Maybe you’ve had a windfall of cash recently and you’re wondering how to put your money to work. Or perhaps you’ve been investing for several years but are looking for ideas to diversify your portfolio.

Whatever the case, figuring out how to invest $100,000 is a massive decision. This amount of money could be the start of your retirement nest egg, or how you save for the house of your dreams.

And the great news is there are plenty of ways to invest $100k that you can explore. Plus, different ideas cater to different styles of investors, so there’s something for everyone.

Factors To Consider Before Investing $100,000

Before we jump into ideas for investing $100k, it’s important to consider a few factors relating to your goals, investing timeline, and current financial situation.

Investing Goals & Risk Tolerance

It doesn’t matter if you’re investing $100,000 or $1 million; it’s always important to know what type of investor you are and what your overall goals are. Are you investing for retirement, or are you putting money to work that’s going to be the downpayment on a house one day? Or perhaps you’re interested in living off dividend income and are pursuing financial independence.

It’s also important to consider your risk tolerance when choosing investments. More conservative investors typically prefer fixed-income investments or investments with lower returns but less volatility. In contrast, if you have a higher risk tolerance, volatility might not be as much of a concern.

Your Investing Timeframe

With a longer investing timeframe, you can typically afford to take slightly more risks because in the long run, compound interest and time should work in your favor. This is why many young investors invest in assets like growth stocks and ETFs that can deliver high returns.

But if you’re investing $100k and need the money in a few years for a major purchase, you probably want a less-risky investment. This way, you reduce the risk that you end up losing money on your principal when you actually need the money down the line.

Outstanding Debts

If you’re tackling debt, it might be better to put your $100,000 to work fighting that first before investing. This is especially true if you have debts like credit card bills or other high-interest debt that’s piling up.

For debts that aren’t so pressing, it’s a bit of a trickier decision. For example, some people choose to pay off their mortgage before investing, but in most cases, investing money while slowly paying off your mortgage makes more sense in the long run because your returns can outweigh the extra interest you pay.

Passive vs. Active Investing

One final factor to consider when investing $100,000 is if you want to be a passive or active investor. If you don’t have time or interest in keeping up with market news and trends, passive investing is a better choice. But if you enjoy reading about new companies, sectors, and opportunities, you might enjoy taking a more active role in picking your own investments.

The Best Ways To Invest $100K Right Now

Once you determine your goals, timeframe, and risk tolerance, you’re ready to start investing. Here are some of our favorite ideas for investing $100,000.

1. Exchange-Traded Funds

Exchange-traded funds (ETFs) are one popular way to invest $100,000 because they let investors easily diversify their portfolios.

ETFs are similar to mutual funds but trade like stocks. Typically, ETFs track an exchange or asset class. For example, you can invest in ETFs that focus on energy, healthcare, or tech stocks. You can also find ETFs like the Grayscale Bitcoin Trust that invests in Bitcoin.

Diversification aside, investors also like ETFs because they generally have low fees. This is because they’re passively managed funds unlike mutual funds which are actively managed. Plus, any top online stock broker offers commission-free ETF trading on thousands of ETFs these days.

The barrier to entry is often low for investing in ETFs, so setting up recurring investments is easy. Overall, ETFs are one of the most popular investing strategies for hands-off investors, and you can certainly put a portion of your $100,000 into various ETFs.

2. Use a Robo-Advisor

In recent years, robo-advisors have become incredibly popular for passive investors. These low-fee investing platforms use algorithms to build you a portfolio that matches your goals and risk tolerance. So, instead of paying a financial planner hefty fees for a personal investing strategy, you can get something similar through a robo-advisor.

As for what you’re investing in, most robo-advisors stick with portfolios of low-cost ETFs. For more conservative investors, robo-advisors can also throw in fixed-income investments like bonds to lower volatility.

Some of the most popular robo-advisors on the market include:

• Betterment: Offers a variety of portfolios, including ESG and SRI portfolios, for you to invest in. You pay 0.25% in annual fees on portfolios under $100,000. For larger portfolios, you pay 0.40% annually but also get access to human advisors. >>> Read our Betterment review for all the details.
• Wealthfront: Another popular robo-advisor that gives you more customization options over the ETFs in your portfolio. Wealthfront charges 0.25% per year like Betterment’s starting plan. >>> Read our Wealthfront review for all the details.
• M1: A hybrid robo-advisor that lets you pick your own stocks and ETFs or use pre-built M1 portfolios, known as Pies. You don’t pay any management fees which is one major selling point. >>> Read our M1 review for all the details.
• SoFi: Another fee-free robo-advisor service that’s also part of SoFi’s ecosystem, which includes financial products like loans, active investing accounts, and a rewards credit card. >>> Read our SoFi Automated Investing review for all the details.

Paying 0.25% to 0.40% for a $100,000 portfolio is only $250 to $400 per year in fees; not bad for a completely passive investing solution. And leading robo-advisors also provide perks like automatic rebalancing and tax-loss harvesting at no extra cost.

3. Real Estate Crowdfunding

In some markets, a $100,000 investment is enough for a down payment on a rental property. But if you don’t want to take on a mortgage or landlord responsibilities, this real estate investing strategy isn’t a good fit.

However, with real estate crowdfunding sites, you can invest in income-generating real estate without the responsibilities of being a landlord. Crowdfunding sites pool money together from investors and invest in commercial and residential real estate; think office buildings and multi family homes. From there, shareholders generally earn quarterly or annual dividends from rental income and can also earn from property appreciation.

