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Where and How to Invest 100k

So, you’ve got some serious capital, but you don’t know what to do with it? $100,000 dollars is a lot…

By editor , in The Public Markets , at August 9, 2018

So, you’ve got some serious capital, but you don’t know what to do with it? $100,000 dollars is a lot of money. Investment can be the best thing you’ve ever done, far outdoing the interest rates that banks offer if you take the easy route and invest 100k in a savings account. But where and how can you invest 100k, while guarding against losing your money but still giving yourself the chance of a nice payday? Here are 3 top tips.

  1. Balance Your Risks

No risk, no reward. Well, that’s not entirely true, but you certainly aren’t going to get rich quick if you play everything safe. A good starting point is an ETF (Exchange-Traded Fund) – the shares are easy to buy and sell and fees are pretty cheap. They’re generally considered safe – although some ETFs, like leveraged oil ETFs, are in fact pretty high risk, so you’ll want to do some research first. For higher risk, think IPOs, REITs (Real Estate Investment Trusts) or even – and this is best left to experienced investors – options trading.

  1. Consider a Mutual Fund

If you’re looking for a diverse portfolio but you don’t have the time or the knowhow to put your money where you want it, consider a mutual fund. Put simply, a fund manager pools together money from several investors, then he or she invests it in a range of securities for you. Which securities? Well, that’s why you’re paying them – they know best (or you hope they do)! Assuming the securities generate returns in terms of dividends, interest, capital gains or whatever, you can then choose for your profits to be automatically reinvested, or you can cash out at any time by selling your fund.

  1. Penny Stocks

Penny stocks get a lot of bad press because they’re high risk. You’re often looking at a sea of companies who are on the verge of bankruptcy, with a higher level of volatility. The main risk though is fraud through pump and dump schemes – think the Wolf of Wall Street. But of course, there’s the chance of hitting on that one stock that soars. After the tech bubble, for example, CNWR (Concur Technologies) was trading at 30 cents. Today, it goes at well over 100 dollars. It’s also important to note that while penny stocks may not always be the best stocks to hold over long periods, their volatility can make them excellent short-term trades.

Diversification between low, mid and high-risk strategies is, in our opinion, the key to success. If you are going to invest 100k, don’t put all your eggs in one basket but make sure there is some room for growth.