If you’re wondering where to invest $200,000 then that is a positive sign. Having this much money to invest is a good sign that you are on the right track to building wealth over time. It is particularly true if you invest $200,000 for 10 or more years, giving compounding interest time to work.
How much money can you expect to have if you invested $200,000 today in a wise way?
It depends on the wayyou choose to invest your money, and what average return you receive. You could invest $200,000 for 20 years and earn a 6% rate of return. After two decades, you would have $641.427.09. If you manage to earn a 10% rate of return, however, you would have $1,345,499.99 at the end of the next 20 years.
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Investing $200,000 Today
The real challenge is to figure out where you should invest hundreds of thousand dollars. As a financial adviser, I recommend spreading a $200,000 investment across several buckets. You can then diversify your investment of $200,000 and gain exposure to different financial areas that are likely to grow.
Here are some guidelines to help you decide how much to invest. Your allocation will depend on many factors, including your age, investing goals and your desired outcome.
1. Investing in the Stock Market
Recommended Allocation:40% – 50%
Risk Level: Varies
Long-term Growth as an Investment Goal
Most of us already save for our retirement through tax-advantaged plans like a Solo 401k, SEPIRA,, or 401k. You can invest in index funds, stocks, bonds and other securities using a brokerage account.
You can invest in a wide range of stocks, ETFs and other securities. The brokerage account that you open will be more liquid than any tax advantaged retirement plan.
You can withdraw money from your retirement account without penalties. When you sell stocks, you’ll need to pay capital gains tax.
How To Get Started: The M1 Finance App is a popular investment app that simplifies the process of investing in stocks, ETFs, and bonds. You can create automatic trades and spread your investment far and wide with fractional shares.
You can also choose from a “pie” of investment options that have been carefully curated by experts to achieve a specific goal. What’s the best part? You can invest in M1 Finance without paying any platform or commission fees.
- Investing without commission
- Allowed fractional shares of stocks and ETFs
- Minimum investment of $100
Who it’s best for:Investing stocks, bonds and ETFs can be a good investment, especially for those who are able to leave their money alone.
| Stock Market Pros | Stock Market Cons |
| Over time, it is possible to earn a fair or excellent return. | Individual stocks are risky to invest in |
| Diversification across sectors is important for the economy | Your investment may lose all or part of its value |
| Index funds and ETFs are a “lazy” investment option. |
Compare your options by checking out Slash.
2. Invest in Real Estate
Suggested Allocation 10% to 15%
Risk Level: Varies
Investment Goal: Growth and Income
Real estate investing can be a great idea, especially if you do not need to access your money immediately. Rent payments from tenants can be used to pay down your mortgage. This will create a passive income stream. And the returns support that with Real Estate Investment Trusts. Real estate platforms allow you to reap some of the benefits of real estate without having to be a landlord.
How To Get Started:Fundrise is a platform that makes it simple to invest in real-estate without having to take out a loan or find new tenants. Fundrise allows you to invest as little as $500 in a starter investment portfolio. Your investment is spread out over a variety of commercial and residential properties, which are carefully selected by platform managers.
Fundrise investors received an average return of 22,99% in 2021, and 1.5% in 2020. For more information, read my Fundrise Review.
- Minimum investment is $10
- Diversified real estate portfolio
- Portfolio Transparency
It is best for: Fundrise is perfect for those who want to get exposure to the property market without the hassle of being a landlord.
| Fundrise Pros | Fundrise Cons |
| A minimum balance of $500 is required to start. | You may need to wait months before you can access your money. |
| The returns have been exceptional (average return of 7.31 % in 2020, 22.99% by 2021 and 1.5% by 2022). | Returns are not guaranteed |
| Investing in real estate without any involvement is possible |
Realty Mogul can also be compared when comparing different companies.
3. Investing in Cryptocurrency
Suggested allocation:5%
Risk Level: High
Long-term Growth as an Investment Goal
It seems that cryptocurrency is gaining acceptance in the mainstream. Bitcoin and other cryptocurrencies can be used to pay in more places than before. Bitcoin ATMs have also been popping up around the world.
