If you’ve got $100,000 available to invest, you’re doing better than the vast majority of Americans. The median American household currently only has about $11,700 between their bank accounts and retirement savings! So you’re definitely in a good place.
But figuring out how to invest that much money can also be tough, especially if it’s a windfall and you haven’t saved it up slowly over time. Luckily, there are lots of excellent options around right now that let you easily diversify this big investment.
If you’re not sure how to diversify your investments, check out this article on asset allocation. Then, use some of these options below to help yourself build the diverse, robust investment portfolio that works best for you.
|Investment Type||Best For|
|Robo advisors||Broadly-diversified, hands-off investing|
|Stocks||Higher returns and a more controlled portfolio|
|Real estate||Passive income|
|Peer-to-peer lending||High-risk/high-reward returns|
|Savings||Safety net or emergency fund|
Table of Contents:
1. Robo Advisors
One thing you’ll likely learn as you figure out your investment allocation is that you should put a good portion of your $100,000 in low-cost mutual funds and similar investments. These options keep your investing costs low, which is essential. And while they’re tied to the market and can have good growth, they’re also less risky than buying individual stocks.
Advertiser disclosure – “This content was reviewed by Vanguard but the opinion is the authors alone”
You can go with a traditional investment advisor to buy these types of funds, but your costs can sometimes be higher. That said, one of the best advisors out there with low fees is Vanguard. Vanguard offers a Personal Advisor Service that rivals the robo-advisors below, with regard to fees but blows them away in customer service.
The Vanguard Personal Advisor Service offers dedicated support from one of their many professionals that will work with you every step of the way to develop your own portfolio. The fee is only 0.3% of the invested amount (billed quarterly) and the minimum investment required is $50,000.
So one of the best options is to choose a robo advisor. These automated investing services are able to manage loads of investments at once and make algorithm-driven decisions. This means their costs are much lower, which can lead to much more growth of your investments over the long run.
As technology gets better and better, more and more robo advisors are popping up. One of our favorites is Betterment. However, if you have as much as $100,000 to invest, you might be better off with Wealthfront, which offers lower pricing for higher net worth investors. That said, the services are quite similar, so check out our comparison here to decide between them.
Another option is M1 Finance, which is a free-to-use robo advisor. However, it has a limited number of investing options available. It does give you almost 2,000 exchange-traded funds (ETFs) to choose from, so that may be plenty of choices for you. Though with $100,000 to invest, you may want to put some of your money with M1 and some with other options to keep your portfolio diverse.
If you’re interested in socially responsible investing, Wealthsimple could be another robo advisor to check out. It’s good for new and small investors and lets you invest in companies who are pursuing goals that are important to you, including supporting local initiatives, gender diversity, and promoting affordable housing. Wealthsimple has higher management fees than many of the options listed here, but its specialized portfolios may be worth the cost for you.
Also Read: Best Robo Advisors
2. Stock Investments
Investing in stocks is riskier than investing in mutual funds or some other options, but it’s still a good way to diversify your portfolio and potentially increase your overall earnings. However, you’ll need a platform through which to buy and sell stock investments.
Luckily, you’ve got plenty of options for that, too. One option is You Invest by J.P. Morgan, an online discount broker that lets you trade individual stocks for no fee. They also currently offer up to a $725 bonus for new accounts based on the following tier level:
- $200 cash bonus if you deposit at least $25,000
- $350 cash bonus if you deposit at least $100,000
- $725 cash bonus if you deposit at least $250,000
(All accounts must be funded at these levels in the first 45 days and remain in the account for at least 90 days)
Disclosure – INVESTMENT PRODUCTS: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
It’s a great no-fee option and competitors like E*TRADE and TD Ameritrade have also adopted a no trade fee platform. AND, these options also allow you to trade individual stocks so that you can build your own portfolio.
If you have this much money to invest, you probably only want to put a small portion of it into stocks. And you’ll want to be sure you’re staying up-to-date on the market so that you can make trades, or buy and hold appropriate stocks, that suit your needs.
