How to Invest $100,000 – 15 Best Ways in 2021
Do you currently have $100,000 in the bank that you would like to invest, but not too sure where to start? The key thing to remember is that leaving the money in the bank is going to earn you very little interest. In fact, with most major banks now paying less than 1% per year in interest, you’d actually be losing money if you take inflation in to account.
Alternatively, by making some really smart investments, you can grow your money a lot faster.
Here we present to you 15 smart ways to invest $100,000 in 2019. We’ll explain how each investment works, how much you’re likely to make, and how you can make an investment today.
Step 1: Register on the U.S. Treasury Office website
Step 2: Verify your identity
Step 3: Choose the length of the bonds (maximum of 10 years is best)
Step 4: Pay for your bonds
Step 5: When the bonds expire, you'll receive your original investment, plus interest payments. You can then withdraw the funds to your bank account
Pros and cons of investing in U.S. Treasury Bonds
- Super safe investment
- Always get paid on time
- Choose how long you want to invest
- Easy to buy
- No fees or commissions
- Interest payments are low
- If you try to sell the bonds on the secondary market, you could lose money
Pros and cons of investing in property developers
- High-interest payments of between 8-12% per year
- Minimize risk by backing multiple loans
- A good way of investing in the real estate space on a short-term basis
- If the real estate market takes a slump, the developer could default on the loan
Step 1: Open an account with Crowd2Fund
Step 2: Deposit some funds by using a debit/credit card
Step 3: Take some time to scroll through the many different small businesses that require help with funding
Step 4: Choose how much you want to invest (minimum is £1000, so USD equivalent)
Step 5: Confirm the investment
Pros and cons of investing in small business startups
- High annual returns of up to 15%
- Spread the risk across multiple companies
- Finance a company that you believe will make it big
- You’ll need to pay some of your profits back to Crowd2Fund as a fee for using the platform
Step 1: Head over to the Franchise Direct website
Step 2: Browse the hundreds of franchise deals available
Step 3: Once you've found a franchise you're interested in, head over to the official website of the franchise company
Step 4: Meet with the franchise manager in your local area
Pros and cons of buying a franchise
- Run your own business
- Buy a brand that is already established
- Good investment for a secure future
- Get assistance from the franchise provider when needed
- You’ll need to dedicate 100% of your time to running the business
Bonus: Gold - Volatile, but long-term prospects of 5-10% per year
If you're the type of person that doesn't trust the global monetary system, or you fear that another financial crisis is imminent, then you might want to consider buying and selling Gold. If history has taught us one thing, it's that in times of market turbulence, securit traders flock to Gold. The key thing to remember is that Gold will always have value, not least because it has a finite supply.
5 things to remember before investing your $100,000
$100,000 is a significant amount of money. While we appreciate that you want to increase your money by making smart investments, you still need to understand the underlying risks. Before you part with your $100,000, make sure that you take note of the following.
- How long can you afford to keep your $100,000 tied-up?
When you have your money tied-up in an investment, you won’t be able to touch it. As such, you need to ask yourself how long you are willing to wait before you start seeing growth. If you want to invest long-term, then consider assets such as real estate or bonds. Alternatively, if you only want to invest for a short amount of time, then you’re probably best suited for peer-to-peer lending or forex trading.
- What is your appetite for risk?
Regardless of what investment you decide to choose, there will always be an element of risk involved. In a nutshell, the higher the expected returns, the higher the underlying risk. If you want to minimize your risk as much as possible, stick with low-risk investments like U.S. Treasuries or property. If you want to add some higher-risk assets to your portfolio, then consider peer-to-peer lending.
- How much money would you be happy to walk away with?
It is important that you make some short and long term targets before you invest your $100,000. Are you looking to make a bit of money on the side, or are you looking for annual gains of at least 10%? You need to set some realistic goals along the way, so that you can cash out your investment at the right time.
- How much experience and knowledge do you have in investing?
$100,000 is a huge amount to invest, so you don’t want to be investing in assets or markets that you don’t understand. If you’re a highly experienced investor – then great. However, if you have virtually no knowledge of the investment space, then you’re best off allowing somebody else to manage your money for you. If this is the case, think about investing in bond funds or mutual funds.
- Do you understand that markets are cyclical?
You need to understand that most markets are cyclical. This means that every now and then, the markets will go through a slump and lose value. This is especially true in the stocks and shares space. Certain real estate markets are also prone to frequent drips. Before you invest your $100,000, make sure that you are emotionally ready for the highs and lows of the investment sphere.
