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If you have $100,000 that you want to invest, you have quite a few options at your disposal. Unfortunately, many traditional choices, like CDs, provide minimal returns these days. The rates are so low that they fall far short of inflation, which means that your investment is losing money by the day. Fortunately, there are investment options that have the potential to provide fantastic returns that exceed inflation. So, if you want the best way to invest $100K, here are five options to consider!
Please note that the suggestions below have no guarantees. All investments have the risk of loss.
Best way to invest $100K: real estate syndication
Arguably, the best way to invest $100K is to join a real estate syndication. A real estate syndication is a group of investors who look to buy, improve and sell multi-family or commercial real estate properties. As a quick example, a commercial real estate acquisition company might buy an office building, improve the offices to rent for more and then sell the building at a profit.
These syndications typically offer some of the best potential returns as they provide the opportunity for capital appreciation and monthly rent. Typically, these syndications run for about five years. During those five years, the real estate syndication returns are usually between 8%-10% annually. At the end of those five years, it’s not uncommon to sell the building for a 40%-60% profit.
Adding all these returns up, it’s easy to see that syndications have the potential to double your money in as little as five years. Imagine investing $100K and having $200K five years later — all passively. That’s the power of syndications!
To invest in real estate syndications, you must be an accredited investor. If you are not accredited, keep this investment idea in mind for when you are.
If a real estate syndication is not an option (e.g., you are not accredited), REITs are likely your next best bet. Real Estate Investment Trusts trade on traditional stock markets, so you can buy and sell them just like you would any other stock. These companies invest in and manage real estate, so they tend to pay dividends and have the potential for sustained capital appreciation.
The returns are typically not as good as syndications, but they are still very attractive when compared with other investment options!
ETFs and stocks
The stock market has historically enjoyed elevated returns compared to many other asset classes. ETFs (Exchange Traded Funds) are like mutual funds, but they trade on the stock exchange. ETFs are a fantastic way to diversify your portfolio without needing to buy and sell stocks yourself actively.
One of the nicest aspects of stock and ETF investing is that you can invest in what you want. If you want to build a socially conscious portfolio, you can — some ETFs target this. Or, if you want to invest in your favorite tech companies, you can do that, too.
Please be sure, though, to choose a reputable online broker that has minimal fees. The less you pay to trade stocks and ETFs, the more money in your account!
Another excellent way to invest $100K is to buy or start a business. That $100K is more than enough to provide adequate seed capital for many business ventures.
It often pays to think outside the box to develop passive income streams from your business. For example, you might buy ATMs in well-positioned places. Or, you might buy a fleet of vending machines.
What business you buy or start is entirely up to you, but $100K is enough seed capital to get your small business off the ground and get you on the way to creating cash flow!
Invest in yourself
At first, this concept might sound strange, but think about it: $100K is enough to make a serious investment in your skills and talents. Have you ever wanted to switch jobs or careers? Have you ever wanted to go back to school to finish that college degree? Do you want to learn a new skill or up-level existing ones to advance your current career?
Depending on where you are in life, investing in yourself could pay far more than many other investments. If you are young and have a lifetime of earnings ahead of you, investing $100K in your skills to have a 20%+ higher salary throughout your career could be worth it!
The top way to invest $100K is self-evident: a real estate syndication. However, as we’ve seen, there are many other fantastic ways to invest this level of money. Make sure you invest it, though! If you don’t, you could lose large chunks of it to inflation.
And once you have invested that $100K, don’t stop there! As that initial investment grows, ensure that you keep reinvesting. The more you can put aside, the better your financial outcomes will be.