Looking to learn the best way to invest 100k safely? Lucky you. If you need some help on how to invest $100,000 and avoid risk, letโs get to work.
Because if you are reading this article, then it probably means you are either working actively towards amassing wealth to the tune of a 100k (by investing smartly) or youโre fervently hoping to win the lottery someday.
Either way, itโs smart to learn about how to invest and not spend this huge amount even before it hits your account. The reason is that $100,000 will not guarantee financial security unless the money is invested in ways that allow it to compound.
So itโs important to invest your 100k with caution.
16 Ways to Invest 100K Safely
Before that $100,000 burns a hole in your bank account, letโs work on investing it.
1. Pay off your debt.
The easiest way to invest your money is by paying off debt. It may sound odd but paying off your debt is the first and biggest investment you can make with $100,000 in your account. The interest on any debt you have grows with time and the sooner you pay it off, the more you will save.
You should know that the secret to success is paying off debt. Sure cutting expenses and spending less is important but getting out of debt is a worthy goal. Before you go off and invest $100,000, make sure your debt with the highest interest rates are paid off, in many cases that is going to be credit cards.
โSo before you go dip your chunk of money into stocks, youโll likely get a better return on your money if you pay off your high-interest consumer debt.โ
According to the latest reports, the averageย credit card interestย rate is 17.98% for new offers and 14.58% for existing accounts.ยน While the average stock market return for 10 years is 9.2%, according to Goldman Sachs data for the past 140 years.ยฒ
Are you picking up what Iโm putting down? Or is your credit card debt all paid off? Letโs move on.
2. High-yield savings account.
If youโre looking for a risk-free way to invest your $100,000 while still earning a competitive return, a high-yield savings account is a smart choice โ especially one that outperforms the average bank account.
The CIT Platinum Savings account stands out as one of the top options, offering an industry-leading 4.30% APY for balances of $5,000 or more. For comparison, the national average savings rate lags far behind at 0.41% APY.
With zero market risk and passive interest accrual, this is an optimal place to park your cash while maintaining full liquidity. Unlike traditional savings accounts that barely keep up with inflation, CITโs high-yield structure ensures your money grows efficiently.
If youโre serious about maximizing returns while keeping your capital secure, this is one of the smartest moves you can make.
- Earn 4.30% APY on balances of $5,000 or more
- No monthly fees to worry about
- Open an account with just $100
- Make unlimited transfers and withdrawals
3. Portfolio management.
If you are working with $100,000 in liquid cash โ you are considered a high-net-worth client who would benefit from a personal touch. With that amount of capital, you can start investing with Empower.
Empower has two options. The first is a free planning tool that collects information from your financial accounts, calculates your net worth, and helps you make improvements to increase returns. Thatโs a great option for anyone, no matter where you bank or invest.
The second option is using their asset management service which has a minimum account size of $100,000 to start. Once you join, you can get help setting goals for your money โ primarily for your retirement. If you invest your money here, the app will invest your money based on the Modern Portfolio Theory (MPT) which ensures true diversification and they go a step beyond tax-loss harvesting. They will optimize your tax burden and your portfolio will be tax-efficient.
According to the companyโs own tests, they outperformed the S&P 500 by more than 1.5% annually with lessย volatility. Overall, opening an Account at Empowerย is a safe betย to help you grow your $100,000 safely.
- Track your net worth in real-time and see all your accounts in one place
- Get personalized investment advice to optimize your portfolio for long-term growth
- Trusted by millions with over $1.6 trillion in tracked assets and a 4.7-star rating on Trustpilot
4. Real estate.
Oneย joint studyย by the University of California and the German central bank found that over the last 145 years, real estate offered the highest returns of any asset class.ยณ Even better, it did so with far less volatility than stocks.
As such, one of the easiest ways to grow your money is to invest in real estate. Robert Kiyosaki, author of โRich Dad Poor Dadโ learned to quickly grow his money by making down payments for rental properties and gaining profit by selling the property later at a higher price.
