Skip to Content

7 Ways to Invest $100k [COMPLETE BEGINNER'S GUIDE]

7 Ways to Invest $100k [COMPLETE BEGINNER'S GUIDE]

Investing is becoming incredibly popular these days, particularly with inflation growing and depleting people's savings of its buying power. However, investment is a very wide term that can encompass a lot of different things, and those who are unfamiliar with it or otherwise new to investments may find it to be relatively intimidating.

The overall best ways to invest $100k are going to be an investment in the stock market, investing in some form of real estate, bonds & funds, money market accounts, money market funds, and cash management accounts. The best ones for you will depend on your risk tolerance.

When you've reached an initial milestone of saving up $100k for a large investment, there are a lot of things to consider, and one of the most important is the risk involved. Additionally, there are factors to consider, are the timeframe you want for returns and the level of return you are looking for. In general, the potential for return will increase with the amount of risk you take, though this isn't always the case. We're going to take a good look at what the best investments are for someone with $100k and the details of each.

saving money womanBest Way To Invest 100k Safely

If you have $100k and want to invest it safely, that is, to invest it with the lowest risk potential, there are several ways to do that. One of the safest ways to invest your $100k is to put it into a Certificate of Deposit, or several of them. These are also known as CDs, and they are a long-term deposit method that guarantees you a particular return in a particular amount of time. Some CDs can be obtained for as little as six months, while you can also get a CD for 1, 3, 5, or even 10 years. Generally speaking, the potential return will increase with the length of the deposit, but you will want to make sure you won't need that additional liquidity since your initial deposit could face significant penalties for an early withdrawal.

Another incredibly low-risk method for investment is to buy bonds. Bonds are a financial instrument that allows you to invest in a large entity, frequently a government or large central bank. Bonds are debt-based security, meaning you are investing in an opportunity to loan your funds to a larger entity, in exchange for repayment over time, with interest. The good thing about bonds is that not only do they have incredibly low risk, but they also provide interest while they're being held. This means you can not only invest your $100k, but you can turn it into a steady stream of effortless income. The downside to both CDs and bonds is that they are often coupled with the interest rates set by the Federal Reserve, meaning as the national standard interest rate changes, you stand to gain or lose potential income or returns.

Real estate is another highly lucrative and relatively low-risk investment. You may be able to invest in an entire property for $100k, or you may be able to buy significant shares or investment in a REIT or real estate investment trust. While real estate may be lower risk than many other investment types, it is also one of the least liquid investments, and those who invest in real estate tend to hold their investments for a very long time. This means they can generate income for you for a long time, but they will also usually require some sort of work or effort on your end to maintain them and keep that income flowing. An exception to this is a REIT.

Best Way To Invest 100k Short Term

If you have $100k to invest, but you don't want to tie it up for ten years at a time or subject it to low liquidity, you are probably looking for a short-term investment opportunity. The general time frame that investments can be considered "short-term" is when you are investing for five years or less. This is often used as a way for investors to grow their capital and generate a return while preparing for other, higher-risk, or longer-term investments. In many ways, short-term investments are considered less risky than many other types of investment, though this also means you may not get the massive gains that could be obtained with other methods. Common short-term investments are a high-yield savings account, money market account, money market funds, cash management account, or short-term corporate bonds.

High-Yield Savings Accounts

You can frequently open a high-yield savings account at your local bank or credit union, and while they only offer interest rates that barely compete with inflation, they will still provide a safe and insured account to stash your cash. You'll need to shop around to find the best HYSAs, but in most cases, you'll be looking for interest rates above 1.5%-2%. Otherwise, you won't be beating inflationary decay. Additionally, be sure that the organization that holds your account is FDIC insured so that if anything goes wrong, your money is insured for up to $250k.

Money Market Accounts

Money market accounts are similar to savings accounts and often provide a much higher interest rate than savings accounts or even HYSAs. They also are FDIC insured, so you can rest easy so that your money is safe. Depending on where you open your money market account, however, you may be required to meet minimum deposit amounts, which you probably meet with $100k, though it's not a guarantee. One of the drawbacks to a money market account is that you will be limited on the number of transactions that you can make in a given month so that the account can still satisfy federal legal requirements.

Money Market Funds

Money market funds are used as low-risk investments for investors that have a more conservative risk profile. They are ideal for investors that are more concerned with retaining the security of their principal investment amount. These funds are highly liquid, so if you need to invest your $100k while still having easy access to it for emergencies, a money market fund may be for you. The drawback to money market funds, however, is that the minimum deposit amounts tend to be much higher than other funds, depending on where you're investing. Some may be as high as $1M.

They also are not insured by the FDIC but offer much higher interest than money market accounts. You can invest in one of four common money market funds. There are treasury funds, which will invest in bills and bonds from the US Treasury. There are Prime Funds, which invest in securities that aren't tied to the treasury, like corporations and government-sponsored organizations. There are government funds, which are funds that invest more than 99% of their assets into pure cash, US Treasury securities, and repurchase agreements. Finally, there are tax-exempt funds, which invest in municipal bond notes for entities that are unaffected by federal income or state taxes, but generally have lower returns.

Cash Management Accounts

If you are looking to invest your $100k into an account that has some of the best features of investment, checking, and savings accounts, a cash management account may be what you're looking for. You can find these in your brokerage accounts and other tax-advantaged accounts generally offered through large online brokers. You get the ability to manage all of your funds easily and in one location, and since you can also link your investments to your cash management account, you can enjoy a large degree of flexibility. They can even be used to pay your everyday bills while giving you a much larger interest rate than other similar accounts.

growing money waterShort-Term Corporate Bonds

Bonds are a way to invest in a corporation that needs them. They will issue corporate bonds when they need funding for a new project, expansion, or initiative, and people will buy those bonds and invest in those companies. Bonds are considered very low risk, and since they pay interest at regular intervals, such as monthly, quarterly, or bi-annually, they can provide residual income throughout the year. They are also a highly liquid investment, so your $100k won't be locked up and inaccessible.

Best Way To Invest 100k When Retiring

When retiring, your risk should be as low as possible; this means being highly diversified and making your portfolio as resilient as possible. A mix of managed ETFs, index funds, dividend funds, and bonds is a great way to make sure your money keeps working for you, even though you're approaching retirement or potentially already retired.

Knowing The Best Ways To Invest $100k Can Help Keep Your Capital Safe While It Grows

There are many ways to invest $100k, and knowing what the leading ways are as well as the risk that goes along with them can help keep your investment as safe as possible. Be sure you understand your personal risk tolerance before investing, and if you have detailed questions, contact a financial advisor.