6 Ways to Invest $100,000 Worth Considering
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Looking to invest $100k? Look no further. Investing that kind of money properly can make it grow exponentially, thanks to the power of compound interest. Today, I’ll share some ideas for investing $100,000 for those looking to get the best return on their money.
How to Invest $100,000
Here are some investment options you might consider as you ponder how to invest that $100,000 you’ve worked so hard to acquire.
1. Real Estate
Depending on where you live, $100,000 could be a nice down payment on a single-family home, a duplex, or a condo, or in some areas, it could be the full purchase price for those items. It could also be a nice down payment for a smaller apartment building in some areas.
Although owning rental properties can take some work, the mostly passive monthly income is a nice bonus, as is your growing wealth portfolio from the appreciation of the property or properties you’ve purchased.
If you’re unsure if rental property management is for you, you can always hire a company to help with that part of your investment.
Suppose you live in an area where housing is expensive, such as New York City or Southern California. In that case, you might consider purchasing an out-of-state rental property in a lower-cost area.
Many investors in expensive housing areas go this route, and it works well for them.
Invest in Raw Land
Another option if you’re interested in getting into the real estate rental market is to consider investing in raw land. This could mean raw land with potential for future development or raw land containing a valuable resource, such as trees.
No matter what your real estate purchase, real estate has a long-term history of steadily increasing in value and building wealth for those investing in it. AcreTrader makes investing in farmland simple.
Invest in Real Estate Via Crowdfunding
If owning and managing rental properties isn’t your deal, you might consider investing in a crowdfunded real estate venture with a platform like Fundrise.
Crowdfunding allows you to invest in real estate with others so that you don’t have to put up all the capital on your own. You and other investors each put up a portion of the capital, and professional real estate investors buy, manage, and maintain the properties.
Crowdfunded real estate investing allows you to help seasoned investors realize their growing real estate ownership dreams while you reap the investment returns with minimal work.
2. Business
If you or someone you know has a banner business idea, this might be the way to turn your $100,000 into a much bigger pile of cash.
Investing in businesses requires due diligence on the potential of said business; however, before laying down any cash, be sure to educate yourself thoroughly on potential wins and losses the business could face, and to research whether there is truly a need for the business idea.
There are many components to starting and running a successful business. Take a cue from business investment experts and analyze any business investment opportunities with a critical eye, keeping your own monetary best interests in mind first as you consider investing in a business.
The business with the greatest potential for success and profit is one that has proven a need for its product or service and has created a solid business plan backed by hard facts.
3. Index Funds
I love index funds. They allow the stock market’s growth history to be true, while still providing the safety net of diversity and generally low fees. Investor Place, for instance, in its review of Vanguard index funds, notes that many Vanguard funds have a 10-year performance rate of 9-11% and higher.
Because index funds generally hold stocks from various proven-performing industries and companies, they have a strong track record and can be a solid choice for investors worldwide. Index funds are often the closest thing you’ll get to a sure bet in the investment world.
Index fund investing has a solid track record of returns, but not all index funds are the same. Researching the specific index funds you’re considering before investing your money is important.
Investment accounts like Ally Invest offer commission-free trading on eligible stocks and ETFs.
4. Blue Chip Stocks
Blue-chip stocks are individual stocks with a long track record of solid performance. Think of long-standing companies that have been around forever and that everyone knows.
Blue-chip stocks are the only area where I’d suggest investing in individual stocks because you’re investing in companies with a 50-, 75-, or even 100+-year history behind them. They’re the products you and billions of others use daily and will likely continue to use for a long time.
Consider this guy’s story as an example of the potential success of blue-chip stock investing. Janitor and part-time gas station attendant Ronald Read didn’t appear wealthy on the outside. However, by the time he reached age 90, he accumulated over $8 million in cash, mostly by living frugally and investing in blue-chip stocks.
When investing in blue-chip stocks, you need to have a brokerage account. If you’re concerned about the fees involved in stock market investing, don’t be. Investors who want an edge can use tools like Stock Rover to screen, research, and track portfolios.
Today, investment companies are realizing the benefits of lowering fees to attract more clients. Investing in blue-chip stocks can be a great way to help your $100k multiply steadily with a calculated amount of risk.
5. Peer-to-Peer Lending
Like other crowdfunding avenues, peer-to-peer lending companies help people realize dreams with the assistance of investors. People might borrow money from a peer-to-peer lending company to pay off debt or to consolidate other loans.
Investors research potential loans and decide how much money to invest based on information such as the borrower’s credit history, debt-to-income ratio, and reason for borrowing.
Investors choose from different grades of notes, A through G, which represent different risk levels. Higher-grade notes, such as those graded A and B, have a lower rate of return but also a lower charge-off rate.
Lower-grade notes, such as those graded D through G, have historically higher rates of return but also higher charge-off rates (i.e., the likelihood of not being repaid).
6. Diversify your money
Speaking of diversification, another great option for investing $100,000 might be to break it up and spread it across several different investment options.
For instance, you might want to put $25k into real estate investing as a down payment on a smaller house or condo if home prices in your area or a nearby area are lower. From there, you could take another $25,000 and invest it in index funds.
Consider taking another share and putting it into a large-cap stock fund, some into an international stock fund, etc. Then take another portion of your $100k and invest in a crowdfunded business venture.
By diversifying how you invest your $100,000, you run even less risk of losing the money and gain more experience in investing as you learn which types of investments suit your investment style and risk tolerance level – and which don’t.
Summary
As you can see, there are multiple options for investing $100,000. It is best to determine your risk tolerance and which of the six options above would work best for you and your family.
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