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14 Best Ways To Invest $100,000 That’ll Make You Rich

best way to invest 100000
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If you are reading this article, then it probably means you are either working actively towards amassing wealth to the tune of 100k or you’re hoping to win the lottery someday.

If you want to learn the best ways to invest 100,000 that you may or may not have (just yet), let’s learn how to do it.

After all, it’s always smart to learn about how to invest (any amount, not just 100k) and not spend this huge amount even before it hits your account. The reason is that a $100,000 will not guarantee financial security unless the money is invested in ways that allow it to compound. Here are 12 practical ways to invest a 100K without much hassle.

1. Robo advisors

Robo advisors offer a hands-free approach to investing $100,000 in a safe manner. Robo advisors (roboadvisors, robo-advisers) are apps that provide automated, algorithm-driven investment services without you needing to lift a finger. Robo advisors are very low cost and often have no minimum balance requirements. They also tend to follow optimized indexed strategies that are best suited for most investors.

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Here is the average return for some of the most popular robo advisors available (2.5-year annualized return data, which is net of fees and covers Dec. 31, 2017, to June 30, 2020):

Robo-advisor2.5-year annualized return
Acorns3.49%
Ally Financial3.22%
Axos Invest4.38%
Betterment1.80%
E-Trade3.54%
Ellevest2.90%
Fidelity Go3.88%
FutureAdvisor3.34%
Merrill Edge2.83%
Personal Capital1.72%
Schwab0.81%
SigFig4.71%
SoFi4.03%
TD Ameritrade3.62%
TIAA4.20%
Vanguard3.42%
Wealthfront2.77%
Wealthsimple3.20%
Wells Fargo3.52%
Zacks Advantage3.49%
Source: NerdWallet

While robo advisors give you exposure to the broad stock market, you’re still at risk of losing money in the short term. However, in the long term, your $100,000 will grow if you have a long term outlook. While past results are no guarantee of future returns, historical returns suggest that long-term investing in stocks generally yields positive results, if given enough time.

2. Pay off your debt

It may sound odd but paying off your debt is the first and biggest investment you can make with a $100,000 in your account. Getting out from under the shadow of debt can seem like an insurmountable task, but with a large cash balance of $100,000, it’s entirely possible to reclaim your financial freedom once again.

While certain costs and setbacks simply cannot be avoided, there are a number of strategies you can employ that will stack the cards in your favor in life. And having $100,000 to pay off debt can definitely set you up for success. After all, the interest on any debt you have grows with time and the sooner you pay it off, the more you will save.

Related: 6 Reasons People Stay in Debt

3. Real Estate

One of the easiest ways to grow your money is to invest in real estate. Robert Kiyosaki, author of ‘Rich Dad Poor Dad’ 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.

Another way to invest in real estate is by buying a property and renting it out. With the ever-increasing inflation rate, rents will go up while your mortgage payments stay the same. This increases your cash flow and your rental yield as an investor.

You could also invest your 100K in raw lands. Investing in lands is a profitable venture because of one key reason: land is scarce and its demand will always exceed its supply.

4. 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.

5. 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.

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6. Peer to Peer Lending

This is a way to make a direct impact in the lives of people. This is how it works: you sign up on a platform like Lending Club 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.

7. Short-term government bonds

These are bonds with maturities of less than five years. They don’t yield much but they have lower risk and preserve capital.

8. Invest in a cash account

This is necessary because it gives you access to your money and makes it easy for you to meet your financial obligations.

9. High-yield savings account

This is another way to invest your 100k. It’s much more profitable than the normal savings account. Your money can sit in there and accrue some interest until you are ready to invest in bigger and more profitable ventures.

10. 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, or learning a new skill.

11. Annuities

This is a low-yielding investment that could pay as low as 3% on your capital. The advantage is that your capital is kept safe and your returns are guaranteed.

12. Donate to charity

One of the best ways to invest a 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.

13. 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 life’s unpleasant surprises.

14. MLPs

In the United States, a master limited partnership or publicly traded partnership is a publicly-traded entity taxed as a partnership. MLPs combine the tax benefits of a partnership with the liquidity of publicly traded securities. Since they’re already tax-advantaged entities, they aren’t suitable for retirement accounts.

So investors need to be comfortable not only with owning them in a taxable account but also with the associated extra paperwork required at tax time. Additionally, MLPs often offer higher yields, so they are a wise place to invest as an alternative.

People also ask

How much interest does 100k earn?

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 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.

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