8 Options for How to Invest 200k in 2022

I’ve written elsewhere on the blog about how to invest a lump of 100k so if you’re in the fortunate position of having a ton of cash sitting around, you know what to do with it. This post Majolein at Radical Fire takes it a step further and gives you ideas on what to do with 200K. Tim

Investing $200k is a lot of money, and investing this much can earn you additional income and will definitely help you with your financial goals. In this article, let’s find out where and how to invest 200k and see how these figures grow.

There are a lot of options to invest your 200k. The challenge here is to find out the best choice where and how to diversify your money and make the best possible returns for your investment. This may be a short-term goal or a passive income stream that will ultimately reach your financial independence.

Continue reading and learn how to invest 200k and know which investment strategy suits you best.

How To Invest 200k?

We cannot reiterate enough that 200k is a big sum of money, and this amount will present you with a lot more options on investing that can give you better returns. 

The earlier you start investing your 200k, the better so that you can grow your fund. But do remember that the trick here is to spread out your investments and learn to diversify, and this will help you manage your risks and maximize your gains.

How and where to invest your 200k? Here are 8 options that can guide you on your investment journey. 

1. Stock Market

There are various ways of investing in the stock market. These include 401(k), Solo 401(k), or SEP IRA. You can also invest in stocks, index funds, bonds, and other securities with the help of a brokerage firm. 

The brokerage can also help you invest in Exchange-Traded Funds (ETFs) and more. One advantage of the account you open is that it’s usually more liquid than the tax-advantaged investments.

M1 Finance is a stock and ETF brokerage that helps you invest in stocks. For as little as $100, you can start investing and be able to open an account. Read our full M1 Finance review and learn the services of the platform.

Many personal finance advisers suggest that you should invest 40 to 50% of your 200k in stocks and bonds. The levels of risks differ, but you can get the help of a personal advisor in choosing an option with low or medium risk. 

Typically, the goal of investing in the stock market is to achieve long-term growth.

Pros: Stock Market

  • Possible great returns in the long term
  • Ability to diversify in different economic sectors
  • A chance to invest in ETFs and index funds
  • A good portfolio investment

Cons: Stock Market

  • It can be risky to invest in individual stocks
  • There is always a possibility of losing your investment

[Related Read: VTSAX vs. VFIAX – Which Investment is Right For Me?]

How To Get Started?

The first step in investing in the stock market is opening a stock brokerage account. You can speak to a stockbroker or a personal financial advisor, and they will help you choose the right stocks, bonds, or other investment options. 

Of course, there will always be risks. But the best way to get over your fear of the stock market is to make educated and risk-based decisions. This is done by doing your own research before investing. Know and learn the potential stocks available and check if these are aligned to your financial goals either for the short term or the long term.

Who Should Invest In The Stock Market?

Investing in stocks, ETFs, bonds, and other securities can work well for many investors, particularly those who want to leave their money to grow with time. This makes it a good investment option if you have 200k that you are trying to invest.

2. Investing In Cryptocurrencies

Today, cryptocurrencies have continued to gain mainstream acceptance. You can now use cryptocurrencies such as Bitcoin to make payments in more places than ever before, and we even have bitcoin ATMs popping up internationally.

With this large-scale Bitcoin adaptation, some industry experts suggest that Bitcoin will be worth more than 200k in the next few years. This makes cryptocurrencies a good investment option. 

Personal finance advisors generally suggest investing 5% of your capital in cryptocurrencies. Some of the popular cryptocurrencies you can invest in include Bitcoin, Ethereum, Dogecoin, and more. Tim’s note: With the emergence of NFTs as an asset class in their own right, perhaps you might include them. This post on Smart Bitcoin Buyer is a great read.

Pros: Cryptocurrencies

  • Easy to trade using mobile apps
  • Possibility of growing your investment
  • You can earn interest on crypto deposits

Cons: Cryptocurrencies

  • Very volatile
  • Short history
  • The learning curve to get started

How To Get Started?

Platforms such as BlockFi, eToro, or Binance were solely created to buy cryptocurrencies. These enable investors to earn interest in their crypto deposits. The interest on crypto deposits accrues daily and is paid out monthly. Some cryptos have a return of over 8.6% APY. 

Who Should Invest In Cryptocurrency?

Cryptos are a great investment option for people who would like to diversify outside the traditional investments. However, you should be prepared for a roller coaster ride as cryptos are very volatile.

