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Best Ways to Invest $100,000: 6 Key Considerations
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Best Ways to Invest $100,000: 6 Key Considerations
With $100K to invest, consider different accounts and investments available to you, alongside potential taxes and fees.
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Dayana is a former NerdWallet authority on investing and retirement. She has written for The Associated Press, The Motley Fool, Woman’s Day, Real Simple, Newsweek, USA Today and more. She has written and contributed to several personal finance books and has been interviewed on the "Today" Show, "Good Morning America," NPR, CNN and other outlets.
Dayana is a former NerdWallet authority on investing and retirement. She has written for The Associated Press, The Motley Fool, Woman’s Day, Real Simple, Newsweek, USA Today and more. She has written and contributed to several personal finance books and has been interviewed on the "Today" Show, "Good Morning America," NPR, CNN and other outlets. Writer + more + more
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19 years of experience Expertise Retirement planning investment management investment accountsArielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 20 years, and was a senior writer and spokesperson at NerdWallet before becoming an editor. Previously, she was a researcher and reporter for leading personal finance journalist and author Jean Chatzky, a role that included developing financial education programs, interviewing subject matter experts and helping to produce television and radio segments. Arielle has appeared on the "Today" show, NBC News and ABC's "World News Tonight," and has been quoted in national publications including The New York Times, MarketWatch and Bloomberg News. She is based in Charlottesville, Virginia.
Arielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 20 years, and was a senior writer and spokesperson at NerdWallet before becoming an editor. Previously, she was a researcher and reporter for leading personal finance journalist and author Jean Chatzky, a role that included developing financial education programs, interviewing subject matter experts and helping to produce television and radio segments. Arielle has appeared on the "Today" show, NBC News and ABC's "World News Tonight," and has been quoted in national publications including The New York Times, MarketWatch and Bloomberg News. She is based in Charlottesville, Virginia. Published in At NerdWallet, our content goes through a rigorous editorial review process. We have such confidence in our accurate and useful content that we let outside experts inspect our work. Head of Content, Investing & Taxes + more + more
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11 years of experienceChris Hutchison helped build NerdWallet's editorial operation and has directed coverage across banking, investing, taxes and insurance. He now leads a team exploring new verticals. Before joining NerdWallet, he was an editor and programmer at ESPN and an editor at the San Jose Mercury News.
Chris Hutchison helped build NerdWallet's editorial operation and has directed coverage across banking, investing, taxes and insurance. He now leads a team exploring new verticals. Before joining NerdWallet, he was an editor and programmer at ESPN and an editor at the San Jose Mercury News. Head of Content, New Verticals + more + moreWhether you’ve received a windfall or steadily built savings over the years, $100,000 is a significant opportunity to start or continue building long-term wealth.
Whether you’ve received a windfall or steadily built savings over the years, $100,000 is a significant opportunity to start or continue building long-term wealth.In this article, we’ll assume you’re already standing on solid financial ground: You have no high-interest debt, you’ve got an adequate cash cushion to cover an emergency and you can easily cover your monthly expenses.
In this article, we’ll assume you’re already standing on solid financial ground: You have no high-interest debt, you’ve got an adequate cash cushion to cover an emergency and you can easily cover your monthly expenses.With the above financial bases covered, here's how to invest $100K.
With the above financial bases covered, here's how to invest $100K.1. Decide how you want your money managed
1. Decide how you want your money managedDeciding how to invest $100,000 can be equally exciting and overwhelming, but you don’t have to go it alone. However, finding the right help depends on the type of advice you want, how much guidance you want, and how hands-on or hands-off you want to be.
Deciding how to invest $100,000 can be equally exciting and overwhelming, but you don’t have to go it alone. However, finding the right help depends on the type of advice you want, how much guidance you want, and how hands-on or hands-off you want to be.I'm seeking full-service guidance. If you want someone to make investment recommendations, strategize about your taxes, plan for the future and even help with estate planning, consider hiring a financial advisor. View our list of the best financial advisors.
