If you believe everything you hear about the financial prospects of most Americans, you might think the chance of reaching your retirement goals is fairly poor. For many the idea of investing $1,000 might seem daunting that investing $100,000 is out of this world.
After all, we’re told over and over that young people are drowning in student loan debt, and that a large percentage of Americans don’t have $400 to cover an emergency expense.
Most are also painfully aware that the average retirement savings by age are downright disappointing. For example, figures from the Vanguard show that the typical worker ages 25 to 34 had an average of $24,728 in their 401(k) account in 2022, and those ages 35 to 44 had an average of $68,935 saved.
Meanwhile, individuals ages 45 to 54 had an average of $129,935 in a 401(k) account, and those closest to retirement (ages 55 to 64) still had just $190,505 stashed away in a 401(k) account.
During the pandemic we saw savings rate going up. But according to a 2022 study by Northwestern Mutual’s Planning and Progress initiative , the amount of personal savings dropped by $11,000 to $62,000 in 2022 compared to $73,000 in 2021.
Regardless of bad news about the economy, a certain percentage of the population is making great strides when it comes to building long-term wealth.
If you’re among these individuals who have $100,000 to invest, you can continue growing your wealth in a few ways.
Table of Contents
- Before You Invest $100k, Do These 3 Things
- How to Invest $100k Starting Today
- 1. Invest $100k in Stocks
- 2. Invest $100k in Real Estate
- 3. Buy a Business
- 4. Invest in Gold
- 5. Invest in Alternative Investments
- 6. Open a Solo 401(k)
- 7. Set Up a Trust (or Give Tax-Free Money Now)
- Your Investment Style for Investing $100k
- The Bottom Line on Best Investments for $100,000
- FAQs on Investing $100,000
Before You Invest $100k, Do These 3 Things
$100,000 is a large sum of money no matter how you slice it. And I completely understand the temptation to WANT to invest it. Before you do, knock out these 3 things…
1. Get Your Debt in Check
Debt can be a big roadblock when it comes to investing and building wealth. Before you start investing, it’s important to pay off your debt. This will help you avoid any costly interest payments and allow you to save for your investment goals.
There are a few different ways to pay off your debt. You can create a budget and stick to it, or use a debt consolidation loan to simplify your payments. Whichever method you choose, make sure you are actively working towards eliminating your debt.
Once your debt is paid off, you’ll be able to start investing in your future!
2. Boost Your Emergency Fund
Building your emergency fund is crucial because it will help you maintain your financial stability in the event of an unexpected expense. When you have money saved up specifically for emergencies, you won’t have to resort to using high-interest credit cards or taking out loans to cover the cost.
Instead, you can use the money in your emergency fund to pay for the expense outright and avoid any added interest or fees.
To build your emergency fund, start by setting aside a small amount of money each month until you have saved up enough to cover your expenses. If possible, try to earmark all of your “extra” money—the money you save each month from not eating out, for example—for your emergency fund. That way, you can build your savings quickly and be better prepared for unexpected costs.
3. Track Your Portfolio
Here’s a situation you might be able to relate to. Currently you have accounts like:
- 401k at your current job
- Roth IRA’s for you and your spouse
- 529 college savings plans for your kid
- Old 401k from your first job
- Online broker account with a few stocks
- Savings account at your bank
This is not unordinary. According to a survey by the American Association of Independent Investors (AAII) , 49% of investors have 2-3 investment accounts with 13% having 4-5.
Having so many investment accounts spread out at different financial institutions makes is different to truly know what you have. That’s why it’s crucial to have one secure central place to see your ENTIRE portfolio.
This is a task that can be easily accomplished with the help of technology. There are a number of different investment apps and websites that allow you to track your portfolio, and many of them are free to use.
Our favorite tracking tool is Personal Capital . Personal Capital is a great tracking tool because it allows you to see all of your finances in one place. This makes it easy to track your net worth, budget, and investment portfolio. And the best part it’s completely free!
By tracking your investments regularly, you can keep tabs on how they are performing and make necessary changes if needed. Try Personal Capital for free today!
