A $50,000 windfall could really get you started securing your financial future. With time and some smart financial planning, you could create financial stability for yourself and your family — and could even turn your money into a million dollars by making some really basic investments.

Here’s how to invest $50,000 and what you need to do to build wealth.

What to do before you start investing

Investing is important to your financial future, but eliminating high-cost debt and having a firm financial footing today are vital to building wealth, too. If you have high-interest debt, such as credit card debt, it’s vital that you get that debt paid off before you start investing.

How high cost is high-cost debt? If you’re paying more than what you can get in an average year from the stock market – about 10 percent – then you’re probably better off settling your debts before you invest your money. Paying off debts that are costing you 20 percent or more annually is a “no-brainer” investment that offers a 100 percent safe return with no risk.

This doesn’t mean you have to pay off all your debts before you get started investing, of course. If you have a handle on lower-cost debt such as student loans and mortgage debt – both of which may get you a tax break – then you can begin thinking about investing for the long term.

How to invest $50,000: Best ways to grow your money

1. Start immediately

If you’re looking to turn your money into real wealth, then don’t delay. Time is your most valuable ally when it comes to growing your money. Even if you’re not starting with $50,000, you can start with what you have and build it up by saving money each week. Here’s how powerful time is when it comes to growing your wealth.

Starting amount Annual return After 10 years After 20 years After 30 years After 35 years After 40 years
$50,000 6% $89,542 $160,357 $287,175 $384,304 $514,286
$50,000 8% $107,946 $233,048 $503,133 $739,267 $1,086,226
$50,000 10% $129,687 $336,375 $872,470 $1,405,122 $2,262,963

If you begin with $50,000 and don’t add any more money to your investment account, you could grow your starting bankroll to hundreds of thousands of dollars even with subpar returns such as 6 percent annually. (Remember, the S&P 500 has returned about 10 percent annually over long periods.) Even 8t percent returns will put you over half a million dollars in 30 years.

Of course, the numbers are much better with 10 percent annual returns and plenty of time. And consider how important an extra five years is to your total return. Investing for an extra five years (from 30 years to 35 years) earns you about 60 percent more in total, about $532,000 more.

That’s why it’s important to get started investing right away, and then you can add money along the way as your income allows.

2. Decide on your investing goal

How you invest is determined by why you’re investing. If you want to build overall wealth over time, you can invest in assets with the best long-term returns. If you’re looking for a specific shorter-term goal, you may need to sacrifice some return to ensure you get there on schedule.

  • A specific goal: If you’re investing to reach a specific goal such as a down payment for a house, then you’re likely going to want to play it safer than if you’re building overall wealth. You’ll want to tailor your investments, such as CDs, to when you need the money. If you have shorter-term goals, it’s better to rely on safer investments than to invest in a potentially volatile stock market, where it’s unclear that your money will be there when you need it. You can use a brokerage account to find safer investments such as bond funds, though.
  • Overall wealth: If you intend to build overall wealth in the long term, then a brokerage account is going to be in your future, and they’re offered at all online brokers. These accounts will allow you to buy stocks and stock funds, which offer the best opportunity for long-term growth. You’ll be able to compound any capital gains while delaying taxes on these gains until you sell, though you’ll be taxed on any dividends. You’ll be able to access your money at any time, which is good if you have an emergency or you simply intend to retire early and don’t want the restrictions of a retirement account.
  • Retirement wealth: If your goal is to build retirement wealth, you can turn to specialized accounts such as a 401(k) plan or an IRA. These accounts let you avoid taxes or defer them, meaning you can accumulate money faster. But these accounts may have penalties if you need to access them before you hit retirement age, typically 59 ½. Still, you can invest in high-return assets such as stocks and stock funds here.

Your goal helps determine how you’ll invest your money. Naturally, you can invest with any one of these goals or all three, but then you’ll want to adjust your investments for each.