I'm seeking full-service guidance. I'm seeking full-service guidance. If you want someone to make investment recommendations, strategize about your taxes, plan for the future and even help with estate planning, consider hiring a financial advisor. View our list of the best financial advisors.I'd like to automate this process. Robo-advisors are algorithm-based services that offer automated portfolio management. You might get access to human advisors if you have questions. We've rounded up the best robo-advisors, depending on your needs.
I'd like to automate this process. I'd like to automate this process. Robo-advisors are algorithm-based services that offer automated portfolio management. You might get access to human advisors if you have questions. We've rounded up the best robo-advisors , depending on your needs.I’d like to manage it all myself. If you want to create, research and manage your own portfolio, you’ll need a brokerage account (if you don’t already have one) in which to deposit your funds. You can then pick various assets, such as stocks, bonds, mutual funds, ETFs and index funds. Just be sure you’re well-versed in diversification and risk tolerance if you go the DIY route. If this is for you, consult our picks of the best stock brokers.
I’d like to manage it all myself. I’d like to manage it all myself. If you want to create, research and manage your own portfolio, you’ll need a brokerage account (if you don’t already have one) in which to deposit your funds. You can then pick various assets, such as stocks, bonds, mutual funds, ETFs and index funds. Just be sure you’re well-versed in diversification and risk tolerance if you go the DIY route. If this is for you, consult our picks of the best stock brokers .» MORE: Find a financial advisor who can help
» MORE: Find a financial advisor who can help » MORE: Find a financial advisor who can help2. Pad your nest egg
2. Pad your nest eggOnce you've determined how you want your money managed, start putting that money to work. A $100,000 lump sum offers a unique opportunity to pad your savings — and beyond, maxing out your retirement account (more on that later).
Once you've determined how you want your money managed, start putting that money to work. A $100,000 lump sum offers a unique opportunity to pad your savings — and beyond, maxing out your retirement account (more on that later).Perhaps you’re thinking, “With this money, we can pay for the kids’ education so they can graduate without any student loan debt!” Instead, consider this: Kids can get scholarships, take out loans or work through school. Similar opportunities aren't available to retirees. Therefore, it's wise to put your own financial needs, like saving for retirement, ahead of saving for your child’s college tuition.
Perhaps you’re thinking, “With this money, we can pay for the kids’ education so they can graduate without any student loan debt!” Instead, consider this: Kids can get scholarships, take out loans or work through school. Similar opportunities aren't available to retirees. Therefore, it's wise to put your own financial needs, like saving for retirement, ahead of saving for your child’s college tuition.Investing $70,000 of that lump sum and earning a 6% average annual return could mean an extra $300,000 in 25 years — the kind of padding that makes it less likely you’ll run out of money and have to move in with the kids. Use a retirement calculator to see how extra dollars affect when you can retire and how much monthly income you’ll have in the future.
Investing $70,000 of that lump sum and earning a 6% average annual return could mean an extra $300,000 in 25 years — the kind of padding that makes it less likely you’ll run out of money and have to move in with the kids. Use a retirement calculator to see how extra dollars affect when you can retire and how much monthly income you’ll have in the future.» MORE: What to do with an inheritance
» MORE: » MORE: » MORE: What to do with an inheritance3. Max out retirement (and avoid the IRS while you're at it)
3. Max out retirement (and avoid the IRS while you're at it)Employer-sponsored retirement plans, such as a 401(k) or 403(b), and individual retirement accounts, such as Roth or traditional IRAs, can help shield tens of thousands of dollars from taxes. (Learn more about the differences between IRAs and 401(k)s.)
Employer-sponsored retirement plans, such as a 401(k) or 403(b), and individual retirement accounts, such as Roth or traditional IRAs, can help shield tens of thousands of dollars from taxes. (Learn more about the differences between IRAs and 401(k)s .)With $100,000 at your disposal, you can afford to max out both a 401(k) and an IRA if you’re eligible.
