Updated June 20, 2019

How to Invest $100k

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Investing large sums of money in a savings account or standard CD? That mistake may be costing you. Learn better ways to invest $100K and increase your profits in our guide.

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If you have $100,000 to invest, that's great! With that amount, you have a lot of options open.

Even if you aren't an experienced investor, there are ways to turn it into more without taking big risks.

Before you invest your $100K, make sure you're in a good financial place. Let's assume you already have an emergency fund with 3-6 months worth of expenses.

TIP: If you DON'T have a fully-funded emergency fund, start one right away. You never know when real life events like home repairs or the loss of a job might impact your financial future.

Next, consider any debt you need to eliminate. If you have credit card debt or student loans, use that $100k to pay them off so you're debt-free.

If you're good to go on both, then read on to learn the best ways to invest $100,000.

Where to Invest $100K
Your threshold for risk will help determine where you should invest your $100K.

  • If you want to keep it safe, consider high-yield savings, CDs, treasury bonds, and money market funds.

    While you won't get rich from these, they carry a lower risk of loss than other investment options.

  • If you have average risk tolerance, consider blue chip stocks, index funds, and peer-to-peer lending.

  • If you are willing to take a higher risk (a better option for young investors), try riskier investments like real estate investments, options, futures, and crowdfunding.

Max Out Your Retirement Accounts

With $100,000, you can seriously pad your retirement nest egg and set yourself up for a better future.

If your work offers an employer-sponsored retirement plan (like a 401k), max out your contribution. The maximum 401(k) contribution is $19,500 per year. Another benefit is that your contributions are tax deductible, so you also pay less income tax.

If you also have an IRA (Individual Retirement Account), max that out too. And if you don't have one, open an account. This allows you to save more for retirement and you get further tax benefits. The maximum contribution limit in an IRA is $6,000.

We recommend a Roth IRA. With a Roth IRA, your contributions are made with after-tax dollars, but your earnings grow tax free and you pay no taxes when you withdraw upon retirement.

Invest in Stocks

With smart investments, the stock market can give you the highest returns on your money. The average annual return of the S&P 500 index has been around 8%.

Here are some ways you can invest in stocks:

  • Robo-advisor
    If you're not sure how to invest your money, let a robo-advisor do the work for you. It'll pick investments for you based on your risk tolerance and goals. It also manages your portfolio so you can be completely hands-off.

    Read more to learn if a robo-advisor is right for you.

  • Individual stocks
    Picking your own stocks could give you a better chance at higher returns. But make sure to do your research carefully. It's recommended to have 15-20 stocks for diversification. It's best to pick stocks you can buy and hold for the long term.

    You'll need to open a brokerage account where you can make trades. See our list of the top free stock trading apps.

      Ally Invest

      Get Up to $3,500

      Expires 12/31/2020

      The minimum qualifying deposit to receive a cash bonus is $10,000. Accounts will be reviewed 60 days after account opening to determine the total qualifying deposit. Corresponding cash bonus will be credited to the account within 10 business days. Once the bonus is credited to the account, the bonus and qualifying deposit (minus any trading losses) is not available for withdrawal for 300 days. If the qualifying deposit is withdrawn, the bonus may be revoked.

      Deposit or TransferCash Bonus
      $10,000 - $24,999$50
      $25,000 - $99,999$200
      $100,000 - $249,999$300
      $250,000 - $499,999$600
      $500,000 - $999,999$1,200
      $1,000,000 - $1,999,999$2,500

  • ETFs
    This option is a happy medium between robo and DIY. Exchange traded funds (ETFs) are baskets containing hundreds of stocks. This way, you get instant diversification with one single investment. For example, a S&P 500 ETF invests in the 500 largest companies in America.

    You can buy ETFs with any brokerage. They're traded just like stocks on the open market.

  • Mutual funds
    Mutual funds are similar to ETFs, but they're not listed on the open market. They are actively managed by an investment company, so the operational fee is usually higher.

    You can purchase mutual funds from certain brokerages or directly from mutual fund companies like Vanguard and Fidelity.

Invest in Real Estate

Real estate is a popular way to invest for income, especially if you purchase rental properties and keep them properly maintained and rented.

With $100K, you can purchase a home or make a decent down payment on a multi-unit property. You can offset the mortgage payments with rental income, and gain some income every month.

You Should Know: Real estate can appreciate, in addition to any income you make from renting the property out.

This offers you the possibility of decent cash flow. If push came to shove, you could sell the property and accept the equity as your profits.

If managing real estate isn't your thing, consider real estate crowdfunding. This allows you to pool funds with other investors to purchase real estate. A few popular options include:

How to Invest $100K to Make $1 Million

If you're dream a lot bigger than your current $100K, you aren't alone. There ARE ways to turn that $100K into $1 million - you just have to be patient.

Start by watching your fees. If you aren't careful, brokerages can eat up your profits with their fees.