How to Invest $100k Starting Today
Most know they should invest so their assets can grow and compound over time, but where do you invest that much money? And do you invest it all in one place?
As a financial advisor, I personally suggest diversifying $100,000 across many types of investments that can help you reach your goals. Here are seven ways you can invest $100,000, starting right now.
1. Invest $100k in Stocks
How Much: Invest 40% to 50% of your portfolio
Purpose: Long-term growth
Risk Level: Varies
Investing in the stock market is easily one of the best ways to build long-term wealth. After all, the average stock market return has fallen somewhere between 7% per year and 10% per year depending on the timeline you refer to. Some years bring significantly higher returns.
For example, the Dow Jones Industrial Average brought in a 18.65% return in 2021 in the midst of the post-pandemic recovery. And even though the Dow was down -8.78% last year in 2022, it’s still average 8.7% since 1998. The S&P 500 isn’t too far averaging 10.67% since inception (1957).
How to Get Started: M1 Finance is a robo-advisor that uses computer algorithms to make smart investment decisions on your behalf. With M1 Finance, you just open an account and either build your own “Investing Pies” or you can choose portfolios constructed by professional money managers.
Who It’s Best For: M1 Finance is best for investors who want to invest in the stock market and have some say in what stocks they pick while also leveraging other professional investors.
|M1 Finance Pros
|M1 Finance Cons
|M1 Finance has no trading fees for stocks and ETFs
|Don’t offer mutual funds
|Uses technology to make smart investment decisions on your behalf
|Not completely hands-off investing
|Have a “set it and forget it” option
|Some investing platforms (like Robinhood and Betterment) let you invest in the stock market with no commissions or fees
2. Invest $100k in Real Estate
How Much: Invest 10% to 15% of your portfolio
Purpose: Long-term growth and diversification
Risk Level: Medium
In addition to stock market exposure, you might also want to invest in residential or commercial real estate . You can do this by purchasing properties and becoming a landlord, but you can also invest in real estate with a more “hands-off” approach. This is possible thanks to real estate investment trusts or REITs.
How to Get Started: Fundrise is a platform that makes it easy to invest into real estate without having to own physical property or deal with the grunt work of a landlord.
You can invest in a starter portfolio with Fundrise for as little as $10, and you can add money to your account as often as you want. For accredited investors interested in investing $100,000 (or more) into real estate may be interested in Fundrise’s Premium account level. This account offers more customized portfolio strategies and exclusive access to their Investor Relations team.
Note that, in 2021, Fundrise brought investors an average return of 22.99% and 5.4% for 2022 (through Q3) I can confirm those returns, because my Fundrise account performed almost identically. If you’re looking for another crowdfunding real estate option, consider Realty Mogul .
Who It’s Best For: Fundrise is ideal for investors who want exposure to real estate without having to own physical property.
|Minimum balance of $500 required to get started
|Not a liquid investment; can take months to cash out
|Exceptional returns so far (average return of 22.9% in 2021 and 5.4% for 2022)
|Past results are not a guarantee of future returns
|Only pay 0.15% in annual advisory fees
3. Buy a Business
How Much: Varies
Purpose: Long-term growth
Risk Level: Varies
How It Works: Many experts (including me!) believe the best way to build long-term wealth is through entrepreneurship and owning your own business. After all, you can only earn so much when you work for someone else.
As an entrepreneur, the sky is truly the limit when it comes to bringing in cash. If you can find one process that turns a profit and you can replicate it, you can earn millions of dollars — even while you sleep.
If you don’t believe this can work, I am living proof. I have made millions of dollars with this website alone.
How to Get Started: You can always look into buying a franchise or building a business from scratch. To get started quickly, I suggest looking at Flippa.com to find the best small business ideas on the web.
Flippa is a platform that lets you buy websites that you can use to sell products or services. You can purchase domain names and even full-fledged websites with content, which you can use for affiliate marketing, display ads, and other online marketing strategies.
