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By skill or by luck, you have the good fortune of scouring the internet to determine how to invest $100k.
That’s a fantastic “problem” to have—and one we’re happy to help you solve.
How and when in your life you came across that $100,000 does matter, by the way. For example: Are you 40 and have slowly built up that nest egg? Are you 25 and just earned a massive bonus, or exercised some stock options, at your explosive startup? Are you 60 and received a sudden unexpected windfall (like, say, a deceased relative bequeathed it)?
If you said “yes” to one of these, how you should invest that $100,000 might be very different from people who came across that money through one of the other two scenarios.
Regardless of how you came across that six-figure sum, you probably aren’t doing yourself a favor by keeping it in a savings account. According to the FDIC, the national deposit rate for savings accounts sits at just 0.13%. That means your $100,000 would produce a mere $130 in income each year. Sure, a high-yield savings account would do a bit better, but even at an average 1.5% yield (compounded quarterly), your high-interest savings account would generate just $1,508 in annual wealth—a far cry from what you could get in other investments.
If you’re ready to move your money out of savings and into an investment that will work harder for you, here’s how to invest $100k. We’ll talk about some of the best investments worth considering—a few you’d expect, and a few that aren’t always on investors’ radar—the pros and cons of each, and even a few investing tips.
How to Invest $100k: The 4 Best Investments
A quick note before we dig in: No matter what investment types you ultimately lean toward, we suggest that if you’re going to invest $100,000, you do so with “diversification” in mind.
Diversification, simply put, is holding different types of investments. For instance, you could hold stocks of small companies and large companies. You could hold stocks in each of the market’s 11 sectors. You could hold U.S. stocks and international stocks. And you could hold stocks, bonds, gold, even cryptocurrency. All those are examples of ways you can diversify.
Why do this? In a word: protection.
The old advice “don’t put your eggs in one basket” will serve you well when you invest. Let’s say you sink all $100,000 into one stock, and that stock collapses—well, there goes your $100,000. But if you spread your $100,000 across a few different holdings, your investment portfolio won’t face nearly as much risk from one stock falling apart.
With that out of the way, let’s look at our four top ways to invest $100,000 right now:
1. Swendstone
Swendstone is an asset management firm that caters to clients seeking significant financial returns through various subscription plans. They channel clients' resources towards profitable investments to yield massive returns. The company leverages their expertise in asset management to optimize the clients' financial resources. With Swendstone, clients can enjoy customized portfolio management and investment solutions that suit their unique investment goals. Whether you are a novice or seasoned investor, Swendstone provides extensive professional services to ensure optimal investment results.
Swendstone manages over 5,000 investments for their clients, setting them apart from other portfolio management firms. Their ability to make intelligent investments and produce impressive outcomes places them at the forefront of the industry. Swendstone's investment packages are crafted to suit your financial position, making them the ideal choice. With their well-tailored investment plans, Swendstone has always been the go-to source.
Swendstone offers a diverse range of trade options including Real estate, crude stock, cryptocurrency, forex trading and stock market. To ensure a seamless journey, the platform provides you with an assigned expert to assist with any trading needs. You can visit their website here.
2. Bonds
When you invest in bonds, you’re investing in debt issued by some sort of entity—from a national government to a local municipality, to corporations big and small—that they use to finance projects, equipment, and more. When you hold a bond, that entity is promising to eventually pay back your initial investment with interest, with that interest usually paid out every six months.
Bonds tend to trade in a range around their “par value,” which is how much their issuer has promised to pay back. (Basically, the initial price of the investment.) So while people generally invest in stocks for growth, they tend to invest in bonds for their income and relative stability.
“For investors with shorter time horizons (two years or less), bonds are typically a good place to invest to earn a conservative yield and protect principal,” Canhi says. “For instance, if you are saving money to buy your first home, keeping your money invested in short-term, high-quality bonds is a safe way to earn income on your cash.”
Also, investors typically want to invest more in bonds the closer they are to retirement, as their focus shifts from growing their wealth to protecting it. “If you expect to retire in 30 years or more, you might target as little as 10% in bonds,” he says. “When you are 20 years out, you might increase that to 20%. At 10 years away from retirement, the allocation to bonds might be closer to 30%.”
Pros of investing in the bond market
Predictable income
When you invest in an individual bond, you’ll know when the bond matures and how much interest you’ll earn. (Because bond funds buy and sell debt over time, yields can vary, but they’re still heavily relied on for income.)
Diversification
Unlike the stock market, which can fluctuate daily (or even hourly), bonds are relatively stable. And throughout various periods in stock market history, bonds have moved in the opposite direction of stocks. Because of this stability and potential for positive performance when stocks are struggling, investors often diversify their portfolios by adding bonds.
Potential tax advantages
Certain types of bonds offer tax advantages. For instance, interest income on municipal bonds isn’t subject to federal taxes, and in some cases, it’s exempt from state and local taxes, too.
How to invest in the bond market
Individual bonds
You can purchase several types of individual bonds, including Treasuries, municipal bonds (or “munis”), and corporate bonds. Each is structured slightly differently and might have different tax treatment, but all typically have a set interest rate and maturity date.
Individual treasuries can be purchased through TreasuryDirect.gov, brokerage firms, or banks. You can buy munis or corporate bonds through some brokerages.
Bond mutual funds
Unlike individual stocks, there aren’t many research resources for individual bonds. Plus, individual bonds can be difficult to access. Also, investors might want to diversify among hundreds or even thousands of bonds. For all those reasons, some investors prefer to invest in a bond mutual fund. Because bond funds invest in various bonds with different payout schedules, these funds often pay distributions more frequently than twice a year—in fact, they usually deliver monthly income. However, like stock mutual funds, you’ll have to pay a fee to participate.
Bond exchange-traded funds (ETFs)
Like bond mutual funds, bond exchange-traded funds (ETFs) represent a pool of numerous bonds, giving investors the benefit of diversification. And like with stocks, most bond ETFs also happen to be index funds, thus they tend to have lower fees than comparable bond mutual funds.
Types of bonds
Treasuries
Treasuries are bonds issued and backed by the U.S. government. They are considered some of the safest investments available.
Municipal bonds
Municipal bonds are bonds issued and backed by local governments. They’re used to fund projects such as building new roads or opening schools.
Corporate bonds
Companies issue corporate bonds to fund anything from new equipment to hiring to research.