4 Ways to Invest $100,000

By Arturo Conde | AUG 30, 2023

If you’ve got $100,000 that you’re looking to invest, you have a lot of options at your disposal. When deciding what to invest in, it’s important to consider outside financial factors, such as unpaid debts and upcoming expenses. But if you can comfortably invest a good portion of those funds, some popular choices include individual stocks, mutual funds, ETFs, real estate and more. If you’re risk-averse, you could also think about deposit accounts, like a certificate of deposit or a high-yield savings account. Either way, it’s important to diversify your investments to avoid the large ebbs and flows of the market. A financial advisor can help you put an investment plan together for your needs and goals.

Deciding How to Invest Your $100,000

Let’s say you have $100,000 sitting in the bank and are looking for ways to invest it and make it grow. This is quite a great situation to find yourself in, but deciding what to do with those funds can be overwhelming. For starters, you’ll want to make a decision based on your risk tolerance, time horizon and financial goals. However, it’s also important to think about the liquidity of what you invest in, since this will dictate how quickly you’ll be able to access the funds you invest.

Here’s a breakdown of some of the most popular options for investing $100,000.

1. Index Funds, Mutual Funds and ETFs

Among some of the most reliable investments you can make are in index funds, mutual funds and exchange-traded funds (ETFs). These investments buy and sell just like stocks, making them extremely liquid.

Index funds, mutual funds and ETFs offer a simple way to diversify your investment portfolio while mitigating risk. In essence, they are basically baskets of investments. The particular investments in these funds vary depending on the type of fund and the entity picking the investments within it. For instance, some funds simply mirror stock indexes like the S&P 500, which consist of the largest companies in the U.S. Other funds may focus on specific areas of the market, like technology or healthcare.

Mutual funds may have high management fees associated with them, in addition to any commissions you might pay your brokerage. ETFs, on the other hand, typically have inexpensive expense ratios.

2. Individual Stocks

Stocks are arguably the most well-known investment, and almost every portfolio includes them to some extent. Unlike mutual funds, ETFs and index funds, stocks are much less stable. That’s because they follow the performance of a specific company as opposed to a group of companies, like ETFs do. In short, stocks may explode in value, as we saw with Gamestock and other meme stocks in 2021, but they may also fall precipitously. However, like all investments, with high risk comes the highest potential rewards.

It’s easy to buy and sell stocks at a moment’s notice if you need access to cash. But since stocks can be more volatile, it’s usually safest to invest for the long term. Even if your stocks dip in value, past trends often indicate holding stocks you trust generally turns out well. Stocks are a good idea for investors who are more willing to take on risk and are further from retirement.

3. Bonds, CDs and Savings Accounts

Bonds, certificates of deposit (CDs), savings accounts, money market accounts and other deposit accounts are some of the most stable investments out there. Bonds are usually offered by companies and the government, which makes them inherently safer. They basically involve you lending the entity managing the bond a certain amount of money, and they agree to pay it back to you, plus interest. Stocks and ETFs are more lucrative than bonds, but their safety is much stronger.

While most investments aren’t insured by the FDIC, most banking products that earn APYs are covered by the FDIC. This means that even in the event of a market downturn or a bank closure, your assets are insured up to a certain point. However, interest rates at most financial institutions are fairly meager, again making them unattractive. Even still, if your financial circumstances make a savings account worthwhile, they’re a great option.

Most deposit accounts are extremely liquid. High-yield checking and savings accounts can be accessed at the drop of a hat. Certificates of deposit, on the other hand, have limited withdrawal options and hefty penalties. So make sure you understand the terms of your deposit investment before you commit.

4. Real Estate

If you have $100,000 to invest, it may be a good idea to use that money to make a down payment on a property. Real estate is a popular investment option for the wealthy, and for good reason. It’s known to appreciate in value if you find the right deal, netting you a sizable payout when you decide to sell. However, any time you take on debt and put down a large payment, there’ll be some inherent risk.

If you decide to buy a rental property, you could also make money from the rental income that comes from having tenants. Or, if you decide to live in it full-time, you may be able to capitalize on tax benefits when you sell. Real estate is a very illiquid investment, though, so only buy a home if you know you won’t need quick access to the cash you have in it. Real estate can also be risky, so don’t go at it alone.

Another option for investing in real estate is buying shares of a real estate investment trust (REIT). A REIT functions kind of like an ETF or mutual fund, allowing you to own real estate shares without having to buy properties yourself. You can also look into ETFs that contain multiple REITs as a way to invest in real estate.

Should You Invest Your $100,000?

$100,000 can run out faster than you might think, so be sure to have a plan for it ahead of time. The prospect of buying a new house or picking a great stock is enticing, but it’s important to make sure you have your bases covered before you invest. For instance, it’s possible that there are better uses for your money.

One good example is if you have any high-interest debts that haven’t been paid off. If you have $50,000 in credit card debt that accrues at a rate of 19% annually, it doesn’t make sense to invest your money in something that earns a 10% APY. Make sure you pay off high-interest debts before investing your money.

It also may be a good idea to create an emergency fund before investing. An emergency fund should be fully liquid. In turn, some of the investments we’ve listed here, such as a high-yield savings account may also qualify as an emergency fund.

Bottom Line

If you’ve got $100,000 you’re looking to invest, it’s important to do your research. First off, you should only invest if it’s the best use of your money and you don’t have other things to check off of your financial checklist. However, if you’re ready to invest, there are plenty of options available for your risk level and liquidity needs. Make sure you do your research to figure out which makes the most sense when you’re investing your money. And always remember that it’s a good idea to diversify your investments across asset classes. If you have $100,000, it’s usually a good idea to invest it, no matter how you choose to invest.

Investing Tips

• Figuring out which investment option makes sense for you can be tough. A financial advisor could guide you in picking investments for your financial plan. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• There are lots of resources available that can help you make the right decisions. SmartAsset has you covered with a variety of free online resources to help you navigate your investment portfolio. Check out our investment calculator today.

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