7 Best Ways to Invest $100k for Maximum Returns

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Contributor, Benzinga
July 16, 2023

If you’ve already saved up $100,000 as a lump sum, you’re on your way to strong retirement savings. But keeping that money in a low-interest bank account means you may lose spending power to inflation each year. It’s not uncommon for people with $100,000 to have several retirement accounts, savings accounts and 529 accounts for college savings. There is no single best way to invest $100,000. Instead, read on for strategies you can use to create the best ways to invest $100,000 for your financial situation and long-term goals. 

Top Ways to Invest $100,000

Investing refers to the act of allocating money or resources with the expectation of generating a profit or attempting to achieve a specific financial goal over time. When investing, you’ll commit funds to various assets, such as stocks, bonds, real estate, mutual funds or businesses, with the goal of earning a return on the invested capital. 

The primary purpose of investing is to grow wealth and increase the value of the invested funds. This aim can be achieved through various investment strategies, including capital appreciation, income generation from dividends or rental income or both. 

All investments come with risk, while certain investments have greater risk. A diversified investment portfolio balances risk across asset classes and investment types to improve overall portfolio performance. You can invest through a brokerage account, individual retirement account, 401(k) or other investment vehicles. 

You could take that $100,000 and build long-term wealth with the investment opportunities below. Without any additional funds, at an average of 7% return, you could have over $380,000 in 20 years. If you can add $1,000 a month, that number could increase to nearly $900,000. 

1. Mutual Funds and ETFs

Mutual funds pool money from multiple investors to invest in a diversified portfolio managed by professionals. Exchange-traded funds (ETFs) are similar to mutual funds but trade on stock exchanges. They offer diversification, flexibility and lower expenses. Look for ETFs or mutual funds that align with your investment goals, such as sector-specific ETFs or mutual funds focused on emerging markets. 

Consider ETFs or mutual funds with a strong track record, low fees and an investing strategy aligned with your investment goals. The advantages of ETFs or mutual funds are built-in diversification and, in the case of mutual funds, professional management. 

Major mutual funds include the Vanguard Total Stock Market Index Fund Institutional Plus, Vanguard 500 Index Fund Admiral and Fidelity 500 Index Fund. Examples of ETFs include Grayscale Bitcoin Trust, US Global Jets ETF, iShares US Home Construction ETF (ITB), VanEck Oil Services ETF and SPDR S&P Metals and Mining ETF. This list of mutual funds functions as an example rather than a recommendation to buy a specific fund.

With ETFs, one of the most reliable and popular options is index funds that attempt to track the performance of a single market index. An index fund that tracks the S&P 500 index, which is made up of the 500 largest publicly traded American companies. You can easily and inexpensively invest in a wide range of companies. 

Financial advisers suggest allocating 40% to 50% of your total invested portfolio in stocks, including mutual funds and ETFs. You could consider investing up to 70% in stocks, mutual funds and ETFs for a more aggressive and risky portfolio. 

2. Individual Company Stocks

Investing in individual stocks can offer potentially high returns but have higher risks. The advantages are the possible major growth, while the disadvantages are the possibility of significant loss in invested value. 

Research and select companies or sectors you believe in and consider a diversified portfolio to spread the risk. Consider investing in ETFs, index funds and mutual funds to diversify stock investments. While you can invest 40% to 70% of your total portfolio in stocks, this should be spread across many stocks in different market sectors to reduce risk. 

For a more conservative approach, you can also invest in blue chip stocks, which are stocks of large, well-established companies with a strong financial track record.  Major blue chip stocks include Alphabet (Google), Amazon, Apple, Bank of America, Coca-Cola and Microsoft. Learn more about investing in stocks

3. Real Estate

Real estate investing is the process of putting money into buying, selling, renting or managing properties. It can be lucrative whether you choose to invest through direct ownership, real estate investment trusts (REITs) or real estate crowdfunding platforms. Real estate has a track record of stable historical returns and different risk factors for volatility than other asset classes like stocks, offering a diversified portfolio allocation option.

If purchasing a property directly, evaluate the potential for rental income, property appreciation and associated costs. Research market performance to create a long-term financial solution. 

REITs and real estate crowdfunding allow you to invest a small amount in real estate passively. Consider investing 10% to 15% of your total portfolio in real estate, either through purchasing properties, REITs or real estate crowdfunding.  

4. Bonds

Bonds are debt securities issued by governments, municipalities or corporations. They offer fixed interest payments over a specified period. Consider Treasury, municipal or corporate bonds based on your risk tolerance and desired income stream. Bonds offer stable returns and low risk, diversifying an investment portfolio and providing added security. 

You could plan to invest 10% to 20% of your portfolio in bonds or across alternative asset classes like gold, silver or coins. 

5. Savings Accounts, Money Market Accounts and Certificates of Deposits

Consider savings accounts, money market accounts or certificates of deposits (CDs) for an emergency fund, usually holding three to six months of expenses. A high-yield savings account offers the greatest liquidity while offering interest rates of 3% to 5%. 

A money market account is an interest-bearing deposit account offered by banks and credit unions. It is designed to provide a higher interest rate than a regular savings account while offering some of the benefits of a checking account, such as easier access to funds through a debit card or checks. 