If youโre looking for a simple way to get started, Fundrise is a great option. For as little as $10, you can start building a real estate portfolio, and new users even get a $10 bonus to kick things off. Whether youโre new to investing or looking to diversify, Fundrise offers an easy and flexible way to grow your money while investing in properties nationwide.
- Earn passive income with real estate investing starting at just $10
- Easy-to-use app for seamless access to crowd-funded real estate deals
- Perfect for those who want their money to work for them
5. Index funds.
Investing in index funds is like investing in the stock market without taking on too much risk. The risk of investing in index funds is very minimal yet the benefits are massive. The trick is to diversify your stocks by buying the largest companies through your index fund.
According to Bankrate, the best index funds to own this year are as follows:โด
- Fidelity ZERO Large Cap Index (FNILX)
- Vanguard S&P 500 ETF (VOO)
- SPDR S&P 500 ETF Trust (SPY)
- iShares Core S&P 500 ETF (IVV)
- Schwab S&P 500 Index Fund (SWPPX)
These index funds track the S&P 500 Index Fund and offer you a way to invest your $5,000 in stocks of the S&P 500 at a low cost, while still enjoying diversification and lower risk.
6. Mutual funds.
Another way to invest your $100,000 in the stock market is through mutual funds. A mutual fund is an investment vehicle that holds a portfolio of stocks, bonds, or other securities.
Since they hold many different securities, it makes it a very attractive investment option for someone who has $100,000 to invest. Investing your money in a mutual fund instead of individual stocks means you get diversification, convenience and lower costs.
According to Investopedia, the top 5 biggest mutual funds in the stock exchange are:โต
- Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
- Fidelity 500 Index Fund (FXAIX)
- Vanguard Institutional Index Mutual Fund (VINIX)
- Fidelity Government Cash Reserves (FDRXX)
- Vanguard Federal Money Market Fund (VMFXX)
Some people may wonder how mutual funds are different than index funds? An index fund only seeks market-average returns (safe), while active mutual funds have fund managers that try to outperform the market. This means that the fees for active mutual funds are higher than index funds and less predictable returns.
7. Max out your retirement accounts.
You can invest in index funds and mutual funds in your retirement accounts and shoot for maxing out these accounts.
If your employer offers a 401(k) that matches employee contributions, and you arenโt currently contributing enough to earn that match, let your extra 100k free up some space in your budget so you can do so.
The other option is to contribute to a Roth IRA or traditional IRA. These retirement accounts do have annual contribution limits โ $6,000 in 2022 ($7,000 if age 50 or older). You can pad these retirement accounts in order to help prepare yourself for retirement down the road. Your retirement accounts commonly invest in index funds and ETFs, mutual funds, and are low-risk investments because your investments are diversified.
8. Start a business.
Invest your 100k in that promising business venture you put on the back burner for lack of money. If it is a high-risk business be sure to conduct research into your prospect, seek expert advice and develop a solid business plan before starting out.
Of course, the amount of money required to start your business depends on your business model and industry. However, a 2009 study conducted by the Ewing Marion Kauffman Foundation puts the average cost of starting a business is around $30,000, leaving you $70,000 for other investments.
Alternatively, starting a business with no money might initially seem like a far-fetched idea, but itโs not impossible. You can even use a personal loan to start a business, in certain situations. The bottom line is that nothing is stopping you from launching a business.
9. Invest using a robo-advisor.
Why not put some of that $300k to work with a robo-advisor? Instead of keeping all your money in one place, diversifying can help reduce risk and maximize returns.
When I had a large sum of money to invest recently, I allocated part of it to robo-advisors, and Iโm glad I did. After comparing options, Acorns stood out as my top choice. It offers low costs, automated investing, and strong performance without the hassle of managing everything yourself.
With Acorns, you donโt have to worry about picking investments. The app analyzes your age, goals, income, and risk tolerance, then selects one of five portfolios, ranging from conservative to aggressive.
Acorns costs just $3 per month, but if you sign up today, youโll get a $20 bonus investment, essentially covering your first six months for free. Why not take advantage and start growing your money now?