3. Real Estate

According to real estate experts, you should invest 10 to 15% of your money in real estate, and the level of risk usually varies with the option. The goal is to ensure that you get a passive income that offers growth.

Many platforms are available for investing in real estates, such as Real Estate Investment Trusts (REITs) and rental properties. With REITs, you can become an investor in real estate without the hustle of working as a landlord. 

The real estate market is always on a boom, and this means that it can help open up cash flow when you invest 200k in various market sectors. However, REITs also have their potential downsides, such as illiquidity. They are also not suitable for all investors, and there is no assurance that you will also meet your investment objectives.

Pros: Real Estate

  • An easy investment options
  • Ability to diversify your portfolio
  • Can be an active or passive source of income

Cons: Real Estate

  • Not a liquid investment
  • Returns aren’t guaranteed

How To Get Started?

Some platforms make it easy to invest in real estate without absorbing all the risks involved. When you invest in such platforms, you will not need to pay any mortgage or search for tenants. The investments are also spread across residential and commercial properties as per the choice of the platform manager.

If this doesn’t feel exciting, you can buy a property and rent it out. You can put the 200k in buying a property, but it will also mean that you will need to wait for a longer time to see a bigger return on investment.

Here are some of the platforms that you consider investing in:

  • Groundfloor – is an innovative new platform where everyone can invest in real estate starting with $10. Here is our full Groundfloor review and learn the process of the platform.
  • EstateGuru – a European real estate crowdfunding platform. Check our full EstateGuru review for more details of the platform.
  • Reinvest24 – a property crowdfunding site where you can earn from growing property valuations and renting. Here is our full Reinvest24 review, and learn more about the platform.
  • Fundrise – an online investment platform where you can invest in private commercial and residential properties at a low cost.

Who Should Invest In Real Estate?

Investing in real estate is ideal for anyone who wants to gain knowledge and experience in the real estate market. Real estate investment is a safe and stable investment strategy for anyone looking to earn passive income. If you are interested in the real estate industry and are looking for an investment for your money, this may be the best option for you.

4. Peer-To-Peer Lending

Peer-to-peer lending has been around for years. This is basically lending money to others and earning income through the returns’ interest. Sites like Mintos have been a popular platform for P2P lending since 2015. 

You can also read our full Mintos review and check the platform’s benefits for yourself. When you sign up using my link, you get a bonus of 0.5% of your invested amount in the first 90 days!

Pros: P2P Lending

  • High investment returns
  • The source of funding is very convenient
  • Low-interest rates

Cons: P2P Lending

  • No insurance
  • High credit risks

How To Get Started?

You can sign up on any online P2P lending platform available. But again, make sure that the site is legit and secure so that your investment will be safe. Do your own due diligence to check if the services these sites offer are good and will give you the best returns for your money. Learning about these sites before investing will help you avoid falling prey to scammers roaming the internet nowadays.

Who Should Invest In Peer-To-Peer Lending

P2P lending may be for you if you have a high-risk tolerance. Due to the probable high returns based on the interest, this type of investment carries with it, accordingly, the risk on your investment. So make sure that you know peer-to-peer lending risks when considering this form of investment for your money.

5. Gold

Investing in gold is a great addition if you’re investing in stocks. You should aim to invest 10 to 15% of your 200k into gold. This will come with a certain level of risk, just like the other investment options above. 

The main reason for investing in gold should be to diversify your investment, and it can also help protect your portfolio from inflation. Gold is an excellent investment in an economic downturn as the price will rise, and your initial investment will increase in value.

Pros: Gold

  • Ability to diversify your portfolio
  • A good hedge against inflation

Cons: Gold

  • Can get volatile in the short-term
  • May not offer the profit expected

How To Get Started?

Various platforms offer you an opportunity to invest in gold. For instance, Orion Metal Exchange enables you to invest in gold as part of an IRA. Other vendors such as Oxford Gold Group offer you an excellent opportunity to invest in gold.

Who Should Invest In Gold?

Gold is a good investment for people worried about the volatility and fluctuations in today’s market. Buying a commodity such as gold will provide a hedge against currency failures and cash problems. Ultimately, gold has also stood the test of time as it has been around for a long time and is therefore worth considering. 

