How to Invest $100,000 – 15 Best Ways in 2021

1. Real Estate – 5-15% per year (rental income and appreciation)

Real estate is potentially the smartest way to invest your $100,000. With the average U.S. property now costing in the region of $226,000, your $100,000 won’t quite be enough to buy a house outright. However, what you can do is use a crowdfunding platform. You essentially own the property at a percentage proportionate to the amount you want to invest. Even better, you can spread your $100,000 investment across multiple properties to mitigate the risk.

How to invest in real estate with $100,000?

One of the best real estate crowdfunding platforms is that of Property Partner. The platform sources all of the deals on your behalf, subsequently charging a 2% transaction fee for their efforts. You’ll receive your cut of the monthly rental payments (paid into your account every month), and when the property is eventually sold (usually a minimum of 5 years), you’ll receive your investment back at the current market rate. This means you’ll also make money as the value of the property increases.

Step 1: Register with Property Partner

Step 2: Confirm your identity (Upload a copy of your passport/driving license)

Step 3: Browse the many property investment opportunities

Step 4: Enter the amount that you want to invest

Step 5: Deposit funds (debit/credit card is best)

Step 6: Complete your purchase

Step 7: Your share of the monthly rental payments will be paid into your PropertyPartner account

Step 8: When the house is sold, you’ll receive your investment back at the current market value

Pros and cons of investing in real estate

2. U.S. Treasury Bonds – Around 1-2% per year

Much like in the case of real estate, U.S. Treasury bonds are a super-safe investment. In fact, unless the U.S. government ceased to exist, you would never lose your money. When you buy bonds from the U.S. government, you are essentially lending them money. You will receive interest payments for loaning the money out, which usually amounts to 1-2% per year. You can invest in U.S. Treasury bonds from 3 months, all the way up to 100 years. The longer the bond term, the higher the interest yield.

How to buy U.S. Treasury Bonds?

You can buy U.S. Treasury bonds directly from the website of the U.S. Treasury’s Office. The platform allows you to buy bonds from as little as $100. When you receive your annual interest payments, these will be paid directly into the account you create with the U.S. Treasury Office.

Note: You can all-but guarantee that you will not lose money as long as you hold onto the bonds until they mature. If you attempt to cash out early by selling them on the secondary markets, then you could get less than what you paid.

3. Peer-to-Peer Lending – 4-7% per year

Banks have been lending money to consumers and businesses for hundreds of years. However, if you’ve got $100,000 at your disposal, why not consider doing the same thing? You can now do exactly this through peer-to-peer lending platforms. In a nutshell, you lend money directly to third parties in return for higher-than-usual interest rates.

The peer-to-peer platform will perform the necessary credit checks on your behalf, meaning you can view the risk levels before making an investment. Although peer-to-peer lending carries more risk, you do have the options of diversifying across hundreds, if not thousands, of individual loans.

How to invest in peer-to-peer lending?

You’ll want to use a highly established peer-to-peer lending platform like Lending Club. In fact, the firm is recognized as the first regulated platform to offer such a service to U.S. residents. The platform has thousands of customers looking for financing, so you can easily spread your risk.

Step 1: Open an account with LendingClub

Step 2: Answer some questions to ensure you are eligible to lend-out money

Step 3: Verify your identity

Step 4: Browse the many different loans on offer. Each option will have a risk level attached to it and a fixed yield

Step 5: Once you’ve decided which loans you want to back, deposit some funds

Step 6: Complete your investment

Pros and cons of investing in peer-to-peer lending

4. Help Fund Property Developers – 8-12% per year

If you like the sounds of earning interest by lending money out, but have a slightly higher appetite for risk, then you might want to consider loaning capital to property developers. Such developers require financing to build a new property project and in return, pay very high interest. You can do this via a crowdfunding platform that performs the due diligence on your behalf. With annual interest payments averaging 8-12% per year, the loans are medium-to-high risk.

How to invest in property developers?

You’ll need to use a crowdfunding platform that specializes in the financing of property developers. The likes of the Property Crowd does just this, and they perform the required due diligence on the companies that require capital, before being accepted on to the platform.

Step 1: Open an account with the Property Crowd

Step 2: Deposit funds using a debit or credit card

Step 3: Spend some time looking at the different projects that need funding

Step 4: Choose how much you want to invest in your chosen project

Step 5: At the end of the term, withdraw your original investment (and interest payments) back to your bank account

Note: Keep an eye on the health of the domestic real estate market that the respective property developer is building in. The chances of the developer defaulting on the loan will be increased if the local housing market takes a slump.