Who It’s Best For: Earning money online can work for anyone, but especially for people who have the grit and determination that an online business requires. Since start-up costs can be low, this is also a good option for people who want to own a business but don’t have millions to invest right away.
|Buying a Business Pros
|Buying a Business Cons
|Buying a website on Flippa can be an inexpensive way to buy your own business
|No guarantee of success
|Unlimited income potential
|Learning curve to get started
|Run your business online
4. Invest in Gold
How Much: Invest 10% to 15% of your portfolio in alternative investments, including gold
Risk Level: Medium
Many experts suggest investing part of your portfolio into gold or other precious metals as a hedge against inflation . This is mostly based on the fact that, as prices rise, the price of gold tends to rise right along with the cost of living.
How to Get Started: If you want to get started investing in gold, there are plenty of strategies to try. For example, Orion Metal Exchange lets you invest in gold within an IRA. You could also use a vendor like Oxford Gold Group , Lear Capital , or Goldco to buy physical gold. You can even invest in gold via ETFs or cryptocurrency.
Who It’s Best For: Investing in gold is best for anyone who wants a hedge against inflation. Gold is also a good option for your portfolio if you want to invest in assets that operate independently of the stock market.
|Investing in Gold Pros
|Investing in Gold Cons
|Gold tends to hold value (or increase in value) during a recession
|Physical gold can be lost or stolen
|Multiple ways to invest in gold
|Might not increase in value during a robust economy
|Helps diversify your portfolio
5. Invest in Alternative Investments
How much: Varies
Purpose: Diversify from traditional asset classes
Risk Level: Medium
Alternative investments usually have higher risks and returns than traditional investments, such as stocks and bonds. They can include private equity, hedge funds, real estate, venture capital, and natural resources.
How to get started: Yieldstreet is a peer-to-peer lending platform that connects investors with vetted small businesses and real estate projects.
Who It’s Best For: Alternative investments are best for those who want to preserve their capital and are looking for steady, predictable returns.
|Yieldstreet offers access to a variety of different asset types
|Private investments that are often reserved for ultra-wealthy
|Mostly for accredited investors
|Offer short-term and long-term investments
- Access to wide array of alternative asset classes
- Access to ultra-wealthy investments
- Can invest for income or growth
6. Open a Solo 401(k)
How Much: Varies
Purpose: Retirement planning and long-term growth
Risk Level: Varies
If you own your own business, researching all of the different retirement accounts available to you is critical to long-term wealth. One account, called the Solo 401(k) , can be incredibly advantageous. It lets you save significantly more for retirement and reduce your taxable income at the same time.
With a Solo 401(k), small business owners can defer up to 100% of their compensation to a maximum of $22,500 in 2023 (or $30,000 if you’re aged 50 and older). However, you can also contribute up to 25% of compensation on the employer side for a maximum contribution of $66,000 for most people in 2023 (not counting catch-up contributions for those ages 50 and older).
Obviously, saving that much for retirement could position you to retire earlier, retire wealthier, or both. In the meantime, contributions to a Solo 401(k) can be deducted from your taxes in the year you contribute.
How to Get Started: You can open a Solo 401(k) with any online brokerage firm , including options like Betterment, TD Ameritrade, and more.
Who It’s Best For: If you’re self-employed and want to save money for retirement while saving money on taxes, contributing to a Solo 401(k) is a no-brainer.
|Solo 401(k) Pros
|Solo 401(k) Cons
|Contribution limits are higher than traditional retirement accounts
|You cannot have employees (other than a spouse) if you want to use a Solo 401(k)
|Reduce your taxable income, and thus your tax bill
|Solo 401(k) requires more IRS paperwork than other accounts, including the SEP IRA
|Save money for a fruitful retirement
7. Set Up a Trust (or Give Tax-Free Money Now)
How Much: Varies
Purpose: Wealth and estate planning
Risk Level: Low
Setting up a trust can be a smart move if you have $100,000 or more to invest, and want to have a say in how these funds are passed on to your heirs. A trust lets you place your assets in the hands of a trustee who helps distribute your money to your heirs, based on your wishes.