3. Determine how you’ll invest

With your goal or goals firmly in hand, now you can figure out how you’re going to reach them. You have three options for how to do that:

  • Manage your money yourself: If you’re managing your money, you get to make all the decisions, as daunting or exhilarating as that may seem. Learning how to invest may seem too difficult at first, but a few investment funds and the right approach – passive buy-and-hold investing – will likely have you beating most of the pros.
  • Invest with a robo-advisor: If you’d rather have a professional manage your money, one option is a robo-advisor. A robo-advisor takes the same process that an investor would use to create an investment portfolio, and does it based on when you need the money and how much risk you’re willing to take. Add your money to the account and the robo-advisor does the rest. The best robo-advisors offer tons of features, even more than most human advisors and they don’t cost much either, often $25 for every $10,000 invested annually.
  • Have a financial advisor manage it: A financial advisor can also help you manage your investments, but you’ll need to find one who’s aligned with your goals. Bankrate’s financial advisor matching tool can help you find someone in your area and then you can see if they fit with your wants and needs.

Each approach can be successful, so you’ll want to go with the one that works best for you. One key difference is how much time you want to spend with your investments. Even if you manage your money yourself, however, you can still put in minimal time and succeed.

4. Invest your money

It’s time to invest your money. That may seem difficult, and going with a robo-advisor or a human advisor can make the process easier since you let the professionals do the work for you . But investing doesn’t need to be difficult even if you manage the process yourself.

  • If you’re investing for yourself: If you’re investing your retirement money or building overall wealth, you’ll be making all the investment decisions. Fortunately, you have a great investment choice that’s available to you and all investors — an S&P 500 index fund. This type of fund includes stocks in hundreds of America’s best companies, and it’s averaged about 10 percent annual returns over long periods. If you take a buy-and-hold approach, the research says you’ll outperform most investors, including the pros. This list of the best index funds can give you some top picks for your account, too.
  • If a robo-advisor is investing for you: You can set up your robo-advisor account by answering questions about when you need the money and how much risk you’re willing to take. The robo-advisor selects the funds and weights them in your portfolio. You can add your money to the account all at once, though it may be better to contribute to the account over time. You’ll be able to check on your account whenever you’d like.
  • If a human advisor is investing for you: Your advisor will also gauge your investment goals and risk tolerance, and then create an investment portfolio for you. The advisor can do it all, including any portfolio management, but it’s vital that you find an advisor who’s aligned with your goals and is compensated accordingly. Here are the top questions to ask a financial advisor to find the right one for you.

While you may have someone else manage your money, you still want to understand how it’s invested and why. Stocks and stock funds are proven long-term investments, so you don’t need anything exotic to earn good returns over time.

If you’re looking to invest for retirement or build overall wealth and you have more than five years before you need the money, you can take on more risk in exchange for more potential return. That means you can afford to have a higher allocation to stocks and stock funds. A diversified portfolio of stocks tends to deliver good returns over time, but they’re volatile in the short term, meaning that stocks are not a good choice for near-term goals.

If you’re investing for a near-term goal, you’ll likely want to have more exposure to safer investments such as bonds and bond funds, CDs and high-yield savings accounts. These alternatives offer regular income and help reduce the risk and volatility in your portfolio.

5. Keep adding to your account and reinvesting any dividends

With a lump sum of money, it can be better to invest it over a period of time, because that helps you avoid the risk of investing it all when the market is at a high point, or what experts call “timing risk.” By buying over time – what’s called dollar-cost averaging – you lower this risk and ensure that you can get an average price over time.

And while you’re investing your $50,000, you can think about how you can invest more regularly over time, too, by adding some money from each paycheck. You’ll not only lower your timing risk, but you’ll give your money more time to compound into real wealth.

If you receive dividends from your investments, you can reinvest those dividends into more shares of the stock or fund, allowing you to compound your wealth even faster. Suddenly your reinvested dividends will start paying you dividends. However, if you spend your dividends, you’ll be severely crimping your ability to grow wealth over time.

Bottom line

Investing $50,000 is a great start on the way to building life-changing wealth for you and your family. Begin by thinking about your goals for the money and then build your investment plan from there. Stick to well-established investing principles that have made other investors wealthy.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.