5. Mutual Funds – Aim for 10%+

If you want to get some exposure to the financial markets, then the safest way to do this is via a mutual fund. By investing your $100,000 into a fund, the institution will manage your investment on your behalf. This means that they’ll perform the required research, and buy and sell the investments as and when they see fit. The best mutual fund managers will aim to make surplus of 10% per year.

How to invest in mutual funds?

Investing your $100,000 into a mutual fund is very straightforward. In fact, you can do this via a reputable stock broker like Hargreaves Lansdown. Even better, by going through a broker, you can diversify your $100,000 across multiple funds. You’ll need to pay an annual maintenance fee of around 0.45%, however, this is good value when you consider that the fund manager will do all of the investing on your behalf.

Step 1: Open an account with Hargreaves Lansdown

Step 2: Deposit funds using a debit or credit card

Step 3: Head over to the funds section and decide which mutual fund you want to invest in

Step 4: Enter the amount you want to buy, and complete the trade

Step 5: You will receive dividends directly into your Hargreaves Lansdown account

Step 6: You can cash out your $100,000 investment at any time

Pros and cons of investing in mutual funds

6. Low-Risk Savings Bonds – 1-3% per year

If you want to put your money somewhere safe, but still earn more than traditional high street banks will pay, then you might want to consider savings bonds. These operate in a similar way to a savings account, however, the interest on offer is higher. You’ll receive monthly or annual interest payments, and then your original investment back at the end of the term.

How to invest in Savings Bonds?

You’ll need to purchase savings bonds directly from a bank or building society. If you want to buy savings bonds from a UK institution, then it’s likely that you’ll be protected by the UK’s FSCS scheme. This means the first £85,000 (about $107,00) invested is protected by the UK government in the event that the institution collapsed. This effectively makes it risk-free.

An example of a good-value savings bond currently available in the UK is that of QIB UK. For just a 1 year term, you’ll get an annual interest yield of 2.05%, which is fully protected by the FSCS protection scheme.

Step 1: Open an account with QIB (UK)

Step 2: As QUB (UK) is a financial institution, you’ll need to verify your identity

Step 3: Decide how many bonds you want to buy, and then transfer the funds across via bank transfer

Step 4: At the end of the 1-year term, you can withdraw your investment (plus interest payments) back to your bank account

Pros and cons of investing in savings bonds

7. Foreign Term Savings Deposits – 8-10% per year

If you like the sounds of savings bonds, but you’re after a higher rate of interest, then it might be worth looking at what foreign banks can offer. Institutions usually label this as ‘term deposits’, however, they operate in exactly the same way as savings bonds.

For example, banks in Georgia will pay you a handsome 9-10% per year if you keep your investment in the country’s domestic currency. Some banks even allow you to take the interest upfront. Terms are usually in the region of 6-24 months. Take note, not only do you have the risk of the financial institution defaulting, but you also need to factor in currency fluctuations.

How to invest in Savings Bonds?

If you want to invest in foreign term deposits, you need to open an account directly with the institution. Some banks allow you to do this remotely without visiting the country. Here’s an overview of how the process works.

Step 1: Go to the institution’s website and open an account

Step 2: You will need to verify your identity, much like you would with a traditional bank

Step 3: Wait approximately 1-2 weeks for your account to be verified

Step 4: Decide which currency you want to hold with the institution (local currency pays the highest rates)

Step 5: Transfer funds to the institution via bank transfer

Step 6: Choose whether you want to receive interest yield upfront (if available)

Step 7: When the bonds mature, transfer the funds back to your nominated bank account

Pros and cons of investing in foreign term savings deposits

8. Robo-advisors – Low-risk strategies aim for 5% per year

Robo-advisors are like virtual financial advisors that cost a fraction of what you would pay with a real-world advisor. The technology is based on machine learning and artificial intelligence, which allows you to make investments without needing to pick the stocks yourself. The risks are much higher than using a mutual fund, as you need to trust the technology. On the other hand, some robo-advisor platforms do not charge any fees.

How to invest in Robo-advisors?

You’ll need to find an established brokerage platform that offers robo-advisor services. One such example is M1 Finance. The platform allows you to build a portfolio of stocks, bonds, and funds, all of which are selected by the robo-advisor – free of charge. You can adjust the settings of the robo-advisor to meet your appetite for risk.

Step 1: Register an account with M1 Finance by providing a range of personal information

Step 2: Answer some questions regarding your financial circumstances (net worth, risk tolerance, etc.)

