How to invest 100k
If you’re interested in learning how to invest 100k, you’ve come to the right place.
If you happen to have 100k sitting around, there are ways you can invest that 100k to grow your wealth. Again, it depends on your age and goals, but if you’re young and have time to grow your wealth, you may want to learn how to invest 100k.
Below are some of the best ways to invest 100k in order to grow your wealth.
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Before Investing 100k…
For purpose of this article, we’re going to assume that you have no high interest debts like credit card debts, you have an emergency fund with at least six months worth of monthly expenses.
If you do, here’s what to do:
Have an emergency fund.
An emergency fund is a fund created solely for emergencies. Emergencies such as a sudden loss of your job, a major car repair, a major illness, or death in the family, can happen all of the times. If something like that happens, would you have enough money saved to cover these expenses? If the answer is no, then you need to create one.
The amount of money to have in this fund depends on your unique circumstance. But the more you have, the better. Financial experts say to have at least 3 to 6 months of expenses.
Your emergency fund should not be invested in stocks or other risky investments. That is what the 100k is there for–it is there to invest in risky investment for higher returns. Instead, it should be placed in a high yield savings account.
Indeed, High yield savings accounts or money market accounts are a great choice to put your emergency fund because they are safe. The point of having an emergency fund is to have that money available to you when an emergency arises. In other words, you want to make sure that your money is there when you need it.
Pay off your credit card debt
Another one of your top priorities should be before investing your 100k is to pay off any high interest debs, such as credit card debts.
Credit card debts carry the some of the highest interests among other debts. And if you don’t pay them off as quickly as possible, it can take you a while to get out of debt.
Other debts also include payday loans, small personal loans, car loans, etc.
To tackle this debt, the first step is to get a free copy of your credit report. This allows you to know how much debt you have and which debt to tackle first.
It makes investing 100k easier once you pay off your high interest debts.
How to Invest 100k to Build Real Wealth:
Now, let’s take a look at some ideas on how to invest 100k:
1. Where to Invest 100k for Income & Wealth: Invest in Real Estate.
If you’re asking yourself where to invest 100k, then you have come to the right place. One of the best way to invest 100k to build real wealth is through buying rental properties.
It’s well established that investing in rental properties is a proven method for building wealth. In fact several of the world’s millionaires and billionaires build their wealth in real estate.
Other people build their wealth through the businesses that started or through other avenues.
But with real estate, there are several attractions. Whether it is investing in raw land or investing in rental properties, $100,000 is a great sum of money to build your wealth through real estate.
So why do people invest in real estate?
People invest in real estate, because they can build great wealth. One of the main things that makes real estate very attractive is leverage. Real estate investments stand apart from other investments, because you can use other people money to buy your property.
For example, you can borrow 80 percent of the value of the property to buy it. All you need to do is to come up with 20 percent down payment.
Find the right Savings Accounts for you
Whatever your savings goals, the right savings accounts can help you get there faster by offering great features such as higher interest rates or zero fees. If you need some extra help, then work with a financial advisor to work out a game plan for your goals.
What to do with 100k?
100k can be a nice down payment on a multi-unit property. Suppose you purchase a multi-unit investment property for $500,000 and use your $100,000 as a down payment (and borrow the other $400,000 through your mortgage lender).
Let’s suppose that in 3 years your multi-unit investment property appreciates to $600,000. In that case, you’d make a profit of $100,000 on an investment of just 100k. In other words, you’d make a 100 percent return on your investment.
If you don’t want to invest 100k as a down payment on a $500,000 property, you can use that cash to buy properties without a mortgage.
You can easily find single family homes in foreclosure for less than $100,000. You can search for properties in foreclosures or bank owned properties at a discount price at RealtyTrac.com.
Another reason why real estate is a great wealth building investment – besides appreciation – is the ability to earn rental income. When you rent out your investment property, you make profits based on rental income. After you pay taxes, mortgage, insurance and maintenance, you can pocket a nice monthly income.
In sum, there are people who got started in real estate investing with no money. So if you have 100,000 cash, you can do a lot with real estate investing.
2. Best way to invest 100k: Start your own business.
Another best way to invest 100k is to start your own business.
Indeed, 100k is a lot of money to start a small business and be a small business owner. Whether you’re starting a law firm, a consulting firm, a restaurant, a delivery business, a barber shop, a beauty shop, a tutoring service, and so on, invest 100k is likely going to take you there.
But keep in mind that starting a business is very risky and involves a lot of work. So as a small business owner, expect to work 60+ hours a week.
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3. Buy an existing business.
If you don’t want to deal with the headaches that comes with starting a small business, you can also invest 100k by buying an existing business and reap great benefits. However, buying an existing business may not be that safe.
Before you invest your 100k, however, find out why the business is for sale in the first place. Is it not very profitable? Is it in decline. This is important, because you want to make sure, you’re making the right decision.
However, if you have great managerial skills and run the business well, you can turn an otherwise not profitable or risky business to a very profitable one.
4. Invest 100k in someone else’s business.
If you don’t want to be a small business owner, and don’t want to deal with the day to day operations of a business, you may want to invest your 100k in someone else’s business.
