How to invest $20,000

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So, you want to invest $20,000. That's a chunk of change!

If you want to invest your money wisely but don't know where to start, you've come to the right place.

I'm going to show you how to invest that money based on your current attitude toward investing.

So, whether your primary goal is to make sure your money is safe and sound or it's to earn as much money on your money as possible, read on, soldier.

Investing $20,000 is serious business, and I have the answers you seek.

Which of the following statements best reflects your situation?

'I'm in consumer debt up to my eyeballs and I'm not sure I should invest.'

Your hunch is a good one. You shouldn't be investing yet, my friend.

How much consumer debt do you have? If it's under $20,000, consider using your stack of cash to pay off the debt. If it's over $20,000, you just might want to consider using it all. Just make sure you have somewhat of an emergency fund before you do.

Debt is like the anti-investment. And unfortunately, it's quite a bit worse than that — debt almost always comes with a guaranteed condition of interest that you would owe to the lender. You see, your investments could go up or down in value. With debt, you're almost always going to pay more than what you borrowed.

Sad day.

The good news is that you can "invest" that $20,000 by throwing it toward your debt. Think of it as a surefire way of not paying any more interest on that amount of debt. Boom. You just saved yourself quite a bit of money.

Want to further your cause to pay off debt? Try these online tools.

'If an emergency happened, I'd need the money like, now!'

On a risk scale of 0 to 10, with 0 being a little risk and 10 being a lot of risk, you're probably going to land at -15. No worries. We can work with that.

You have $20,000 to invest but you don't want to lose your money. Here are some options I'd recommend . . . .

1. High-yield savings accounts. 

Ah, the beauty of simplicity. High-yield savings accounts allow you to earn a low rate of return (when compared to stocks and bond investing, for example) while ensuring that unless armageddon comes, your money will be safe.

Why are they called "high-yield" when you earn a low rate of return? Well, they earn more interest than most savings accounts on the market.

These types of accounts are great for saving emergency fund money — or any money you don't want to disappear overnight. These accounts are also great to use after the loss of a loved one when you're emotional and are more prone to make poor investing decisions.

If you feel this is the right type of account for your 20 grand, click here to check out some of my favorite high-yield savings accounts.

2. Money market accounts.

These accounts are crazy boring, my friend. Yawn.

But the good news is that money market accounts are stable and sometimes offer the same protections as their savings account counterparts. Check with your local bank or credit union to see if they offer a money market account.

How about the interest? You'll probably earn less than or equal to the amount you would with high-yield savings accounts. Still, if this kind of account is available to you and you need quick access to the money in case of an emergency, this is a good option.

'I'm don't anticipate needing the money anytime soon and I don't mind risk.'

Sweet. You're in a good position to make some serious money.

I would recommend you do some traditional investing either yourself or with the help of a professional. Let's take a look at both options . . . .

1. Invest yourself.

There are a number of ways you can invest yourself into a long-term portfolio. I'd only encourage you to do so, however, if you know what you're doing. Even when you're investing using automated, passive techniques, you might find yourself lacking the degree of financial planning necessary to reach your goals. You've been warned.

Okay, so you still want to invest yourself. One way to do so is to use Betterment. Betterment is a pretty nifty way to invest online in a mixture of stocks and bonds based on the degree of risk you can stomach. If you're the kind of person who doesn't mind risk, you'll find that Betterment will recommend more stocks than bonds — and rightly so. Betterment automates investing and rebalances your portfolio based on preprogramed protocols constructed based on expert advice.

With Betterment, you will pay a low assets under management fee. If you want your $20,000 to be automatically invested without much input from you, it's worth it.

If you want to fine-tune your investing, don't go with Betterment. Instead, open up a Scottrade account. It'll only take 10 minutes of your time and you'll be able to select the exact investments you want to add to your portfolio — and in what proportions. Scottrade offers some pretty cheap trades but you'll need to do your own investment research to discover the best strategy for you.

2. Invest with a financial advisor.

If investing $20,000 in a portfolio on your own doesn't sound like a walk in the park, consider working with a financial advisor.

A financial advisor can help you come up with a comprehensive strategy to reach your goals. But please, please! I beg you! Don't just hire anyone!

Some financial advisors are out to practically rob you. In fact, if you haven't read my story of the woman who was duped into paying over $3,500 in variable annuity fees and didn't know it, read it now.

Hire someone you trust and do your own homework too. You should understand the investments being proposed before you plop down your $20,000. Invest your money wisely by making sure your financial advisor knows what they are talking about.

If you want someone who will be honest with you, teach you, and won't settle until you fully understand what you're investing in, work with me.