Step 3: Choose which account type you want (individual, joint brokerage, retirement or trust account)

Step 4: Deposit some funds

Step 5: Set-up your robo-advisor parameters (risk levels, auto-invest, etc)

Step 6: If you like the strategies that the robo-advisor suggests, then choose how much you want to invest

Pros and cons of investing in robo-advisors

9. Index Funds – Up to 10% per year – expect slumps along the way

If you don’t have the confidence or experience in trading individual stocks and shares, why you don’t you consider trading in in the stock markets? Known as index funds, you can now trade the performance of specific stock markets. For example, if you want to trade in the U.S. stock market, you can start by buying into an index fund that tracks the S&P 500. This represents the largest 500 companies listed on the U.S. stock markets.

10. Stocks and Shares – Up to 10% per year

If you have a firm understanding of how stock markets work, and you’re keen to make your own a few shares, then you might want to consider buying and selling stocks and shares. While on the one hand, the risks might be higher than using a mutual fund, however, if you’re a shrewd trader that knows that you’re doing, then you’ll be in full control of what companies to back.

11. Bond Funds – Aim for 3-5% per year

Did you know that financial institutions trade bonds on the secondary marketplace? They buy a full range of government and corporate bonds, and then sell them before they mature with the view of selling them at a premium. This is a highly skilled area of finance, however, you can now join the club by investing in a bond fund. They operate in a similar way to traditional mutual funds, however, instead of investing in stocks and shares, the fund will specialize purely in bonds.

How to invest in mutual funds?

The process of investing in bond funds is the same as a mutual fund. As such, you’ll need to go through a broker like Hargreaves Lansdown, which will allow you to choose the bond funds you want to invest your $100,000 in. You’ll also pay an annual maintenance fee in the region of 0.45%.

Step 1: Open an account with Hargreaves Lansdown

Step 2: Deposit funds using a debit or credit card

Step 3: Head over to the funds section then select bond funds

Step 4: Choose which bond funds you want to invest in

Step 5: Enter the amount you want to buy, and complete the trade

Step 6: The value of your investment will go up or down depending on how the bond fund performs

Step 7: You can cash out your investment whenever you like (early redemption fees could apply)

Pros and cons of investing in bond funds

12. Finance a New Business Startup – Up to 15%

Although we’ve already covered peer-to-peer lending to individuals and real estate developers, the phenomenon also allows you to invest in new business startups. You essentially loan money to new and exciting companies that you believe will make it big. As these startups don’t have much in the form of trading history, the risks are much higher. However, to match the risk, you should expect to charge up to 15% for parting with your money.

How to invest in a new business startup?

You’ll need to use an established crowdfunding platform that specializes in new business startups. One such example is Crowd2Fund, who allows you to invest in newly established UK companies that require financing. You should do some research on the who the company is and what market they are looking to target before making an investment.

Note: Lending money to a company with virtually no trading history is a risky business. However, diversifying is a smart way to reduce your risk. Never invest your entire $100,000 into a single company.

13. Buy a Franchise – Aim for 5–10% per year

If you’re currently sitting on $100,000, then you might want to consider buying a franchise. A franchise is where you open a branch of a successful business that is already established. For example, you could buy a Subway franchise in your local town. Although the fees associated with successful franchises can be hefty, you need to remember that you are investing in a brand that is already established. As such, there is no need to build up a loyal customer base. You’ll also receive support directly from the franchise provider, which is an added bonus.

How to invest in a franchise?

There are literally tens of thousands of business franchises available in the U.S. The fees could range from a few thousand dollars, all the way up to $100,000 plus for an established brand like McDonald’s or KFC. The best option is to browse the many franchise offerings at Franchise Direct.

Note: Unlike investing in the financial markets, buying a franchise is going to require 100% of your time. You need to ask yourself whether you can commit to running a business full-time.

14. Forex Trading – Up to 10% per year

If you have a good understanding of how forex trading works, then you might want to consider trading full-time. A $100,000 starting balance would allow you to nip ultra-small profits, while still minimizing your risk. However, you need to remember that forex trading can be very risky if you don’t have any experience.

15. Pension – 20% tax relief

If you want to invest your $100,000 into your future, then it might be worth playing it safe and placing the cash into a pension pot. If you’re from the UK, the government will give you 20% tax relief on what you put in.

How to invest in a pension?

The easiest way to invest in a pension is to use a third party broker. You can do this easily with Hargreaves Lansdown, and you’ll still get your 20% tax relief. You won’t be able to touch your pension pot until you’re 55, so make sure that you won’t need to cash before this.

Step 1: Open an account with Hargreaves Lansdown

Step 2: Head over to the pension section

Step 3: Decide how much you want to invest (lump sum or regular payments)

Step 4: Leave the money to rest until you retire

Pros and cons of investing in a pension