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How to invest $100,000: Top 5 ways while minimizing risk

Wondering how to invest $100K? Dive into our recommendations for the smartest ways to invest, including retirement accounts and buying the best stocks and ETFs.

So, you have $100,000 to invest? Lucky you!

But that’s a big chunk of change. And you want to make sure you’re investing it appropriately, so you don’t end up losing instead of generating returns.

If you’ve already paid off any high-interest debts (like credit card debt) and have established an emergency fund, then you’re golden. That $100,000 can go straight into investments. If you haven’t, read more below and go do those things first before you start investing.

Then, when ready, it’s time to invest that $100,000 by buying stocks and ETFs, investing in real estate, maxing out your retirement accounts.

Before you start investing

These are some items to cross off the checklist before actively seeking how to invest the $100,000 you’ve saved up.

Build up your emergency fund

An emergency fund is a stash of money best held in high yield savings account or money market account that is safe, easy to access, and there if you need it. Everyone needs an emergency fund – how much you need exactly is up to you.

A lot of experts recommend that you have six months of expenses set aside for emergencies.

The reason you want to have some money set aside for emergencies is because you don’t want to have to withdraw your investments, perhaps at an inopportune time, if you have an unexpected event.

Pay off debt

Another thing to consider before you start investing is your debt load, especially killer high interest debt.

Yes, you’ll likely get returns from the stock market if you invest over a long period of time, but there is risk involved. However, paying off debt is a guaranteed return on your money – since it’s interest saved.

For example, you might expect to earn 5-10% annually in the stock market over 10 years. The key word there is expect. But if you have a credit card that is charging 17% paying that off now will give you a guaranteed 17% return on your money right now.

Plus, getting your debts paid off gives you a more solid foundation, less stress, and will reduce the risk that you’ll be forced to sell investments when you weren’t planning to.

Best ways to invest 100k right now

Debt-free and emergency fund filled? Good. Let’s dig into how to invest $100k the right way, so that you won’t just keep it, but grow it.

Once you are ready your options are endless. You mutual funds and EFTs are a great place to start, or you could try your hand at individual stocks. You can make these investments in a brokerage account or in a retirement accounts.

Stock market not for you? You can get into real estate or peer to peer investing.

Alternatively, if you want some help you can always work with a financial advisor who can create a plan for you.

Here are the 5 smartest ways for you to invest $100,000 today while minimizing risk.

1. Invest in individual stocks

The stock market is where I highly recommend you place the majority of your investment. 

That’s because stocks offer some of the best diversification for your portfolio. Not only can you get exposure to nearly every industry in the world, but stocks have historically been proven to provide one of the best returns on investment.

While the markets have had their periods of not so great returns, the average annualized return on the S&P 500 since the early ’70s has been close to 12% per year, and has historically rebounded with even better years after economic downturns. Here are the annual average returns on the S&P 500 over a recent 10-year snapshot (including dividends) to give you an idea:

  • 2013 – 32.15%
  • 2014 – 13.52%
  • 2015 – 1.38%
  • 2016 – 11.77%
  • 2017 – 21.64%
  • 2018 – -4.23%
  • 2019 – 31.21%
  • 2020 – 18.02%
  • 2021 – 28.47%
  • 2022 – -18.01%

You can find all of the annual returns since 1928 on this historical returns on stocks, bonds and bills sheet that NYU Stern School of Business graciously put together.

If you’re going to invest in individual stocks yourself, start by reading our guide on value investing. It’s my favorite approach to picking individual stocks and can significantly reduce your risk while also providing you some recurring revenue (since you’re going after dividend-paying stocks.) Then consider a beginner-friendly commission-free online broker, like popular Robinhood.

» MORE: Best Online Brokerage Accounts

Alternately, you could go with a top robo-advisor, which is ideal for a first-time investor (and actually, I’ve been investing for over a decade and still choose to use a robo-advisor).

A robo-advisor is a digital broker that uses a computer algorithm to compose, monitor, and rebalance your stock portfolio. You merely invest the money and tell the algorithm what your goals and risk levels are, and they’ll do the rest for a reasonable fee. These don’t typically let you choose individual stocks at your own selection, however, if that’s where you’re leaning.

There’s a number of popular popular investment accounts with no to low fees that can provide you access to stocks and #2 on the list coming up.