With $100,000 at your disposal, you can afford to max out both a 401(k) and an IRA if you’re eligible.The 401(k) contribution limit is $24,500 in 2026. People aged 50 and older can contribute an extra $8,000 as a catch-up contribution. Due to the Secure 2.0 Act, those aged 60, 61, 62 and 63 get a higher catch-up contribution of $11,250.. Combine that with an IRA or Roth IRA contribution limit of $7,000 for 2025 ($8,000 if aged 50 and older). For 2026, the limit is $7,500 ($8,600 if aged 50 and older).
The 401(k) contribution limit is $24,500 in 2026. People aged 50 and older can contribute an extra $8,000 as a catch-up contribution. Due to the Secure 2.0 Act, those aged 60, 61, 62 and 63 get a higher catch-up contribution of $11,250. $24,500 in 2026. People aged 50 and older can contribute an extra $8,000 as a catch-up contribution. Due to the Secure 2.0 Act, those aged 60, 61, 62 and 63 get a higher catch-up contribution of $11,250. $24,500 in 2026. People aged 50 and older can contribute an extra $8,000 as a catch-up contribution. Due to the Secure 2.0 Act, those aged 60, 61, 62 and 63 get a higher catch-up contribution of $11,250. . Combine that with an IRA or Roth IRA contribution limit of $7,000 for 2025 ($8,000 if aged 50 and older). For 2026, the limit is $7,500 ($8,600 if aged 50 and older) $7,000 for 2025 ($8,000 if aged 50 and older). For 2026, the limit is $7,500 ($8,600 if aged 50 and older) $7,000 for 2025 ($8,000 if aged 50 and older). For 2026, the limit is $7,500 ($8,600 if aged 50 and older) .If you max both out, you're on your way to investing as much as possible for your future.
If you max both out, you're on your way to investing as much as possible for your future. ? Nerdy TipYou can't deposit a lump sum into a 401(k) — these accounts typically take contributions out of your paycheck. But you can drastically increase your contribution percentage for a few months, paying yourself back from the $100,000.
You can't deposit a lump sum into a 401(k) — these accounts typically take contributions out of your paycheck. But you can drastically increase your contribution percentage for a few months, paying yourself back from the $100,000.» Ready to max out? Consult our picks for the best Roth IRAs
» Ready to max out? » Ready to max out? » Ready to max out? Consult our picks for the best Roth IRAs4. Handle your taxes now
4. Handle your taxes nowWe've focused primarily on investing, but an equally important objective is to retain as much of that $100,000 lump sum as possible. Specific situations may require immediate action to avoid unwanted attention from the IRS. These scenarios include:
We've focused primarily on investing, but an equally important objective is to retain as much of that $100,000 lump sum as possible. Specific situations may require immediate action to avoid unwanted attention from the IRS. These scenarios include:I liquidated a 401(k) when I left a job. You have just 60 days after an employer cuts you a check to get that money into a Roth IRA or a traditional IRA. Otherwise, you’ll trigger a pretty hefty tax bill consisting of income taxes (the IRS treats the money as earned income for the year) and a potential 10% early withdrawal penalty. Read more about how to roll over a 401(k) to an IRA.
I liquidated a 401(k) when I left a job. I liquidated a 401(k) when I left a job. You have just 60 days after an employer cuts you a check to get that money into a Roth IRA or a traditional IRA. Otherwise, you’ll trigger a pretty hefty tax bill consisting of income taxes (the IRS treats the money as earned income for the year) and a potential 10% early withdrawal penalty. Read more about how to roll over a 401(k) to an IRA .I inherited an IRA: If you inherited an IRA, you may be on a tight deadline. The rules about what beneficiaries can and cannot do vary, as does the timeline for taking action without incurring penalties or triggering extra taxes. It all depends on your relationship to the deceased (surviving spouses have different options than other beneficiaries), whether the former owner started taking distributions before they died, and the type of IRA (Roth or traditional).