However, investing 100k in someone else’s business can be risky. Before you do, make sure you understand the business model, do your research and use your judgment.
Before you invest your hard earned cash, ask for the business plan, check out the management (the people who run the business), if you don’t understand something, ask questions.
5. Other ways to invest 100k: Join a Franchise.
One of the requirements to join a franchise is to somehow have an amount of cash available, which can range anywhere from $10,000 to millions. Here are 100 franchises you can start for less than $100,000.
Owning and running a franchise can be a terrific and lucrative investment. But with all investments, there is risk involved.
So make sure you choose something that you understand and do your due diligence, including reading the company’s disclosure document and talk to current and former franchisees about their experiences.
Just recently, Amazon announced a new business called Amazon Delivery Service Partner. Based on their website, you can start your business with an initial investment as little as $10,000 and make anywhere from $75,000 to $300,000 as annual profits. The program allows entrepreneurs to staff and operate Amazon delivery trucks and deliver packages to its customers.
6. Best Investment for 100k: Invest in dividend paying stocks.
Another best investment for 100k is to invest in a diversified list of dividend stocks. Search for good companies that are stable and growing and that pay dividends.
Stocks like Apple, Microsoft, Tesla, just to name a few are good stocks that have a good history of paying out dividends to their shareholders. Purchase these stocks when they go on sale. If you’re patient and make the right choices, investing in dividend stocks is the best way to grow your wealth.
To invest in stocks, you need to have a brokerage account. I would recommend Ally Invest for $4.99. It’s important because in order to grow your wealth, you need to make sure you keep your trading fees as low as possible.
7. Best way to invest 100k safely: Invest in your own education.
Another best way to invest 100000 is to invest it in your own education. The more educated you are, the better your returns will be. You can go on to get a masters degree or use some of your 100k to learn as much as possible about business, investing, etc.
Investing 100k in yourself is probably the best investment you can make that will make you rich.
8. Where to Invest 100k: Invest in your retirement.
With $100,000, you can invest some of it in your retirement accounts. If your employer provides a 401k plan or a 403b, you should invest in it and take advantage of your employer’s matching funds. Matching funds are a 100% return. Also, contribute to the annual maximum allowed by law, which is currently $18,000.
Once you do that, open a Roth IRA or contribute to your Roth IRA, which is $5,500 per year.
Contributing to the maximum is important because your IRA and 401k accounts are tax-deferred. That means your investment accounts can accumulate interest, and then accumulate interest on interest, without incurring taxes on those gains until you retire. So, your wealth can grow very fast.
In conclusion, whether you want to buy an investment property, start a small business, or invest in stocks, there are plenty of smart ways to invest 100k and grow your wealth.
9. How to Invest 100k for peace of mind?
If you do not want to risk your first 100k, it may make sense to invest it in a safe place. Online banks are good options:
CIT Bank Savings Builder – Up To $300 Cash Bonus
Premier High Yield Savings account
CIT Bank No-Penalty CD. This CD gives you get the security of an 11 month CD with no withdrawal penalty seven days or later after funds have been received. Open an account today!
Indeed you are able to receive some good interest on your money with these online banks.
If you have a small business, open an account with Huntington Bank to take advantage of all these bonuses:
- Enjoy a $750 bonus when you an Unlimited PLUS Business Banking Checking Account. Deposit at least $20,000 within the first 60 days. Then, they will deposit $750 into your account after it’s been open for 90 days.
- Earn a $400 bonus when you open an Unlimited Business Banking Checking Account and earn a $400 bonus. Deposit at least $5,000 within the first 60 days. Then, they will deposit $400 into your account after it’s been open for 90 days.
- Access over 1400 ATM and over 800 branches across the United States.
- Apply online in minutes. Open your account online now.
- Huntington Bank mobile app – manage your accounts, deposit checks, transfer money and more — all from your device.
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To recap, some ideas on how to invest 100k include:
- Invest in a 401k or IRA
- Start a small business
- Invest in someone else’s business
- Buy an existing business
- Invest in yourself
- Join a franchise
- Invest in stocks
- Invest in real estate
Related articles on how to invest 100k:
While working on investing 100k, here’s what you can do in the meantime:
Start a blog.
If you’re interested in earning passive income, then you need to create your own blog. It’s one of the best ways to make money while you sleep.
Starting a website with Bluehost takes less than 15 minutes and hardly costs anything. And there are several ways to monetize your website.
Read our step-by-step guide on how to start a successful blog in 15 minutes. It’s one of the best passive income streams you can have.
Second, If you’re thinking of buying a house, estimate how much you may be able to borrow. Get pre-qualified.
Third, maintain a good credit score.
A good credit score of 730 means that not only will you able to get qualified for mortgage loan, it also means you’ll get qualified for a better interest rate. And being able to get a better interest rate means that you will have lower monthly mortgage payments. This, in turn, means that you’ll save thousands of dollars on interests.
Work with the Right Financial Advisor
You can talk to a financial advisor who can review your finances and help you save 100k (whether you need it to pay off debt, to invest, to buy a house, or plan for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.
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