When Your Investment Account Reaches $50,000, Here's What You Should Do Next

Recent years have been tough for everyday Americans who want to be disciplined and invest. There have been supply chain problems impacting stores, the Covid-19 pandemic, and up and down markets. Many individuals have seen their retirement savings take a hit in the course of these events.

If you have managed to reach $50,000 in your investment accounts, then you are doing well. This may not pay for retirement, but it is a solid start. Should you be able to grow this nest egg by just 8% each year for the next 20 years, the $50,000 stake would go up by almost five times, reaching about $246,000, per data from NASDAQ.

There are five steps that you should take to improve your financial position once you have $50,000 invested. This will help to insure that your retirement plans move ahead as they should. These include common investing strategies like diversifying your investments and increasing your emergency fund, as well as pushing yourself to save more even more and protect your savings with an annuity or precious metals IRA.

One of the first and best rules of investing is to diversify your investments away from a single asset class or stake. You can effectively do this with $50,000. Stocks are only one reliable asset class, and it is a smart idea to supplement your equity investments with other holdings that can reduce your portfolio risk while possibly adding to returns.

Consider these ideas. Your portfolio may be heavily skewed towards large-cap growth issues. It is a good time to mix this up with international stocks, small-cap value stocks, and possibly some corporate or tax-free investments like municipal bonds.

The whole point with diversification is to acquire those assets that do not move up or down in lock step together. You want holdings that will all contribute to growing long-term results. This helps you to manage portfolio volatility at the same time as you keep up the longer-term growth potential.

It does not make sense to be paying high interest on debt if you are already up to $50,000 in investments. Credit card debt is especially toxic to your finances. These pariahs often come with high interest rates exceeding 20% for most consumers. It only takes five years for your debt to double at these exorbitant rates.

Consider the fact that you are probably on the losing end of the equation if you are investing money while carrying credit card debt. If your investment holdings are growing between 5% and 10% per annum, this sounds like a great return. When you are paying 20% interest on credit cards, though, the numbers are stacked heavily against you.

Now is the time to pay off or at least pay down this costly debt. Debt is only helping you if the cost of carrying it is less than the returns you are earning on a comparable amount of money. Unless you have acquired dependable high-yielding investments that exceed your debt interest rates, you should just eliminate your debt as fast as possible.

Emergency funds can be so crucial in your life. Any financial advisor worth his or her salt will tell you that this is a key element in a sound financial strategy. It is all but impossible to adequately plan for unknown emergencies like wildfires, earthquakes, and hurricanes, not to mention health scares.

If you do not have such an emergency fund, when disaster strikes you may find yourself in dire straits. You might be left with no better choices than to take on debt to cover the costs. Financial planners will tell you that debt is a costly setback to a solid financial plan.

When you have reached the $50,000 investment milestone, this is the time to ensure that your emergency fund is sufficiently funded. Financial experts suggest that you keep from three to six months worth of living expenses in this fund, according to NASDAQ. Many people maintain this fund in a high yield savings account that is fully FDIC insured or a CD with better rates.

For people who have achieved an investment account worth $50,000, this did not happen by accident. Such an accomplishment required discipline to save consistently. It may be time to review your monthly savings plan to see if you can push yourself still more.

Having become used to money taken directly out of your paycheck is excellent. Now you can take it to the next level by increasing your rate of savings from each check. For those of you at 10% now, try to increase this to 12% or even 15%.

This hurts at the beginning, without question. Over time though you will get used to the higher savings deductions from your paychecks. The rewards to doing this will be significant as your compound interest rate on the larger contributions will help you to set up an even more significant retirement account.

Markets go up and down in cycles. There are no guarantees in investing, which is why regulators require stock prospectuses to say that past performance is no guarantee of future returns. There are two vehicles that you can use to protect your retirement savings which you should seriously consider after hitting the $50,000 mark.

The first idea is to open a guaranteed-rate annuity. Annuities are contracts between an insurance company and an investor that guarantee regular future payouts in installments. These can pay substantial returns of even 5% to 6% a year. Once you reach 59 ½ years of age you can withdraw the money in monthly payments with no tax penalty.

The second vehicle is with a precious metals IRA. In bad times and volatile markets, gold, silver, and platinum frequently outperform stocks and other investments. Another bonus is that their value generally goes up alongside inflation, providing you with a useful hedge in these uncertain economic times. It is easy to roll over your existing funds from another retirement account into a precious metals IRA without suffering any penalties or taxes.