Be aware that you can give a certain amount of cash to your heirs each year without any tax consequences. For 2023, the annual gift exclusion amount increased to $17,000 (according to Kiplingers ).
If you plan to pass money to your heirs and you want them to have cash now for higher education, a home purchase, or business investment, then you can give up to the gift limit without tax penalties on either end.
How to Get Started: You can set up a trust with an estate attorney, but you can also set up one using a platform like LegalZoom.
Who It’s Best For: Giving money away isn’t for everyone. However, investors with considerable assets they will likely outlive should consider how they’ll pass on wealth to their heirs.
|Setting Up a Trust Pros
|Setting Up a Trust Cons
|Create a legal process for your assets once you pass away
|Requires considerable research and planning
|May help your heirs avoid probate
|Cost involved in setting up a trust
|Could help your heirs save on inheritance taxes depending on where you live
Your Investment Style for Investing $100k
Outside of these investment options, I believe most people should also keep 10% to 15% of their portfolio in cash. However, you won’t want to keep your extra money under your mattress! Instead, open a high-yield savings account that lets you earn a decent return on your savings.
Considering the average savings account only returns .30% right now, according to the FDIC , the account you use to store your savings matters more than ever. Sadly this interest rate is a 500% improvement from a year ago! 😂
Beyond having some money set aside for emergencies or a rainy day, also think about your investing style before you invest $100,000 or any other amount. For example, consider how much risk you want to take, how long you can leave your money to grow, and whether you want to invest on your own or get some help from a third-party platform.
If you’re someone who wants to invest independently, then some options to consider include investing in cryptocurrency, investing in gold, or even investing with a Solo 401(k) and hand-selecting the securities in your account.
If you want some help figuring out how to invest your $100,000, on the other hand, then opening an account with Betterment or Fundrise could be a better fit.
The Bottom Line on Best Investments for $100,000
If you have $100,000 burning a hole in your pocket, then you should absolutely invest this money for long-term growth. Since that’s quite a bit of money, however, spread out your investment so you’re not “betting the farm” on a single strategy.
The seven investment options above are my personal recommendations. Keep in mind that other investment strategies might work better if you have a smaller amount to invest, like $100 or $1,000.
No matter what you do, don’t let fear of investing force you onto the sidelines.
Sure, $100,000 is a lot of money, but it could be worth a lot more later on if you invest it today.
FAQs on Investing $100,000
Your best option for investing $100,000 is to spread your money among a variety of different income generating assets in order to minimize your risk. This could include: cash (or cash-equivalents), dividend stocks, real estate, crypto, and businesses. A good starting point would be to invest $30,000 in stocks, $30,000 in bonds, $20,000 in real estate, and $10,000 in cash. Remember to always consult with a financial advisor before making any major investment decisions.
What you invest into matters. Say, for example, you invest in bonds vs stocks .
The ROI in stocks or bonds will vary depending on a number of factors, including the specific stocks or bonds that are purchased, the length of time that the investment is held, and the overall performance of the stock or bond market.
Cited Research Articles
- Vanguard Investors (n.d.) How much should you be saving? Retrieved from https://investor.vanguard.com/investor-resources-education/retirement/savings-how-much-to-save-for-retirement
- Northwestern Mutual (n.d.) PLANNING & PROGRESS STUDY 2022. Retrieved from https://news.northwesternmutual.com/planning-and-progress-study-2022
- FDIC (2022, December 19) National Rates and Rate Caps. Retrieved fromhttps://www.fdic.gov/resources/bankers/national-rates/
- IRS.gov (n.d.) One-Participant 401(k) Plans. Retrieved from https://www.irs.gov/retirement-plans/one-participant-401k-plans
- Kiplinger’s (n.d.) What’s the Gift Tax Exclusion for 2023? Retrieved from https://www.kiplinger.com/taxes/gift-tax-exclusion
- American Association of Independent Investors (n.d.) Retrieved from https://www.aaii.com/latest/article/10341-aaii-survey-how-many-brokerage-accounts-do-you-have-and-why