But look, $100,000 is a LOT of money. If you don’t know what you’re doing, you could lose it all. Not to scare you because I think investing on your own is super valuable, but with this kind of money, it’s smart to make sure you know what to do with it.
So one option to consider is working with a Certified Financial Planner (CFP) who can give you advice and recommendations on how to manage your money and–more importantly–your investments.
Facet Wealth is one of the best companies for this, as they’ll help align you with a CFP that fits your exact financial situation. You can meet with them virtually via video conference and they’re dedicated to you–so you don’t have to worry about working with a random person each time you need help. Read our full Facet Wealth review for more information.
3. Real Estate
In some areas of the country, $100,000 is more than enough to buy an investment property and become an individual landlord. And if this money is just part of your portfolio, that’s sometimes a great idea. But if $100,000 represents all your investable cash, you probably shouldn’t tie all of it up in a single property.
However, you can invest in real estate along with other investors in order to bring diversity to your portfolio and, in some cases, get a fairly quick return on your investment. Platforms like Fundrise and Realty Mogul are crowdfunding platforms for real estate investment. This means that you invest in real estate projects and properties along with potentially hundreds of other investors.
Each offers slightly different types of investments. Realty Mogul lets you purchase shares in an LLC or LP that invests in a property. It offers pre-vetted investments and a low investment minimum. Fundrise has an excellent track record of great returns, and offers investment options through REITs, which are ways to invest in a diverse portfolio of real estate. You have to be accredited to invest in Realty Mogul but not to invest in Fundrise.
In the United States you have to have a net worth of at least $1 million, excluding the value of your primary residence, or have an income of at least $200,000 per year ($300,000 if you’re married) for at least the last two years to be an accredited investor. If you don’t meet this criteria, Fundrise is your best bet for investing in real estate.
4. P2P Lending
Lending your money is another option for getting a good return. Again, this is one that used to only be open to the truly wealthy. But now P2P lending platforms have made this option accessible to the masses.
With a P2P lending platform, you can typically decide who you’ll lend to, with varying information available based on the platform. Then you’ll lend your money and get your investment back as the loan is paid back. Higher-risk loans can give you a great return if they’re paid back, but you can also make fairly safe loans to individuals with excellent credit and recommendations.
You can practice P2P lending through platforms like Lending Club and Prosper. These platforms aren’t available to investors in every state. And if you live in a state where they are available, you’ll have to meet minimum qualifications based on your annual salary and net worth. These requirements aren’t as high as those for some real estate investing, but you’ll need to be sure you meet them before you can invest.
Related: Prosper vs. Lending Club
If this $100,000 is over and above your three- to six-months’ worth of living expenses in an emergency savings account, you may not need to save much more. But maybe you want to portion off some of the money for a mid-term or long-term savings goal. In this case, make sure you’re getting the most bang for your buck by choosing a savings account with a good APY.
Right now, APYs are still fairly low on savings accounts, but you should try to find the best return you can get in the market. Some savings accounts and money market to consider are from Chime, CIT Bank, Ally Bank, and Capital One 360. These all have similar FDIC-insured savings accounts with great APYs.
My personal favorite savings account offer currently comes from Citi and their Accelerate Savings account. The current APY on the account is 1.00% and you can couple the savings w/ their Priority Checking Account offer that yields a $700 bonus for new account holders (conditions apply).
Another option would be to create a CD ladder. If you want to save $10,000, you can invest the money in CDs of varied lengths. That way you always have some money coming mature if you should need it to be liquid, but you’re taking advantage of the higher APY you can get from a CD versus a savings account. Here’s an explanation of how to build a CD ladder.
Deal of the Day: Chase is now offering a $200 cash bonus when opening a Total Checking Account. No minimum deposit and all deposits are FDIC insured up to the $250,000 per depositor maximum.
6. Vehicles for Investing
Some of these investing platforms are their own vehicles for investing, but others offer different options. For instance, you can open a taxable investment account with TD Ameritrade, but you can also invest your IRA there.