NOTE: You may think a 1% fee is minimal. If you look at it over the next 30 years, though, the compounded interest you can lose on that "measly" 1% really adds up. In fact, it may take away your chances of that $1 million.

If you have your eye set on that $1 million target, stick to robo-advisors or discount brokers. Both tend to have lower fees than your traditional broker.

You should also keep your investments in the more traditional options, such as blue chip stocks, ETFs, and treasury bonds.

Most importantly, you need a plan and you have to stick to it. Remove the emotion from investing and stick to your goal. In other words, you'll need to ride it out.

If you diversify your portfolio enough, one downturn may be offset by another successful investment, leading you to that $1 million target in a slow and steady fashion.

Best Way to Safely Invest $100K

If you would rather not risk your $100K or you need it in an account you can liquidate quickly, an online bank may be a good option.

    CIT Bank

    CIT Savings Builder - Earn 0.45% APY

    Earn up to 0.45% APY. Here's how it works: Maintain a minimum balance of $25k OR make at least a $100 minimum deposit every month. Member FDIC


    Betterment Cash Reserve - Earn up to 0.40% APY

    • FDIC insurance covering up to $1,000,000 at program banks
    • Access cash in 1-2 business days
    • No minimum balance
    • No fees on balance
    • Unlimited withdrawals

    Chase Savings℠

    • Enjoy a $150 bonus when you open a new Chase Savings℠ account, deposit a total of $10,000 or more in new money within 20 business days, and maintain a $10,000 balance for 90 days
    • Access to 16,000 Chase ATMs and nearly 4,900 branches
    • Link this account to your Chase checking account for Overdraft Protection.
    • Chase Mobile® app - Manage your accounts, deposit checks, transfer money and more -- all from your device.
    • Open your account online now.
    • Available online nationwide except in Alaska, Hawaii and Puerto Rico. For branch locations, visit locator.chase.com.

You may be able to snag higher interest rates by investing in online banks rather than your local bank thanks to the lack of overhead online banks have. A few popular options include:

  • Synchrony Bank: Offering CDs and money market accounts, Synchrony offers higher interest rates for "large deposits."

    Synchrony offers taxable CDs and money market accounts, as well as IRA CDs and money market accounts.

  • Ally Bank: Offering high-yield CDs, money market accounts, and IRA online savings accounts, Ally is an online only bank.

    This allows them to offer slightly higher interest rates than your traditional bank may offer.

Watch Your CD Maturity Dates
If you choose to invest some or all of your money in CDs, make sure you pay close attention to the maturity date. You agree to tie up your money for a specific period with this savings vehicle.

While you may be able to end the CD prematurely, it could cost you as much as 90 days of interest as a penalty.

Other Ways to Invest $100K

Hoping to break away from the traditional mold? Here are a few other ways you can put your $100K to good use:

  • Peer-to-peer lending: If funding commercial real estate transactions doesn't peak your interest, you may like peer-to-peer lending. With this option, you invest in loans for individuals.

    Prosper and Lending Club are two of the more popular choices.

  • Options: If you're comfortable with trading stocks, you can complicate things by trading options.

    Buying and selling puts or calls can leave you with a higher return on your investment than stocks. But be careful - the loss can be equally as large.

      Ally Invest

      Get Up to $3,500

      Expires 12/31/2020

      The minimum qualifying deposit to receive a cash bonus is $10,000. Accounts will be reviewed 60 days after account opening to determine the total qualifying deposit. Corresponding cash bonus will be credited to the account within 10 business days. Once the bonus is credited to the account, the bonus and qualifying deposit (minus any trading losses) is not available for withdrawal for 300 days. If the qualifying deposit is withdrawn, the bonus may be revoked.

      Deposit or TransferCash Bonus
      $10,000 - $24,999$50
      $25,000 - $99,999$200
      $100,000 - $249,999$300
      $250,000 - $499,999$600
      $500,000 - $999,999$1,200
      $1,000,000 - $1,999,999$2,500

  • Cash-value life insurance: Whole life or universal life insurance provides you with the same benefits AND a cash value investment that you can use as you age.

  • Start a business: If you prefer to keep your money out of the market and you have a business idea, the $100K can get you started.

    If you don't have the wherewithal to handle your own company, you can also invest as a silent partner in someone else's business/idea.

    TIP: Consider investing in yourself.

    Whether you go back to college, pay for additional training, or take an unpaid internship while living off the $100,000, there's value in bettering yourself.

Bottom Line

Every investor will chart their own course for investing $100K. Before you invest, do some soul searching:

  • What type of investor are you?
  • What type of risk can you take?
  • Can you stand to lose it all or do you need to be a bit more conservative?

Once you have these answers, you can make investment choices that are right for you.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

More from CreditDonkey:

Invest Money for Beginners

How to Save $100000

How to Trade Options

Are Robo Advisors a Good Idea

Robo advisors make it possible for new investors to start investing. But they come with a fee. Are they worth it? Read on to learn about the pros and cons.
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