2. Buy ETFs or mutual funds

If investing in individual stocks is too risky or labor-intensive for you, mutual funds and ETFs (exchange-traded funds) are an ideal alternative to invest $100k. 

The problem with picking stocks is that unless you’re investing in thousands of individual stocks, which most people don’t, your level of diversification will be low.

Mutual funds and ETFs, on the other hand, are basically baskets of stocks, pre-bundled for you, so you can make a single investment and get instant diversification. The difference between the two is how they’re put together, managed, and sold.


An ETF acts exactly like a stock and is usually not actively managed. It typically follows an index — for example, the S&P 500.

You can go as broad or narrow as you want with exchange traded funds, and you can focus on industries that are important to you. For instance, if you want to invest in socially responsible companies, you can buy an ETF that does that for you.

You can also use a robo-advisor for investing in ETFs, rather than hand-picking your own bundles.

Wealthfront, for example, offers a DIY approach or the ability to have them create a portfolio of ETFs for you (you can edit this portfolio at any time). Wealthfront offers investments in specific categories like socially responsible investing, tech ETFs, healthcare ETFs, and many more.

Mutual funds

Mutual funds, on the other hand, are actively managed by a person or group of people. There are some exceptions where they may not be (like with Vanguard, which has index funds), but in most cases, mutual funds have someone picking the stocks that are in the fund.

Mutual funds still act like an ETF in that you can get instant diversification, but it’s more meticulously monitored, and the strategy for picking stocks might be based on the fund manager’s personal investment preferences and biases.

The cost is also higher due to this. You’ll pay a premium for investing in a mutual fund — but the argument is that someone is managing the fund for you.

3. Capitalize on the real estate market

While $100,000 isn’t a small chunk of change, it’s not really enough to get into traditional real estate. However, you could consider REITs and real estate crowdfunding.


A real estate investment trust (REIT) is much like an ETF, only the focus is on real estate investments.

You can buy into a REIT at a relatively low cost and get instant diversification in real estate in a variety of areas and with a variety of property types.

The downside here is that you have little control over where your money is going. You are at the mercy of whoever is managing the REIT to decide where the investments are placed. Now, you could always sell your stake in the REIT, but to me, that negates the idea of a buy-and-hold strategy, which is ideal for real estate.

Buying into a REIT is now easier than ever, thanks to our good friend, technology. Streitwise, for example, is an app that lets you invest in private real estate for less than $5,000.

With Streitwise, they track down the properties for you, and, on average, they’ve generated dividends between 8%-10% over the last few years (the platform is run by experienced investors). One thing that makes Streitwise unique is that you can fund your investments using Bitcoin or Ethereum. If you have cryptocurrency, this could be a great way to make the most of it.

Traditionally, though, you’d invest in real estate investment trusts by opening a brokerage account. Through this method, you choose investments just as you would stocks. 


Crowdfunding for real estate is a relatively new avenue for investing in commercial real estate projects. The concept is simple: a large-scale real estate project comes up for investment and multiple investors (the “crowd”) pitch in money to fund the project.

Those investors then become stakeholders in the project and are rewarded based on a variety of factors — maybe a set dollar amount they’re paid back as part of a loan, or perhaps they’re given a cut of the project when it’s completed and successful. Regardless, this is an excellent way for anyone looking to invest in massive real estate deals to have the opportunity to do so.

There are several platforms available for crowdfunding in real estate. Some of our favorites are:

  • Fundrise features flexible minimum amounts starting from $1,000 based on a number of different investing strategies.
  • CrowdStreet offered a curated portfolio of growth-oriented commercial real estate projects chosen by their advisors lumped together in a single investment ($25K minimum).
  • DiversyFund lets you invest in multi-family commercial real estate, starting with as little as $500. There are also tons of educational resources.

» MORE: Best Real Estate Investment Apps

4. Stash some money in a retirement account

One of the smartest things you can do with $100,000 is to invest it in retirement accounts. After all, if you want to retire comfortably, considering today’s cost of living and estimating the future cost of living, you’ll need a significant chunk of change.

There are two options here for investing your $100,000: a 401(k) or an IRA.


The first retirement plan that I’d recommend is your company-sponsored 401(k), if you have access to one.

There’s a trick you can use to “deposit” money when you come into a lump sum (like $100,000).