Some industry experts believe that Bitcoin’s widespread adoption will make it worth $1,000,000.
A cryptocurrency app allows anyone to invest in Bitcoin, or other cryptocurrencies like Ethereum or LiteCoin. These apps store your crypto safely until you are ready to sell or trade.
How To Get Started:Coinbase offers a great platform to buy cryptocurrencies. It also allows you to earn interest by staking your crypto deposits. Interest is accrued daily on crypto deposits and paid out every month. Some cryptos offer returns of up to 5.75 percent.
Who it’s Best for:Cryptocurrency can be a good investment option for those who want to diversify their portfolios outside of the traditional investment options. You’ll have to be prepared for a lot of ups-and-downs, as cryptocurrency is extremely volatile.
| Cryptocurrency Experts | Cryptocurrency Cons |
| Coinbase simplifies the process of investing in multiple crypto currencies | Your entire investment could be lost |
| The mobile app allows you to buy, sell or trade. | The history of cryptocurrency is relatively new |
| Earn interest on your crypto deposits | Learn how to start. |
4. Purchase a business
Suggested allocation: Varies
Risk Level: HighInvestment Goal: Earnings
It’s clear that buying a business may not be for everyone. This investment strategy requires a greater level of “hands-onness” than other strategies. But investing in a company gives you the opportunity to create something that can bring you income over many years.
It is possible to build up your business so that others can manage it for you. You could then oversee the overall planning and have a stream of passive income for the rest of your life.
How To Get Started:Although it is possible to buy a business locally or a franchise, I recommend looking at buying an online one through Flippa. You These
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Many people are concerned about the risk of gold investing due to recent bank insolvency concerns. A recent report by CBS News explains how to invest in the gold market in today’s environment.
6. Open a Solo 401(k)
Suggested percentage Allocation: Variables
Risk Level: Varies
Long-term Growth as an Investment Goal
Solo 401(k)s are a great way to save for retirement if you have a business or any other form of income from self-employment. Investors can save much more than they could with a traditional 401(k). Contributions can also be made tax-advantageously, so that you can reduce your tax bill the year you make them.
Solo 401(k), a specialized retirement plan, allows small business owners or self-employed employees to defer 100% of their earnings up to a maximum amount of $22,500 by 2023. (Or $30,000 for those over 50).
You can contribute as much as 25% of your compensation, but the maximum contribution cap for 2023 is $66,000 (excluding catch-up contributions).
Get Started You can open a Solo401(k) at the top online brokerage firms. Fidelity, Charles Schwab and Vanguard are the top options.
Who it’s Best for:Investing a Solo401(k) is a good idea for anyone with self-employment income.
| Solo 401(k) Pros | Solo 401(k) Cons |
| More retirement savings | The money is meant for retirement, and it can’t be accessed prior to retirement age without penalty |
| Your Solo 401(k), you can choose the funds that you want to use. | Additional IRS paperwork may be required for a solo 401(k). |
| Contribute to a charitable cause and reduce your tax bill |
Your Investment Style
Even though any of these options could be a great choice for your $200,000. Think long and hard what you want to achieve.
You want to make a long-term investment and not worry about changing your strategy. Do you want to make a quick return? Consider how quickly you will need to access your initial investment or if you intend to leave your $200,000 investment alone for 10 or even 20 years.
You may want to consider investing for the long term in a Solo-401(k) account or brokerage account. The same is true for investing in real estate, cryptocurrency or buying your own company.
I would choose a different option if you needed to access your money in the next few months. Consider opening an account with a high rate of return to stash your money. While you won’t see a high return on investment, it will be easy to access your money without risking losing it.
The Bottom Line for Investing 200k
You’re already on the road to financial success, but you still have work to do. Your nest egg can be built over several years or even decades if you invest your $200,000 strategically.
It’s better to invest your money than let it sit in a bank where you can’t even be sure that it will keep up with inflation. To find an investment strategy tailored to you, consider your age, your life goals and your risk tolerance. Consider investing only a part of your money. You can explore the top ways to invest $100,000.
