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How to invest $100K: Five ways

Having $100K to invest can help you on your way to long-term wealth. Here are 5 of the best investment strategies to grow your money.

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Wondering where to invest $100K safely to make the most of your money? Here are 5 investment strategies to help your savings grow. Since $100,000 is a large investment, you can also use multiple strategies below in order to diversify your portfolio.

Before you invest $100K

Make the most of your $100K investment by doing these first:

  • Pay off high-interest debt. Otherwise, your debts will always grow faster than your investment returns.
  • Stock your emergency fund. Make sure you have a fully-stocked emergency fund with 3-6 months’ worth of expenses. Keep it in a high-yield savings account where you can tap into it when needed.
  • Max out retirement contributions. The yearly contribution room for your RRSP is stated on tax Form T1028. Any deposits you make beyond this are not tax deductible.

How to invest 100k: Five ways

1. Invest in high-quality stocks

Take a portion of your $100K investment and purchase high-quality stocks from stable companies with higher profit margins and lower debt.

Pros

  • High returns. Historically, stocks have the highest potential return compared to other assets.
  • Liquidity. People trade stocks daily, so you can easily convert to cash when you need it.
  • Stability. High-quality stocks don’t usually experience the same dips and swings in price as other stocks do.
  • Passive income. Many companies pay quarterly dividends to shareholders.

Cons

  • Slower growth. Contrary to startups and mid-sized businesses, these stable companies aren’t likely to experience rapid growth in the future.
  • Requires expertise. Choosing the right stocks can be difficult, so you’ll need to know how to read a stock chart and analyze its performance.
  • Higher stock prices. You could pay hundreds or thousands of dollars for one share of high-quality stock.

Compare stock trading accounts

To invest in stocks, you’ll need to open a trading account. Consider account fees and trading fees when searching for an account.

Name Product Finder Rating Available Asset Types Stock Trading Fee Account Fee Signup Offer Table description
Interactive Brokers
Finder Score:
★★★★★
4.3 / 5
Stocks, Bonds, Options, ETFs, Currencies, Futures
min $1.00, max 0.5%
$0
N/A
Winner for Best Overall Broker in the Finder Stock Trading Platform Awards.
CIBC Investor's Edge
Finder Score:
★★★★★
3.8 / 5
Stocks, Bonds, Options, Mutual Funds, ETFs
$6.95
$0 if conditions met, or $100
100 free trades + up to $4,500 cash back
An easy-to-use platform with access to a variety of tools to help you trade with confidence.
Questrade
Finder Score:
★★★★★
4.3 / 5
Stocks, Bonds, Options, Mutual Funds, ETFs, GICs, International Equities, Precious Metals
$4.95 - $9.95
$0
Get $50 in free trades when you fund your account with a minimum of $1,000.
Opt for self-directed investing and save on fees or get a pre-built portfolio to take out some of the guesswork.
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2. Invest in mutual funds or exchange-traded funds (ETFs)

If you’re looking to diversify your portfolio (which you should be!), mutual funds and ETFs may be the way to go. Both are made up of a basket of securities, such as stocks, bonds and other commodities. But mutual funds are actively managed, meaning they have higher fees, while ETFs are passive.

Pros

  • Low costs. Many brokers offer commission-free ETFs and low-fee mutual funds.
  • Values-based investing. ETFs and mutual funds allow you to invest in specific sectors like technology and in certain ideas, such as sustainability.
  • Diversification. These investment types are made up of hundreds of securities, so you won’t feel a sting if one security tanks.
  • Liquid investments. You can readily convert both mutual funds and ETFs to cash when you need to.

Cons

  • Varying levels of control. An investment manager controls mutual funds, but you can trade them daily. You manage your own ETFs, but you can’t trade them daily.
  • Tax implications. ETFs are more tax efficient than mutual funds, but you’ll pay capital gains taxes on both when you realize profits, just like stocks (unless you hold them in a registered account, like a TFSA or an RRSP).
  • Can have pricey fees. Although there are several low-cost options out there, beware of brokers with hefty trading and management fees, especially with mutual funds.

3. Use a financial advisor to manage your portfolio

If you’re looking for personalized advice on how to invest $100K, it may be time to hire a financial advisor. Alternatively, you could use a robo advisor to passively manage your portfolio – this will save you hefty management fees, but is less personalized and customizable. (You can read more on this in our guide to human vs. robot portfolio managers).

Pros

  • Working with an unbiased professional. Money can be an emotional topic, so a financial advisor can keep you from making costly mistakes with your investments.
  • Industry expert. Financial advisors typically have years of experience managing large sums of money and dealing with complicated investment and tax situations.

Cons

  • Hefty fees. You’ll typically pay a set percentage based on the total value of the assets under management. So, if you have $100,000 in assets and your advisor charges 2%, you’ll pay a $2,000 fee to have someone else manage your wealth.
  • Requires thorough vetting. You’ll want to research and interview several financial advisors before you hire someone.

4. Invest in real estate

There are several ways to invest in real estate and $100K is enough to fund any method.

Pros

  • Multiple ways to invest. With $100K, you can invest through a real estate investment trust (REIT), crowdfunding platforms or through investment property.
  • REITs are safer. REITs are made up of several different properties and are more diversified and less risky than traditional real estate investments.
  • Passive income. Regardless of which real estate investment you choose, many offer monthly or quarterly payments.

Cons

  • Accreditation is sometimes (but not always) required. You may need to be accredited to invest with certain crowdfunding platforms, even if you can pay the minimum investment.
  • Direct investments carry risk. You put all your eggs in one basket with direct investments.
  • Big time commitment. If you purchase a property, you’ll have landlord responsibilities unless you outsource it to someone else.

5. Invest in peer-to-peer lending

Lend your money to other individuals in need through peer-to-peer (P2P) lending.

Pros

  • Lucrative returns. The average investor earns between 5% and 9% interest with P2P lending.
  • Steady cash flow. You’ll receive steady monthly income as the borrower repays their loan.
  • You’re helping someone in need. Most P2P investors enjoy lending money to help someone who needs it more than they do.

Cons

  • Risk of default. There’s a chance you could lose your money if someone defaults on their loan.
  • P2P lending is new. This industry has only been around since the Great Recession, so it’s hard to tell how it will do during the next economic downturn.
  • Unsecured loans. Often, borrowers don’t put up collateral for the loans, so there’s a slim chance you’ll get your money back if something happens.

How to build a $100K investment portfolio

It’s important to spread your investments to various areas for good diversification. If you choose to allocate to one type of investment, you may increase your portfolio’s risk. For instance, if you only invest in stocks, you’ll lower your diversification and increase your portfolio’s risk.

The investment types you choose should depend on your financial goals and timeline. If you’re an older investor nearing retirement, you may not want to choose a riskier, more volatile investment. Likewise, if you need the money in a few years, you may want to play it safe with an investment type that has low risk, but low returns.

If you have a high risk tolerance and long investment timeline, a $100K portfolio might look like this:

Investment typePercentage
GICs/bonds10-25%
Stocks/ETFs/mutual funds50-75%
Real estate/alternative investments0-25%

Bottom line

To determine how to invest $100K, you’ll want to take a look at your goals, timeline, current needs, and level of comfort with trading and risk. You may choose to build your own portfolio using stocks, mutual funds and ETFs; have someone (or a robo advisor) manage your portfolio for you, get into real estate investing, or try peer-to-peer lending. Whichever strategies you choose, explore top investment accounts until you find the right institutions for you.

Frequently asked questions

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.

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