If You Have $500,000 Saved It Can Start Making You Real Extra Money
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them. When you are at the start of your financial journey, you have to make money without getting much help from compounded returns. However, people who amass large savings can get a lot of help […] The post If You Have $500,000 Saved It Can Start Making You Real Extra Money appeared first on 24/7 Wall St..
When you are at the start of your financial journey, you have to make money without getting much help from compounded returns. However, people who amass large savings can get a lot of help from solid returns.
If you have an extra $500,000, you have plenty of options for where to put your money. You can store it in a high-yield savings account to minimize risk and get steady returns. However, you can also put the funds in stocks, crypto, bonds, and other assets.
Wondering how much your cash can grow? Here’s what can happen to your money if you allocate $500,000 into assets.
Key Points
-
You can make a lot of extra money with $500k.
-
Discover how savings accounts, stocks, bonds, and crypto can move you closer to your goals.
-
-
- Earn up to 3.8% on your money today (and get a cash bonus);
- . (Sponsored)
-
Annualized Returns
For this analysis, we will look at high-yield savings accounts, stocks, crypto, and bonds. You can find a high-yield savings account with a 4.00% APY, but the returns for the other assets vary. While some stocks can comfortably outperform the market, others can get left behind.
For this analysis, we will look at the annualized returns for the S&P 500, Bitcoin, and the Vanguard total bond market over the past five years. Here’s the types of returns you can get with $500,000.
| Asset | Annualized Return over 5 years | Return on $500,000 After 1 Year |
| High-yield savings account | 4.00% | +$20,000 |
| Stocks | 14.31% | +$71,550 |
| Bonds | -0.52% | -$2,600 |
| Crypto | 63.5% | +$317,500 |
Bitcoin has been the best asset over the past five years. Its 5-year annualized return of 63.5% significantly outperforms the other assets. High yield savings accounts have done better than bonds during this stretch but lag the S&P 500.
The Pros and Cons of a High-Yield Savings Account
The main advantage with a high-yield savings account is that these accounts pose no risk. Your funds are safe in these accounts and aren’t subject to any price fluctuations. Furthermore, the interest automatically accumulates.
However, a high-yield savings account may underperform inflation, especially since interest is treated as ordinary income. Furthermore, these accounts can underperform most assets during bull markets.
The Pros and Cons of the Stock Market
The stock market gives investors many options and is highly liquid. These investments can outperform a high-yield savings account, and some of them also provide dividends. However, stocks fluctuate sharply and can result in significant losses if you aren’t careful.
The Pros and Cons of Bonds
Bonds are similar to high-yield savings accounts. These financial instruments let you collect interest, but you have to hold them until maturity to ensure that you don’t lose money. Granted, it is possible that a bond’s value goes up. You can make more money with corporate bonds, but some bond issuers default, resulting in their investors underperforming the market. Bonds can also significant underperform other assets during bullish market cycles.
The Pros and Cons of Crypto
Cryptocurrencies can significantly outperform the other assets during bull markets. The limited supply of Bitcoin and rising demand make it appealing for some investors. However, cryptocurrencies are speculative, high-risk investments that can quickly wipe out value. These assets also trade 24/7 which is either an advantage or a disadvantage, depending on how you look at it. Extra volatility may not give you a break over the weekend like you’ll get if you buy stocks.
Minimize Risk While Earning Cash
You don’t have to take big risks to reach your financial goals, especially if you have already built up to $500,000. A high-yield savings account can be a great resource that advances you toward your long-term goals. Comparing options can help you find a great savings account for your needs, but the SoFi high-yield savings account is a great starting point.
The post If You Have $500,000 Saved It Can Start Making You Real Extra Money appeared first on 24/7 Wall St..
