If You Had $10,000 Today, What Would You Do With It?


I was talking with a friend the other day and he asked me a very interesting question: what is the best investment that I can make TODAY? I’m not going to explain the whole context around this discussion but I wanted to mention these thoughts on this blog. Let’s say you have a specific amount (for this article, let’s put it at $10,000) that you can use to make more money. You don’t need this money for a while and are looking for the best investment possible. What would you do?


What is the “Best” investment?


In today’s economy, the “best” investment is relative to your global financial situation. It is also conditional to a specific risk tolerance as well. So the “best” investment will not be the same for everybody. However, we can see some similar patterns when you look at the options. Bond rates suck regardless if you are a young entrepreneur or a retiree generating income from his portfolio. So I’m offering a few options to invest your fictional $10,000:


Do Nothing


Sad but true, when confronted by many options but not clear direction, most individual will decide to let the money sleep in a “high yield” (whooot! 1.50%!!!!) savings account and wait “for good timing”. I’m sure you have heard this several times; it’s not the right time; I’ll jump in when I’ll be sure to make money. This is a very risky decision as you are guaranteed to lose money (since the interest rate is not enough to cover inflation) and you may make bad investment decisions once you are “tired” of letting the money sleep.


Bonds & CDs


The second worst thing to do with your money (in my humble opinion) is to buy bonds and CDs at the moment. We all know that we have reached the lowest yield environment possible and can only face rising interest rates again in a few years. So what’s the point of buying something that has a very low yield and that will lose (or keep a minimal) value in the near future? No stress when you look at your statement, but that’s all you get.



How about using this money to go back to school? Depending on your field and competencies, additional diplomas or specific training could worth a lot more than $10,000 in the future. You obviously have to consider the tuitions fees vs the potential return in terms of pay check raise and a promotion. But in my case, getting my CFP and MBA was definitely worth the investment (mind you, it had cost more than $10K!). If you are aware of a hole in your resume, you might want to use this money to add some interest. Sometimes, investing in yourself is the best thing you can ever do!


Pay Your Debts!


Another interesting way to invest money is done by not investing it! Sometimes, it’s the best way to invest your money. By paying down a debt at a 5% interest rate, you are not only paying down your debt and saving on interest; you are also generating a “before tax” return of 6.67%  at a 25% tax rate. Since you are paying your debt with “after tax” money, the return of 5% is “net of taxes”. This is a huge improvement in your yield without any risk!


Dividend Stocks


You can bet that I’ll tell you that dividend stocks are a very interesting place to put your money in. In all honesty, I think that dividend stocks could be one of your best investments at the moment. The current stock market is trading under its historic P/E ratio average and dividend stocks are sought after by bonds and CD investors. Since the interest rates are very poor, these investors are ready to accept more risk in exchange for a bigger yield. Since there is an obvious interest toward dividends, I think you can’t really go wrong with this choice. For the record, I do have a preference for Canadian Dividend Stocks at the moment (since US stocks have been surging for the past 4 years).


Real Estate


I’ve heard a lot that people wanted to secure their money by investing in Real Estate. The only thing you are securing by investing in Real Estate is the fact that you don’t receive a quarterly statement and don’t get access to a daily updated value of your property via internet. Real Estate in Canada seems overpriced right now. I’m not a fan of the Canadian housing bubble burst theory, but I definitely don’t think that there will be rapid growth coming in the next 10 years! Some areas in the US seem promising but I don’t know the market well enough to take a position on that. If I had to invest in Real Estate, I would do it through REITs. They are professionally managed and I certainly don’t want to get called for a leaking sink!




Along with dividend stocks, I think that the overall stock market is probably the best place to invest your money at the moment. There is no question that once the uncertainty aroundEuropeand theUSdeficit is gone, the market is going to explode. The only trick is to know when ;-). So if you can wait and are not nervous, check out what’s interesting in your brokerage account and start trading… unless…


Side Business


Unless you have a side business in mind! While the risk of any startup is way higher than investing in the stock market (only 5% of startups survive the first 5 years), this is always where you can get the highest return on your investment. For example, since I’ve started my online company, I’m making at least 33% of growth over the past 4 years. When you invest in your own business, it is “normal” to expect a double digit return. It’s normal, since the risk is a lot greater!


Where is your best investment?


If I had extra money right now, I would do 2 things: invest in my company and invest in dividend stocks. I would rather diversify my $10,000 investment in 2 sectors instead of concentrating everything in the same place. I see interesting growth on both sides and dividend stocks have the advantage of working for me while I sleep. I still have to work on my company to make it run ;-).


What about you? Where is your best investment right now? What will be your next investment move?



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  1. Michel says

    Right now, if I was a young person, with $10,000, I would consider my personal situation, and possibly invest in a monthly income ETF or RBC monthly income fund. That is, 50% stocks and 50% (bonds, GIC, preferred shares, etc) and wait for the market to settle down.

  2. Luc says

    Do the same recommendations apply to $20,000? $100,000? Aside from the fact that more money would allow you to diversify more, would you still recommend the same investments?

  3. says

    I just sold 50 shares of Amazon last week and I do have $10k burning a hole in my pocket. I’m thinking about WMT and I’m researching other dividend paying stocks. I’m hoping the market will go down a bit more though.

  4. RICHARD says

    10K at this time of the year would probably go into my RRSP where I could buy dividend stocks.
    A nice double whamy of a tax refund and more tax free dividends for the RRSP which then enables me to diversify.
    OHH! the love for compounded tax free (for the moment) savings.

  5. Shawn says

    FYI – There is a sale going on today over at the TSX. I think I’ll stop by and pick something up.

  6. says

    I would pay off my line of credit (which has about 800ish left on it), go back to school and take an e-learning course or something similar, and then use the rest to contribute to my TFSA.

  7. says

    Same thing I do every year no matter how much money I have.

    Sell in May and go away (cash).

    Wait until a double-bottom in the market sometime in Sept-Oct to throw it all back in to QQQ.

    That scenario playes out most of the time.

    So if somebody gave me $10,000 today I’d just put it in the money market account, enjoy the summer, and start checking the market right before labor day to see how close we are to a double bottom in the market.


  8. says

    Oh… If I was retired, I’d have a balanced portfolio consisting of 50% fixed income of GNMA fund, maybe some IYR XLU PFF, and then the other 50% probably in VIG, which I would sell in May and buy in Sept/Oct as above. So I’d put 50% in the fixed income side immediately, and the 50% on the other side would go to cash today, and wait out the summer before putting in VIG.

    I would also use the May and Fall times as rebalancing times to recreate the 50/50 split.

  9. Newton Chowdhury says

    Just invest in Gov found. Or do day trading if you really have great exprience what to pick. Very important for next 3 years in canada just keep cash as much as you can in ur bank. Everything is over valued. Market all sector will fall when bank of canada will increse interest rate few time. And they will increse for sure, they have to. they cant keep this rate we all know. so everybody save more cash instead of enjoying summer. The more cash you will have the more your and your family secure for future. Good luck

  10. says

    I would invest in some trucks for my business and not have to use personal vehicles to send my techs out into the field with. I would put 6250 of it down on a 97% home loan and buy a $220000 house at 4.25% interest rate. I would move my family into the house and continue to run my growing business and have a blessed summer with my children. That’s what I would do with it.


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