Glossary of Investment TermsBonds
A bond is a loan made to an organization or government with the guarantee that the borrower will pay back the loan plus interest upon the maturity of the loan term. It can be advanced to the national government, corporate institutions, and city administration. It is an investment class with a fixed income and a predetermined loan term.Mutual Fund
A mutual fund is a professionally managed investment vehicle that pools together funds from numerous investors and invests it in such securities as stocks, bonds, and other money market instruments. They are headed by portfolio managers who determine where to invest these funds. They are highly regulated and invest in relatively low-risk money markets and in turn post lower rates than other aggressive managed funds.P2P Lending
Peer-to-peer lending (p2p lending) is a form of direct-lending that involves one advancing cash to individuals and institutions online. A P2P lending platform, on the other hand, is an online platform connecting individual lenders to borrowers.Bitcoin
Bitcoin is the legacy cryptocurrency developed on the Bitcoin Blockchain technology. It is a new form of money primarily developed to solve some of the inherent challenges associated with fiat currencies like inflation and over-production. It is virtual (online) cash that you can use to pay for products and services from bitcoin-friendly stores.Index Funds
An index fund refers to the coming together of individuals to pool in funds that are then invested in the stock and money markets by professional money managers. The only difference between an index fund and a mutual fund is that the index fund follows a specific set of rules that track specific investments and index stocks.ETFs
An Exchange-traded fund refers to an investment vehicle that is publicly traded in the stock exchange markets – much like shares and stocks. The fund is expert-managed and its portfolio comprises of such investment products as stocks, bonds, commodities, and more money market instruments like currencies.Retirement
Retirement refers to the time you spend away from active employment and can be voluntary or occasioned by old age. In the United States, the retirement age is between 62 and 67 years.Penny Stocks
Penny Stocks refer to the common shares of relatively small public companies that sell at considerably low prices. They are also known as nano/micro-cap stocks and primarily include any public traded share valued at below $5.Real Estate
Real Estate can be said to be the land and buildings on a given property as well as other rights associated with the use of the property like the air rights and underground rights. Real estate can be either commercial if the land, property, and buildings are used for business purposes or residential if they are used to non-business purposes – like building a family home.Real Estate Investment Trust (REIT)
REITs are companies that use pooled funds from members to invest in income-generating real estate projects. While a REIT may specialize in one real estate niche, most diversify and invest in as many high-income real estate projects as possible. They are especially interested in commercial real estate projects like warehouses, prime office buildings, residential apartments, hotels, timber yards, and shopping malls.Asset
Asset simply refers to any resource of value or a resource that can be owned and controlled to produce positive value by an individual or business.Broker
A broker is an intermediary to a gainful transaction. It is the individual or business that links sellers and buyers and charges them a fee or earns a commission for the service.Capital Gain
Capital gains refer to the positive change in the price of a capital asset like shares and stock, bonds or a real estate project. It is the difference between the current selling price of the asset and its lower original buying price and it is considered a taxable income.Hedge Fund
A hedge fund is an investment vehicle that pools together funds from high net worth individuals and businesses before having professional money managers invest it in highly diversified markets. The difference between mutual and hedge funds is that the later adopts highly complicated portfolios comprised of more high-risk high-return investments both locally and internationally.Index
An index simply means the measure of change arrived at from monitoring a group of data points. These can be company performance, employment, profitability, or productivity. Observing a stock index, therefore, involves measuring the change in these points of a select group of stocks in a bid to estimate their economic health.Recession
A recession in business refers to business contraction or a sharp decline in economic performance. It is a part of the business cycle and is normally associated with a widespread drop in spending.Taxable Accounts
Taxable Account refers to any investment account that invests in shares and stocks, bonds and other money market securities. The account is offered by a brokerage company and you are obliged to report and pay taxes on the investment income each year.Tax-Advantaged Accounts
A tax-advantaged account refers to savings of investment accounts that enjoy such benefits as a tax exemption or deferred tax payment. Roth IRA and Roth 401K are examples of tax-exempt accounts whose contributions are drawn from after-tax incomes with the yields generated from investing funds therein being tax-exempt. Traditional IRA, 401K plan and college savings, on the other hand, represent tax-deferred accounts. Their contributions are deductible from your current taxable incomes but you get to pay taxes on their accrued incomes.Yield
Yield simply refers to the returns earned on the investment of a particular capital asset. It is the gain an asset owner gets from the utilization of an asset.Custodial Accounts
A custodial account is any type of account that is held and administered by a responsible person on behalf of another (beneficiary). It may be a bank account, trust fund, brokerage account, savings account held by a parent/guardian/trustee on behalf of a minor with the obligation to pass it to them once they become of age.Asset Management Company
An Asset Management Company (AMC) refers to a firm or company that invests and manages funds pooled together by its members. Like mutual or hedge funds, the AMC creates diversified investment portfolios that comprise of shares and stocks, bonds, real estate projects, and other low and high-risk investments.Registered Investment Advisor (RIA)
A registered investment advisor is an investment professional (an individual or firm) that advises high-net-worth (accredited) investors on possible investment opportunities and possibly manages their portfolio.Fed Rate
The fed rate in the United States refers to the interest rate at which banking institutions (commercial banks and credit unions) lend - from their reserve - to other banking institutions. The Federal Reserve Bank sets the rate.Fixed Income Fund
A fixed-income fund refers to any form of investment that earns you fixed returns. Government and corporate bonds are prime examples of fixed income earners.Fund
A fund may refer to the money or assets you have saved in a bank account or invested in a particular project. It may also refer to the collective basket of resources pooled from different clients that are then invested in highly diversified income-generating projects.Value Investing
Value investing is the art of using fundamental analysis to identify undervalued shares and stocks in the market. It involves buying these shares at the current discounted prices and hoping that a market correction pushes them up to their intrinsic value effectively resulting in massive gains.Impact Investing
Impact investing simply refers to any form of investment made with the aim of realizing financial returns while positively impacting the society, environment or any other aspect of life in the process. Investment in solar projects and green energy, for instance, posts profits and helps conserve the environment.Investing App
An investment App is an online-based investment platform accessible through a smartphone application. It lets you save and invest your funds in a preset portfolio that primarily consists of shares and stocks, bonds, ETFs, and currencies based on your risk tolerance.Real Estate CrowdFunding
Real Estate crowdfunding is a platform that mobilizes average investors – mainly through social media and the internet – encourages them to pool funds, and invests them in highly lucrative real estate projects. It can be said to be an online platform that brings together average investors and lets them enjoy real estate projects previously preserved for high net worth and institutional investors.
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