How to invest $100k: 7 options & tips

Having $100k to invest puts you in a strong position to create lasting financial security. The key is thoroughly researching your options and choosing financial products that make sense for your risk tolerance and financial goals.

From high-yield savings accounts to mutual funds, here's how to invest $100k to make the most of your money.

‍

Where to invest $100k: 7 alternatives

You've got a lot of options when deciding what to do with $100k. Here are seven of the best ways to make $100k pay off for years.

1. Annuities

An annuity is a contract with an insurance company where you deposit money in exchange for future payments. You put money in now, and the insurance company promises to pay you back over time, plus interest. If you're looking to contribute $100k for passive income, an annuity may be the answer.

There are three main types of annuities to choose from:

• Fixed annuities offer a set interest rate, ensuring guaranteed growth. For example, if you contribute $100k in a fixed annuity with a 5% annual rate, your funds would grow to $127,628 after five years (note that this doesn’t account for compounding interest).
• Variable annuities put your money into assets like stocks and bonds. Your earnings depend on how well these investments perform, which means higher growth potential — but you risk losing money if the market goes down.
• Indexed annuities tie your growth to the market’s performance, but they also protect your initial deposit from downturns. If the market goes up, you earn money (usually up to a certain percentage). But if it goes down, you won't lose your original deposit.

Annuities are one of the best places to contribute $100k if you want:

• Higher interest rates than traditional savings accounts
• Relatively predictable growth
• Access to tax-deferred growth until you start taking payments
• Steady income in retirement

Some annuity companies charge hidden fees and commissions, but Gainbridge^® cuts out the middleman, so you’ll get to keep more of your hard-earned money.

2. Stocks and ETFs

When you buy stocks, you own a small piece of a company. The value of your stocks goes up and down based on how well the company performs.

There are two main ways you can add stocks to your retirement portfolio depending on your risk tolerance. First, you can pick individual company stocks, like buying shares of Apple or Netflix. This takes lots of research and comes with more risk since your money is tied to just a few companies.

A more stable option is buying exchange-traded funds (ETFs) or mutual funds, which are like baskets filled with many different stocks. Some ETFs own pieces of hundreds of large companies. This helps protect your money by spreading your capital across many businesses at once.

3. Real estate

Real estate investing means putting money into property that can grow in value over time. One option is buying buildings directly, like a rental home that brings in monthly income from tenants. This costs more up front and requires hands-on management, but it also gives you better control over your investment.

You can also invest in real estate investment trusts (REITs), which are like ETFs for real estate. These companies own many properties, like apartment buildings or shopping centers. This diversity makes REITs an easier, safer, and more hands-off way to invest.

4. Bonds

Bonds are a common investment option when you’re looking into how to utilize large sums of money. Purchasing a bond essentially loans funds to a company or government, and they promise to pay you back at a guaranteed (but typically low) interest rate. 

Government bonds are a safe option since they're backed by the U.S. Treasury. Corporate bonds usually pay higher interest rates but carry more risk since businesses can run into financial trouble. If the company fails, you may only receive a portion of your original contribution back — or they may not return your funds at all.

5. Certificates of deposit

A certificate of deposit (CD) is a type of savings account banks offer. In exchange for a guaranteed interest rate, you agree to deposit money for a certain period of time. Terms can last anywhere from a few months to several years, and most accounts won’t let you withdraw any funds until the end of the Term. 

These accounts are considered safe, as institutions like the Federal Deposit Insurance Corporation and the National Credit Union Administration insure CDs for up to $250,000.

6. High-yield savings accounts

High-yield savings accounts are just like regular savings accounts but with much better interest rates, often around 4–5%. 

These work well for emergency funds because you can typically take your money out anytime without penalties, keeping in mind that many banks limit some transaction types to a maximum of six transactions per month.

7. Retirement accounts

Retirement accounts offer special tax breaks to help your money grow faster than regular brokerage accounts. Two of the most common types are individual retirement accounts (IRAs) and Roth IRAs.

Traditional IRA contributions are tax deductible, and you don't have to pay any taxes on your earnings until you withdraw them in retirement. With a Roth IRA, you pay taxes on the money now, but you won’t pay taxes on the growth, even when you take funds out.

‍

4 tips on what to do with $100k

Here are some ways to make sure your $100k investment lives up to your expectations.

1. Pay down high-interest debts

Don't start investing until you've paid off any high-interest debt, such as credit card balances. If you're paying 20% interest on credit card debt but earning 10% on investments, you're losing money.

2. Build an emergency fund

Before making long-term investments, set aside 6–12 months of expenses in a high-yield savings account or another stable option as an emergency fund. Keeping this money separate from your investments means you can easily access it when needed.

3. Diversify your portfolio

To protect yourself from an investment performing poorly, contribute to multiple types of accounts, like ETFs, mutual funds, and bonds. Robo-advisors can create such a mix automatically, or a financial advisor can build a custom plan for you.

4. Be tax smart

Use tax-advantaged accounts to keep more of your money. For instance, if you think you’ll be in a lower tax bracket later in life (e.g., upon retirement) then financial products that allow you to defer taxes until you withdraw funds may be beneficial. They would prevent you from paying higher income taxes now, allowing more of your money to accumulate interest.

‍

Other considerations

Before putting your money anywhere, consider how these factors affect your saving strategy:

• Risk tolerance: Be honest about how much market swings might worry you. If seeing your money drop 20% would be concerning, stick to more stable options.
• Timing needs: Know when you'll need your money back. Some investments, like stocks, reward you for keeping your money invested longer. Others, like high-yield savings accounts, let you access your cash anytime.
• Tax situation: Different investments have unique tax rules, so choose tax-efficient investments that match your financial goals.
• Diversification: Instead of chasing the highest possible returns, focus on building a diverse portfolio that can weather different market conditions.

‍

FAQs

How much can I earn by investing $100k?

Your earnings depend on the assets you invest in and how long you hold them. Historically, the stock market has grown by an average of about 10.5% per year. But more conservative options like bonds and high-yield savings accounts typically return about 2–5%. Working with a financial advisor can help you design a mix that matches your goals.

What's the best way to save $100k for passive income?

Several financial products can generate regular income without a lot of hands-on management. For example, bonds and annuities are a great way to receive a steady income on a regular basis. Dividend-paying stocks and mutual funds are another route, although payouts are less predictable.

Should I manage my investments myself or get help?

This depends on your comfort level with investing. Robo-advisors offer a middle ground by automatically building and managing your portfolio based on your financial goals. For more personalized guidance, especially for bigger amounts like $100k, many investors find working with a financial advisor valuable.

How long should I plan to keep my money invested?

Investment periods of five years or longer give you more flexibility to ride out market ups and downs. These lengthier terms also give your money more time to grow, especially in accounts that offer compounding interest. But some money should still be liquid — keep shorter-term savings like emergency funds more accessible in assets like high-yield savings accounts.

‍

This communication is for informational purposes only. It is not intended to provide, and should not be interpreted as, individualized investment, legal, or tax advice.