- Round up spare change from everyday purchases and invest automatically
- Even small investments can grow significantly over time with automated reinvesting
- Get a free $20 bonus investment when you invest just $5
10. Annuities.ย
This is a low-yielding investment that could pay as low as 3% on your capital. An annuity is a way to supplement your income during retirement.
Annuities can be a smart option since it provides regular payments, tax benefits, and a potential death benefit. The other advantage is that your capital is kept safe and your returns are guaranteed.
11. Donate to charity.
One of the best ways to invest 100K is to make an impact in the lives of the less fortunate through charitable giving. Investors who are into impact investing also get tax deductions. Most all charitable organizations qualify for a charitable contribution deduction.
You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions. Generally, you may deduct up to 50 percent of your adjusted gross income, but 20 percent and 30 percent limitations apply in some cases.
12. Invest in an emergency fund.
One wise thing to do once you have your 100k in hand is to set up an emergency fund or fund it if you already have one. It will shield you from lifeโs unpleasant surprises.
As you may have guessed, there are so many ways to invest your $100,000 with confidence. You might choose one particular method, or you might choose to diversify. Just make sure to invest somehow so you can offset inflation and your wallet will thank you for it!
13. Treasury bonds.
Treasury bonds are a safe and reliable way to invest, offering steady returns and government-backed security. They pay semiannual interest and return your full principal at maturity, making them a great option for long-term stability.
Whether youโre looking to diversify your portfolio or simply want a low-risk way to earn passive income, Treasury bonds can be a smart addition to your financial strategy. While TreasuryDirect has traditionally been the go-to platform for purchasing these bonds, it has limitations, including a complex interface and restrictions on transfers.
Public offers a modern, user-friendly way to invest in Treasury bonds with as little as $100, making it more accessible than traditional platforms. Instead of dealing with complex systems, Public lets you invest in fractional bonds and build a diversified Treasury bond ladder with maturities ranging from 3 months to 30 years. This approach provides steady returns while keeping your investment strategy flexible.
With competitive yields, currently up to 6.7%, Public simplifies the process of investing in bonds without the hassle of outdated platforms. Whether youโre looking for a low-risk way to grow your money or aiming for long-term financial stability, Public offers a seamless and accessible way to put your money to work.
14. Peer-to-peer lending.
This is a way to make a direct impact on the lives of people. This is how it works: you sign up on a platform like LendingClub or Prosper and start giving loans to peers registered on the platform. You can buy into a thousand different loans to spread out risks and earn a profit in the form of interest.
16. Invest in yourself.
Investing in yourself is one of the best investments you could ever make and it can take many forms: pursuing a creative project, nurturing a talent taking a course, learning a new skill, or picking up a new side hustle thatโll bring you additional income every month.
While you wonโt likely spend $100,000 by investing in yourself, when you put your wellness first, your energy and production will increase at work which will yield better results and more revenue overall.
Things to Keep in Mind Before You Invest $100,000
Before investing $100,000, take a deep breath and go over your financial situation. Do you have any pressing financial issues that you need to deal with? Before investing this money thatโs liquid, you should make sure everything else is in order.
This generally means that you already have an emergency of three to six months set aside, you are paying down debt already, and you need to understand what type of investor you are.
Because you only know your risk tolerance, so that alone will help you decide which way you want to invest your money.
Whether you want to use it as a down payment on a rental property, pay off some expenses, invest in a CD, or a taxable brokerage account, itโs all up to your risk tolerance.
If youโre looking to invest a larger amount of money, you can see how to invest $150k safely.
For you: What ways have you found to invest or which way to invest 100k safely did you like best?
Footnotes:
- ยน Source: WalletHub Credit Card Landscape Report.
- ยฒ Source: Goldman Sachs Data.
- ยณ Source: University of California and German Central Bank Study.
- โด Source: Bankrate โ Best Index Funds.
- โต Source: Investopedia โ Biggest Mutual Funds.
Arrived lets you invest in residential real estate and vacation rentals with only $100. It's an excellent option for anyone looking to earn passive income with rental units. And the platform is available to non-accredited investors.