6. Solo 401(K)

The amount that you should invest in a 401(k) depends on your needs. A Solo 401(k) will generate a good amount of money over time, but the ultimate goal should be long-term growth. 

Besides that, you can also invest up to 25% of compensation to your Solo 401(k), with a maximum of $58,000.

You make contributions as a tax-advantaged option, and therefore, there are no taxes and costs to be paid when money gets invested in the fund. But when you take out the money, this leads to taxation.

Pros: Solo 401(K)

  • Enables you to save for your retirement
  • Allows you to choose a 401k fund
  • Minimize your tax bill in your year of contribution

Cons: Solo 401(K)

  • It is retirement money. A penalty applies if you access it earlier
  • Additional paperwork may be needed for the Solo 401(k)

How To Get Started?

You can open a 401(k) account with some of the best brokerage firms online. You can consider including Charles Schwab, Vanguard, and Fidelity. 

You may also read our articles about Charles Schwab, Vanguard, and Fidelity funds. This will give you an overview as to what funds to buy. Take a look here:

Who Should Invest In Solo 401(K)?

Investing in a Solo 401(k) is relevant and should be considered by anyone who meets the qualifications based on their self-employment income. If you are a business owner or self-employed, having a 401(k) is an optimal investment strategy that will help you down the line.

7. High Yield Savings Account

Out of your 200k, you should put some of your money in a high yield savings account. You should ensure that such an account pays a higher interest than the average annual inflation rate. We recommend investing 10 to 20% of your portfolio in a savings account. 

When choosing such an account, consider:

  • Minimum balance
  • Minimum deposit
  • Withdrawal options
  • Annual percentage rates

Pros: High Yield Savings Account

  • Higher Annual Percentage Yield (APY) than a regular savings account
  • Lower minimum balance and no monthly fees
  • Get access to money when it’s essential
  • Apps available for money management
  • You can transfer money between different accounts
  • Insured by the FDIC

Cons: High Yield Savings Account

  • Can only be found online
  • Not provided by all banks
  • Can be a lag during the fund’s transfer

How To Get Started?

We advise that you find a brick-and-mortar or online bank to open your savings account. Just ensure that you consider the factors we have highlighted above.

Who Should Invest In High Yield Savings Account?

Anyone can choose to invest in a high yield savings account due to the inherent pros this type of investment brings. A high yield savings account has a higher interest rate than a standard savings account, so it would help you keep your emergency fund close while making some money off of it.

8. Online Business

If you don’t mind a hands-on investment strategy, you can consider buying a business. This will allow you to build something that will bring long-term income for many years. You can also build up the business to have other people manage it on your behalf.

Pros: Buy A Business

  • Possible to make huge returns
  • Build passive income using your creative talents
  • Can get started with a small financial investment

Cons: Buy A Business

  • A learning curve is needed to get started
  • No guarantee of success

How To Get Started?

You can buy a franchise or a local business in your area. You can also buy an online business through different platforms and build passive income eventually. Or, you can do your own online business like starting a blog. If you have a passion for writing and sharing about anything under the sun, this one may be a better fit for you.  

You can do some options to earn money online like flipping things for profit, becoming a Youtuber or a Snapchatter, and many more. It’s your call which online business to make that you think you can excel based on your interest and skill.

Who Should Invest In An Online Business?

Buying an online business is a good fit for people who can manage the business 100%. This is a good choice as you can oversee and become hands-on when growing and managing your business. If you have the passion and the interest in this line of work, this may be your best bet.

I wrote a post about investing in Hulu, an unlisted stock, but if you’re interested in online businesses, there are options for buying into unlisted companies. Tim

In Summary – How To Invest 200K

You already have a bag of 200K to invest and probably want to diversify your funds. The next challenge is where and how to invest your money. There goes a very apt expression when making this decision: never put all your eggs in one basket. 

As you read through this article, there are so many options that you can choose from, and it all boils down to which ones are aligned with your financial goals.

You are already armed with the capital to use for your investment, and the cards are already laid out on the table. You only need to choose, based on an educated and risk-based decision aligned with your investment objectives. You are halfway there, you just need to push a little further, and your financial plans are yours for the taking.

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Tim Thomas has no positions in the stocks, ETFs or commodities mentioned.

This post originally appeared on Radical Fire and has been syndicated by Tim Thomas / Timothy Thomas Limited.

Featured image credit: Pixabay.