What is the best way to invest $100k?

1 min readLast updated March 8, 2024by Unbiased team

Explore the best way to invest $100,000, gain insights into assorted investment options, and learn why seeking professional financial advice will help ensure your investment gets the best returns.

Summary 

  • There are several ways to invest $100,000, and each option suits different investor styles. 

  • Using the dollar-cost averaging method when investing can reduce long-term investment risk. 

  • Before investing $100k, it’s best to settle your debts and build up a financial safety net. 

  • To ensure maximum return on investments, it’s always best to work with a qualified, regulated financial advisor.  

What are your investment goals?  

How to invest $100,000 will depend on a few factors, like your desired goals and investor type. It’s important to determine what both of these are before you make any big investment decisions.  

Need help investing?

Unbiased can match you with a financial advisor who can create a personalized investment strategy just for you.

Understanding your goals is like knowing the milestones to look out for on a road trip. Common goals include setting a target amount you want to achieve, the time frame, and strategies you wish to employ to reach your destination. 

Your investor type considers the risks you're prepared to take.  

Investors prepared to take more risks might get faster returns on an investment, but they run a greater risk of losing out as these investments might be more volatile.  

Investors who prefer low-risk investments will have more patience and are prepared to play the long game, but their returns are more assured.   

Once you've outlined your goals and determined your risk profile, it's time to consider some other important factors for investing 100k. 

What factors should you consider before you start investing your money?  

As alluring as the returns on investing $100k are, it's likely in your best interest to use some of that money to pay off debt and set up an emergency fund as a safety net.  

Settling outstanding debts helps you avoid unnecessary interest payments with the money you're saving, easing your journey to financial freedom. 

Simultaneously, setting up an emergency fund for unplanned expenses also guards the money in your investment.  

For example, if you need $2,000 for emergency vehicle repairs, taking that from your safety net and leaving your invested capital untouched to earn a higher interest is better. 

Once you've set the foundations for investing 100k, you choose an approach based on your goals and risk profile.  

Six ways to invest $100,000 right now  

The six investment strategies outlined below include conservative and riskier ways to invest.  

Remember, there is no such thing as a one-size-fits-all investment approach because individuals have unique goals and different risk tolerances.  

Here are six of the best and most lucrative ways to invest $100k right now: 

1. Create a diversified investment portfolio

Diversifying an investment portfolio means spreading $100,000 across varying asset classes such as bonds, stocks, and possibly alternative investments.

The goal of a diversified investment portfolio is to reduce risk by not putting all funds into a single asset.  

The benefits of this approach include: 

  • Risk mitigation: Diversification helps protect investments from the poor performance of a single asset class. For example, if one investment underperforms, the others may compensate. 

  • Potential for higher returns: By investing $100k in varying assets, the portfolio can benefit from the strong performance of specific sectors or industries. 

  • Increased stability: A diversified portfolio can provide more stability, as the impact of market fluctuations on the overall portfolio may be less severe. 

2. Invest in real estate 

Real estate investment involves purchasing property, like residential or commercial, with the expectation of earning rental income or capital appreciation over time.  

This is a popular way to invest a larger sum of money as the benefits include: 

  • Steady income: Real estate can provide a consistent passive income stream through rental payments. 

  • Potential for appreciation: Over time, the value of real estate properties may appreciate, allowing for potential profit upon selling. 

  • Diversification: Adding real estate investments can diversify a portfolio, offering a hedge against market volatility. 

3. Invest in stocks and shares  

Investing $100k in individual stocks or through stock market funds allows you to become a partial owner of companies.

Stocks represent company ownership shares, and their value can fluctuate based on market conditions.  

Benefits of stock and share investments include:

  • Growth potential: Stocks can offer significant capital appreciation and higher returns than some other investment options. 

  • Liquidity: Stocks are generally liquid assets, allowing investors to buy or sell quickly on the stock market. 

  • Dividend income: Some stocks pay dividends, providing a regular income stream to investors. 

4. Look for high-interest savings accounts 

As the name suggests, high-interest savings accounts offer a more favorable interest rate than traditional ones, providing a way to earn more on the deposited funds.  

Benefits include: 

  • Safety and liquidity: Savings accounts are low-risk and highly liquid, ensuring the invested funds are readily accessible. 

  • Stable returns: While lower than some riskier investments, high-interest savings accounts provide a more stable and predictable return. 

  • Emergency fund: Such accounts can be a reliable place to hold emergency funds, ensuring they are safe and earn some interest. 

5. Consider a certificate of deposit (CD)  

A certificate of deposit has a fixed rate and term. The investor agrees not to withdraw funds for a specific period.  

Benefits include: 

  • Predictable returns: CDs offer a fixed interest rate, giving investors a known return on their investment at the end of the term. 

  • Capital preservation: The principal amount you invest in a CD is generally protected, making it a low-risk option. 

  • Structured savings: CDs can be part of a structured savings plan, as they discourage impulsive withdrawals. 

6. Contribute to your retirement 

Retirement accounts like individual retirement accounts (IRAs) or 401(k)s allow people to save for their long-term financial needs and enjoy potential tax benefits.  

It’s important to note that many retirement accounts have annual contribution limits, which may prevent you from investing all of your $100k.

However, investing some of your hard-earned money toward your retirement is always considered a wise decision.  

Other benefits include: 

  • Tax advantages: Contributions to certain retirement accounts may be tax-deductible, providing immediate tax benefits. Others may grow tax-deferred until withdrawal. 

  • Compound growth: An early start and consistent contribution to retirement accounts allows compounding to work over an extended period, potentially resulting in significant growth. 

  • Financial security: Building a substantial retirement fund ensures financial security in later years, reducing reliance on Social Security or other sources. 

Should you invest your money all at once?  

Investment professionals typically suggest investing $100k periodically instead of all at once to mitigate your risks. 

Dollar-cost averaging is a strategy that suggests you space out your investments, regardless of market conditions, with the view that they will balance out in your favor. 

For example, when the market is good, you'll buy fewer shares with your allotted investment amount.

However, when the market is poor, that same investment amount will buy you more shares.  

Where can I find expert investment advice?

Knowing how to invest $100,000 requires knowing your risk appetite, understanding what your options are, and many other factors.

The best way to invest $100k will also depend on your specific circumstances and your goals. 

Whether you're a beginner or a seasoned investor, seeking the assistance of an expert financial advisor is always recommended.  

Let Unbiased match you with an SEC-regulated financial advisor who can help you determine your goals and offer sound financial advice on investing $100k based on your risk tolerances. 

Find a financial advisor now.  

Writers

Unbiased team

Our team of writers, who have decades of experience writing about personal finance, including investing and retirement, are here to help you find out what you must know about life’s biggest financial decisions.

Need help investing?

Unbiased can match you with a financial advisor who can create a personalized investment strategy just for you.