How to Invest 100k in 2022 [9 Worthy Options]

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If you have disposable income to invest with, there are many investment options to choose from. You can, for example, invest in stocks, bonds, or real estate. But how do you know which option is best for you? This article addresses options of how to invest 100k and provides a list of the most resourceful ways to manage your finances. We also offer tips on making decisions before you invest your money.

How to Invest 100k

If you wish to invest a large sum of money, you should first consider your goals and choose the investment tool that best suits your needs. Consider the following nine advisable options.

401(k)

What is the best way to invest 100k? If your goal is to save for retirement or grow your wealth over time and take advantage of tax breaks, you should invest in a 401(k). A 401(k) allows you to invest money pre-tax, which helps in reducing your taxable income. In addition, many employers offer matching contributions, which can also help grow your savings even quicker.

Traditional IRA

Another way to invest your $100,000 is to put it in a good IRA savings account. Similar to a 401(k), when you invest in a traditional IRA, you can help reduce your taxable income. This type of savings account has the added benefit of allowing you to make tax-deductible contributions, which could even further lower your tax bill.

Roth-IRA

If you’re wondering where to invest 100k, a Roth-IRA is also an opportunity to consider if you don’t qualify for a traditional IRA or are looking for more flexibility with your retirement savings. This individual retirement account offers you tax-free growth (and withdrawals) of your savings, meaning that your 100k could progressively increase, and you won’t be obliged to pay any taxes.

529 Plan

If you’re looking for a smart way to grow your money, invest in a 529 plan. This education savings account offers tax benefits and flexibility. It’s no wonder that more people are taking advantage of these accounts.

If you wish to invest 100k for your child’s education, a 529 plan is probably the best option. The funds in a 529 plan grow tax-free, and withdrawals are also tax-free when used for qualified education expenses.

Stocks

One of the best ways to gradually grow your wealth is to invest in stocks, as they can provide some of the best diversification for your portfolio. No matter what kind of stock you buy (cheap stocks, TAAS stocks), you’ll have an ownership stake in a company, which can prove to be very profitable. As the company grows and becomes more successful, your shares’ value will also increase, which can ultimately lead to significant growth in your investment.

Mutual Funds

If you’re wondering what to do with 100k, you might want to invest in mutual funds. Mutual funds are a type of investment that allows you to pool your money with other investors to buy a portfolio of stocks or bonds. This can be a good option if you’re looking for professional management and diversification and reduce the risk of investing in only one company.

Bonds

Are you looking to invest in returns with lower risks? Bonds are perhaps the best way to invest 100k for income, as they are a type of investment that pays you back over time with interest. When you invest in bonds, you’re lending money to the bond’s issuer, which can be a government or corporation. In return, they pay you interest on your loan.

Savings Accounts

If you’re looking for a safe place to invest your money, a savings account may be a good option. A savings account is a type of bank account that offers interest on your deposited funds, which can help you grow your money gradually. Additionally, savings accounts are FDIC-insured, which means your money is protected in the event of a bank failure.

Real Estate

When you invest in property, you’re purchasing an asset that can lead to significant profits as the value of that property rises. Real estate is the best place to invest 100k for some people, which can be done via a real estate investment company. In addition, real estate can provide you with regular income payments if you choose to rent it out to tenants.

DID YOU KNOW? When you invest, don’t lose all your money to fees, as this is money you’d never be able to invest. Even small amounts of extra costs can affect your investment returns. It’s been calculated that if a millennial investor pays just 1% more in investment fees, they sacrifice around $600k in returns over time.

Should You Invest Independently or via a Third Party?

If you’re wondering how to invest 100k to make $1 million or more, first determine what type of investor you wish to be and what to invest in. This dictates what kinds of services and companies you’d invest in.

Option 1

Invest the money independently by buying stocks, bonds, or mutual funds. This can be a great option if you’re interested in taking a more hands-on approach to what you invest in. But it can also be risky since you’re responsible for all of your own investment decisions.

Option 2

Another option on where to invest 100k right now is to invest with a third-party company, such as a broker or Robo advisors. These companies will invest your money for you and typically charge fees for their services. This can be a good option if you don’t want to take a risk and invest independently and are looking for someone else to manage the details.

  • Robo advisors allow you to invest your money via a hands-off approach. Although they charge fees, they’re a good choice if you don’t wish to invest independently.
  • A brokerage account has the potential to be the best place to invest 100k, enabling you to buy and sell stocks, bonds, and other securities. And if you’re a novice, you can also choose to work with a stock broker who can help you determine which option is best to invest in.

The ultimate decision of which option to invest in depends on your individual goals, preferences, and financial plans. Do your research and calculate the risks before deciding.

Key Takeaways

A list of the best investment options for 100k includes a 401(k), an IRA account, stocks, bonds, and real estate.
Be careful not to lose much money on fees, as this would reflect on the returns of what you invest in.
You can invest your money independently or via a third party using Robo advisors or a brokerage account.
The ultimate decision should be based on your individual goals and calculated risks.

Should You Invest a Lump Sum?

Although investing 100k generally depends on your goals and risk tolerance, it would probably be best if you invest in regular intervals, even if you have the perfect asset allocation. This is especially applicable if you’re looking for short-term investments—one of the best ways to invest money.

If you have a large sum of money to invest, the most significant advantage of spacing out your investment is that you’ll avoid the risk of spending the whole sum on an asset while it has a high price. Even though markets typically increase, some corrections and crashes are inevitable. The idea is to invest your money to protect yourself from such a risk and choose the most prudent way to invest 100k.

Conclusion

There’s no one-size-fits-all solution when searching for ways to invest your money. There are many options to choose from, but your decision should solely depend on your goals and preferences. Whatever you choose, do your research and calculate and understand the possible risks before you invest your money.

FAQ

What to do with 100k savings?

There are many ways to invest your 100k, including investing in retirement funds, such as an IRA, a 401(k), a 529 plan, or you could invest in stocks and bonds or real estate.

How should I invest 100k?

You can choose to invest your 100k in stocks, bonds, or other securities independently. You could also use Robo advisors to help you invest your money, or you can consider a brokerage account professional who will help you determine where to invest your 100k.

How to invest 100k in real estate?

If you’re wondering how to invest 100k, invest in real estate. It’s one of the best investment options, as the value of properties is constantly rising and can provide a regular income if you choose to rent it out.

ABOUT AUTHOR

I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

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