Generally, your best bet is to invest first in an IRA and then in taxable options. The tax savings you gain with tax-advantaged accounts like an IRA or 401(k) make for potentially huge long-term gains in your accounts.
So if you just happened into a $100,000 windfall and haven’t fully funded your tax-advantaged retirement accounts, do that first. If you can, bump up your payroll deductions for your employer-sponsored account, and then open or fully fund an IRA on the side. You can also make sure you’re doing the best you can with your employer-sponsored account with a service like Blooom, which helps you manage your 401(k) plan to ensure you’re getting the most bang for your buck.
Once you’ve maxed out your tax-advantaged options, then you can spread your investments into various taxable accounts, whether that’s with a robo advisor, a real estate investment option, or a P2P lending platform.
7. How to Keep Track
Now that you know about these options for making investments, you can make a truly diverse portfolio that will balance risk with reward. But keeping track of all these various investments can be difficult, to say the least.
One of our favorite platforms to pull it all together is Personal Capital. This management tool plugs into your existing accounts, including spending and investment accounts, and pulls all your data into a single dashboard. You can use it for everything from budgeting to keeping track of your investments and overall net worth.
Another resource to consider is Paladin, a free service that connects you with reputable financial advisors. You’ll tell Paladin what you’re looking for and the service will match you with three advisors that you may interview and find out which is best for your needs. Did we mention using Paladin is free? You can find out more about Paladin here.
With $100,000 to invest, you’re off to an amazing start. Now just take things slowly as you learn to invest and make smart decisions to keep that money growing.
How much interest will I earn on $100k?
How much interest you’ll earn on $100,000 depends on your rate of return. Using a conservative estimate of 4% per year, you’d earn $4,000 in interest (100,000 x .04 = 4,000). To use a more aggressive assumption say, 9%, you’d earn $9,000. Just take the invested amount and multiply it by the assumed interest rate for your total dollar return that year.
How can I invest $100k to make $1 million?
Turning $100k into $1 million is quite challenging, as you’re effectively trying to 10x your investment. Doing this isn’t impossible, though, you just need to invest in high-risk/high-reward investments, such as real estate and peer-to-peer lending.
Using the Rule of 72, which tells you how long it takes to double an investment, you can do this a few times to understand how long it’ll take to turn $100k into $1 million. The Rule of 72 has you divide 72 by the expected rate of return, which will give you the amount of time it’ll take to double an investment. So if you’re expecting a 10% rate of return, you can surmise that it’ll take just over 7 years to double your investment (72 / 10 = 7.2 years). So after 7.2 years you’ll have $200,000. Meaning, approximately every 7 years you’ll double your principal with a 10% rate of return. So to get to $400,000 it’ll be 14.4 years, and $800,000 will be 21.6 years. At 28.8 years you’ll be up to $1.6 million, passing your target.
So, it’s safe to say that if you do nothing else but invest $100k in a high-return investment (targeting 10%) you can turn it into $1 million after about 25-26 years.
Obviously you can accelerate this by adding to your investments, compounding the interest, and avoiding the assumption you are going to net 10% in returns each year.
How can I invest $100k wisely?
$100,000 isn’t enough to retire on, but it’s still a lot of money. To invest $100,000 wisely, you should put it in a broadly-diversified portfolio (such as using a robo advisor) or into a handful of diversified and inexpensive index funds.
What’s the best way to invest $100k short term?
To invest $100k short-term, focus on relatively safe and diverse investments. This means a mutual fund, ETF, or an index fund that is already diversified and has lower costs.
Having $100,000 to invest is a big accomplishment. Whether you obtained it through a windfall or an accumulation over time, it’s a sizable investment. That being said, you want to make sure you’re investing it appropriately. This article lays out several options, but you should always do what is best for you and what suits your long-term financial objectives the most. Overall, stick to a relatively safe investment that is diversified enough to gain you a nice return, but also mitigate risks.
- Robo Advisors
- Stock Investments
- Real Estate
- P2P Lending
- Keep Track