Different crowdfunding sites have various minimum investment requirements, liquidation rules, and focuses. But as a whole, this strategy lets you add real estate to your portfolio without having to manage properties yourself.

We like Fundrise for beginner and experienced investors alike since it has low fees and a variety of funds you can invest in. It also pays quarterly dividends, and you can sell shares without paying penalties if you hold them for five years. CrowdStreet and RealtyMogul focus more on commercial real estate opportunities but are also excellent options for investing $100,000.

4. Individual Stocks

Another common strategy for investing $100,000 is to simply invest in stocks. This could mean investing in a portfolio of 10 to 25 companies you believe in and buy and hold for the long run. Alternatively, it could mean investing in a broader range of companies and regularly buying and selling off different companies.

There’s no cookie-cutter solution for how to invest in stocks. Some investors specialize in one or two sectors, like tech or healthcare, so they can gain a deeper understanding of the players in those spaces. In contrast, many investors are value investors and simply look for quality companies they believe are undervalued and invest in them for the long term. Finally, some investors follow trends more closely. This could involve investing metaverse stocks, or companies like Tesla that are seemingly always in the news.

Whatever investing style you develop, the most important thing is to actually research and understand the companies you’re investing in.

Actually placing trades is very simple. Like ETFs, pretty much any online stock broker or trading app offers commission-free trading nowadays.

Again, actively researching the companies you’re considering as investments is important. After all, you want to be an informed investor, not just someone who follows social media hype to pick stocks.

If you need a helping hand, stock picking services like The Motley Fool are an excellent starting point. Its Stock Advisor service delivers high-conviction stock picks every month plus a wealth of educational resources to help make members better investors.

5. Alternative Investments

If you’re investing $100,000, you might want to diversify a portion of your portfolio with alternative investments instead of traditional asset classes like stocks and ETFs.

Investors gravitate towards alternative investments because they can outperform the market in certain cases. Plus, alternative assets often provide downside protection since they don’t always correlate strongly with market movements.

Examples of popular alternative assets and how to invest in them include:

• Artwork: Companies like Masterworks let you invest in shares of artwork starting with $20.
• Farmland: Buy shares of income-generating farmland with companies like AcreTrader and FarmTogether.
• Wine: Invest in shares of fine wine with companies like Vinovest and Vint.
• Startups: Companies like OurCrowd let accredited investors buy into promising startups from around the world.
• Small Businesses: Help support small U.S. businesses by investing with platforms like Mainvest.

You can also explore alternative asset investing platforms like Yieldstreet that support numerous asset classes. Just consider the risk factor here since alternative investments can be more illiquid and have higher risks depending on the platform you’re investing with.

6. Fixed-Income Investments

If you have a short investing timeframe or are more risk averse, you can always consider fixed-income investments for a portion of your $100,000 investment.

With fixed-income investment, you typically get way less risk but lower returns than investing in stocks and ETFs. But if you need your money in a few years or don’t like dealing with volatility, it can be a smart move.

Examples of popular fixed-income investments include:

The main risk to watch out for with fixed-income investments is inflation. After all, if you’re only earning 1.50% with a high-yield savings account but the inflation rate is 4%, you’re not really growing your wealth.

7. Cryptocurrency

Another alternative asset class you can consider for investing $100k is cryptocurrency. And you certainly have a lot of options to get started.

For example, there are dozens of popular cryptocurrency exchanges like Coinbase and Gemini where you can invest in dozens of popular coins. Many investors start by adding the two main players, Bitcoin and Ethereum, before dabbling in other altcoins of interest.

Crypto exchanges are just the tip of the iceberg. You can also explore crypto savings accounts from companies like Nexo and BlockFi that pay you interest on your crypto. This is a popular way to create a new passive income stream, and finding APYs of 10% to 15% isn’t uncommon.

Finally, you can explore other decentralized finance (DeFi) opportunities like staking cryptocurrency. This involves locking up crypto similarly to depositing it in a savings account. Your crypto is put to work to validate blockchain transactions, and you earn passive crypto rewards in exchange.

Just note that investing in assets like cryptocurrencies or NFTs can be incredibly risky and volatile. This is why many investors diversify their portfolio with a small amount of crypto but don’t go all-in.

8. Retirement Accounts

One final option for investing $100,000 is to start maxing out your retriement accounts to take advantage of potential tax benefits.

If your employer offers a 401(k), this is an excellent place to start, especially if there’s company matching. Your investing options can be a bit more limited inside this account type, but contributions are done on a pre-tax basis, so you can lower your taxable income for a given year. And you can also use 401(k) analyzers like Blooom to make sure you’re not overpaying on fees.

Investing in a Traditional or Roth IRA is also an effective way to invest for retirement while gaining tax benefits. You also have more investing freedom in these account types compared to a 401(k). And you can also open a self-directed IRA with companies like Alto or Rocket Dollar and invest in alternative asset classes if you want more than stocks and ETFs.

Bottom Line

At the end of the day, there are so many ways to invest $100k that you can explore. And with that amount of starting capital, you have the flexibility to diversify across several investments, so you don’t have to put all your eggs in one basket.

However, as mentioned, it’s important to know what type of investor you are. Outline your goals, determine your risk tolerance, and then do your research! Investing can seem intimidating, especially with large sums of money. But as an informed investor, there’s no reason why you can’t invest $100,000 and begin growing your net worth for decades to come.