Basically, what I do is temporarily increase my contributions to the max, until I am able to deposit the full amount I’m intending, then I put my contributions back to normal.

I then take the cash out of my lump sum investment pile, “subtract” the taxes I’d pay (and put this into a savings account), then deposit the rest into my checking, spread out over the time period I’m ramping up my contributions.

Sound confusing? It isn’t — let me show you what I mean:

Let’s say you have $100,000 to invest. And you’re currently depositing $200 per paycheck into your 401(k) so under normal circumstances you will have contributed $5,200 this year. 

The max you can contribute to a 401(k) this year is $22,500. So subtracting what you intended to contribute that leaves you $17,300 left of room to contribute some of your $100,000 that you want to save. 

If you have 40 weeks left in the year you could increase your bi-weekly contributions by $865 per paycheck.

This will obviously reduce the amount of your paycheck. Simply, replace your missing income from your lump sum each paycheck so your actual income remains the same but you’re still maxing out  your 401(k) contributions.


After you’ve maxed out your 401(k), you should max out an IRA.

Most people prefer a Roth IRA due to the retirement tax benefits (your withdrawals in retirement are tax-free, but you contribute taxed income now).

But I personally like a traditional IRA over a Roth IRA (you can get a tax credit on your contributions now, but you’ll be taxed in retirement.) I do this because I assume to be making much less in retirement than I am now so my taxable income will be less. 

Regardless of what you choose, you should max out one of the two — and the current cap is $6,500 per year.

If you don’t already have an IRA, open one now. If you’re open to the robo-advisor route (like I mentioned above) then I recommend going for it (again, Wealthfront is great).

I personally have my traditional IRA in a robo-advisor and I love it. It’s completely hands-off and my returns have been great. 

5. Reach out with peer-to-peer lending

Another great way to invest your $100,000 is with peer-to-peer (P2P) lending.

P2P lending is basically when you loan your own money to someone else who needs it.

There are a number of reasons you may want to consider P2P lending instead of something like stocks or real estate:

  1. Strong returns — Depending on where you invest your money, you can get returns of anywhere from 5% to 12% with P2P lending.
  2. Passive income — With most P2P lending platforms, you invest money by loaning it to someone else and you get monthly or quarterly deposits as they pay that money back. This creates a great stream of passive income, especially if you do it at scale.
  3. Helps others — P2P lending is a great way to lend money to others who need it for things like medical bills, paying off debt, or building their first business.

How to decide which investment is right for you

First things first, you’ll want to know what your financial goals are.

Are you looking for long term growth or do you need income right now?

Also, how hands on do you want to be? Real estate may mean being a landlord. Do you have the time and temperament for that kind of investment? Or would mutual funds be a better fit since they require very little maintenance.

You’ll also need to understand your own risk tolerance. A lot of risk tolerance assessment has to do with your time frame. If you have decades before you will need to access your funds then you can afford to take more risk. Whereas, if you will need the funds in just a few years you’ll want to consider a more conservative investment portfolio.

However, your personality will also play a part in your risk tolerance. If you feel nervous every time you hear about a dip in the stock market then you’ll want more stable investments than those who can withstand wild swings.

Work with a financial advisor

If you still aren’t feeling comfortable you can always get some expert advice. Financial advisors can help you set your own financial goals and determine your risk tolerance. This will help them develop a personalized plan on how to best build your investment portfolio.

The drawback here is that you will have to pay them for their time. Depending on how your financial planner structures their fees, you may pay them on a flat fee basis or as a percentage of “assets under management.” The fees for hands-on human input can be quite high, so for many a robo-advisor over a financial advisor may serve as a cost-effective option.

The bottom line

Having $100,000 to invest is not pocket change. It’s a significant amount of money and you want to make sure you’re investing it correctly so you don’t lose that money.

If you’re already feeling pretty confident on your own, then any of the above suggestions are good places to invest your $100,000. If you’re unsure, this could be a good time to hire a financial advisor.

The most important thing is to do your research before you dive into any investment, avoiding any financial woes while putting your money to work for your future.

About the author

Chris Muller

Chris Muller

Chris has an MBA with a focus in advanced investments and has been writing about all things personal finance since 2015. He’s also built and run a digital marketing agency, focusing on content marketing, copywriting, and SEO, since 2016.

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