CDs are fixed-term financial products from banks and credit unions. They are a type of time deposit where you agree to keep your money deposited for a specific period, known as the maturity period, in exchange for earning interest on the deposited funds. At maturity, you gain access to the principal. 

Savings accounts, money market accounts and CDs are Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) insured up to $250,000 per account holder, offering a secure location to store funds. 

6. Retirement Accounts (IRAs)

Individual retirement accounts (IRAs) are a type of tax-advantaged investing account to include in your retirement plan. The pros are long-term tax-free growth. The cons are potential penalties for early withdrawals. 

With a traditional IRA, you'll deposit funds into the account before paying taxes, reducing your annual income tax liability. Then, the funds will grow tax-free until you withdraw them after age 59 ½. Remember that you'll have to pay a 10% penalty plus applicable income tax if you withdraw funds before that age.

With a Roth IRA, you'll deposit after-tax dollars into the account, but then they grow tax-free. You don't have to pay taxes on withdrawal and aren't required to take minimum disbursements. You can also withdraw the principal before age 59 ½ penalty-free. 

As of 2023, according to the IRS, you can contribute a maximum of $6,500 or $7,500 if you're age 50 or older. Once you contribute the funds, you can invest them in any of the options above, including index funds, mutual funds, ETFs or REITs.

There are no income limits for a traditional IRA. For a Roth IRA, you can only contribute if your adjusted gross income is under $153,000 or $228,000 in 2023 if you file taxes jointly with your spouse. 

7. Peer-To-Peer Lending

Peer-to-peer lending (P2P) involves individuals directly borrowing from other individuals. You can participate in P2P lending platforms to potentially earn higher interest rates than cash savings. P2P platforms match lenders with borrowers. However, the default rates for P2P loans are much higher than traditional loans, which means the risk of losing the investment is also higher. 

Due to the high-risk nature of P2P lending, it may be wise to invest a small percentage of your portfolio (less than 5%) in these lending platforms. Also, consider other alternative investments

What You Should Consider Before Investing $100,000

If you're building an investment plan for $100,000, you should assess your risk tolerance and investment methods. Here's what you should consider before investing. 

Determine What Kind of Investor You Are

There are different types of investment. You could invest in a mutual fund and allow someone else to manage your funds for you, or you could consult a financial planner to create an investment strategy. Or, you might be a do-it-yourself investor wanting to research and build your strategy. You could also opt to get the help of a robo-adviser to create a personalized investment plan. 

Assess Your Risk Tolerance

It's essential to assess your risk tolerance before investing $100,000. Risk tolerance encompasses how much you're willing to risk losing and your emotional tolerance to market downturns. Evaluate your income stability, financial resources and other savings to understand the risk you're willing to take.

Generally, having a higher income, greater savings or strong financial security means you can take on greater risk. A risk profile requires risk mitigation strategies, including diversification and holding investments for the long term. 

Pay Off Debt

If you're carrying debt, including credit card debt, auto loans, student loans or a mortgage, you can also pay off debt. Prioritize high-interest debt like credit card debt and then consider paying off other debt before investing $100,000.

Save for an Emergency Fund

Having an emergency fund with three to six months' worth of expenses is essential. If you have a job in a more senior position or a limited market where it can take longer to find a new position, consider keeping a larger emergency fund with up to one year of expenses.

Diversify Your Portfolio

Avoid investing $100,000 in any one investment. It's essential to diversify your portfolio across asset classes and investment types. Consider stock, bonds, REITs, mutual funds, ETFs, index funds and savings to build a personalized investment strategy for $100,000. 

Building a Customized Investment Strategy

Investing $100,000 is an excellent opportunity, but it can come with significant risks depending on your investment strategies. You can speak with a financial adviser, educate yourself on investment strategies and research individual investments. To minimize risk, invest across asset classes and diversify within assets. Don't put all your money in a single investment. Learn, research and diversity while holding for the long-term to potentially grow your wealth.

Frequently Asked Questions


What are some tax implications of investing $100,000?


You will need to pay applicable income tax on earnings from $100,000. This can include personal income tax and capital gains tax. Speak with a CPA or tax expert to understand your individual tax obligations.


What is the average return on investment for different investment options?


Average annual returns range from 3% to 15%. However, no investment guarantees returns. The average yearly return of the S&P 500 over the last 70 years has been 11.28%. For REITs, the average return over the last 50 years has been 11.9%.


How can you minimize potential losses when investing $100,000?


By diversifying investments and asset classes, you can minimize potential losses when investing $100,000. Research historical returns on investment opportunities and analyze financial performance. However, remember that past performance doesn’t guarantee future success. You can also speak with financial advisers or use a robo-adviser to create your investment portfolio.

Alison Plaut

About Alison Plaut

Alison Kimberly is a freelance content writer with a Sustainable MBA, uniquely qualified to help individuals and businesses achieve the triple bottom line of environmental, social, and financial profitability. She has been writing for various non-profit organizations for 15+ years. When not writing, you will find her promoting education and meditation in the developing world, or hiking and enjoying nature.