I inherited an IRA: I inherited an IRA: If you inherited an IRA , you may be on a tight deadline. The rules about what beneficiaries can and cannot do vary, as does the timeline for taking action without incurring penalties or triggering extra taxes. It all depends on your relationship to the deceased (surviving spouses have different options than other beneficiaries), whether the former owner started taking distributions before they died, and the type of IRA (Roth or traditional).» MORE: How to find a CPA or tax accountant near you
» MORE: How to find a CPA or tax accountant near you » MORE: How to find a CPA or tax accountant near you5. Stay vigilant about fees
5. Stay vigilant about feesNot only is every dollar you hand over in fees money you’ll never recoup, but it’s also one less dollar you invest for your future. And a dollar that’s not invested has no chance to compound and grow.
Not only is every dollar you hand over in fees money you’ll never recoup, but it’s also one less dollar you invest for your future. And a dollar that’s not invested has no chance to compound and grow.Even a small extra fee can take a huge bite out of investment returns. The fix? Consider low-cost mutual funds and exchange-traded funds instead of paying the higher price for actively managed funds.
Even a small extra fee can take a huge bite out of investment returns. The fix? Consider low-cost mutual funds and exchange-traded funds instead of paying the higher price for actively managed funds.» MORE: How taxes on stocks work
» MORE: How taxes on stocks work » MORE: How taxes on stocks workSee where you stand compared to households like yours, and get steps you could take to grow from here.
Run the numbersNWWP is an SEC-registered investment adviser. Registration does not imply skill or training. Calculator by NerdWallet, Inc., an affiliate, for informational purposes only.
NWWP is an SEC-registered investment adviser. Registration does not imply skill or training. Calculator by NerdWallet, Inc., an affiliate, for informational purposes only.6. Reallocate your portfolio
6. Reallocate your portfolioWith this money in hand, now’s a good time to review where you are:
With this money in hand, now’s a good time to review where you are:Take an asset allocation snapshot. Look at the overall mix of investments you have in all your accounts, including current and old 401(k)s, IRAs, taxable brokerage accounts, bank accounts and so on and make sure they are generally aligned with the amount of time you plan to leave your money invested and how much risk you want to take. More time generally allows you to take more risk, assuming you're comfortable.
Take an asset allocation snapshot. Take an asset allocation snapshot. Look at the overall mix of investments you have in all your accounts, including current and old 401(k)s, IRAs, taxable brokerage accounts, bank accounts and so on and make sure they are generally aligned with the amount of time you plan to leave your money invested and how much risk you want to take. More time generally allows you to take more risk, assuming you're comfortable.Identify areas where your portfolio has become unbalanced. The amount of money you have in stocks vs. bonds or other investments can morph over time as investments grow or lose value. Rebalance your portfolio by using some money to restore the underrepresented assets and reduce your exposure to risk from lack of diversification.
Identify areas where your portfolio has become unbalanced. Identify areas where your portfolio has become unbalanced. The amount of money you have in stocks vs. bonds or other investments can morph over time as investments grow or lose value. Rebalance your portfolio by using some money to restore the underrepresented assets and reduce your exposure to risk from lack of diversification.Consider asset location, too. Asset location also offers tax diversification. With your 401(k) and IRAs, you’ve got the tax-deferred angle covered. Because you’re not taxed on investment growth, holding investments that generate taxable income (such as corporate bond funds, high-growth stocks or mutual funds that buy and sell a lot) in these accounts makes sense. Even better if you can hold them in Roth versions of these accounts, where withdrawals in retirement are tax-free. In a taxable account, such as a regular brokerage account, capital gains and interest income are subject to taxes.
Consider asset location, too. Consider asset location, too. Asset location also offers tax diversification. With your 401(k) and IRAs, you’ve got the tax-deferred angle covered. Because you’re not taxed on investment growth, holding investments that generate taxable income (such as corporate bond funds, high-growth stocks or mutual funds that buy and sell a lot) in these accounts makes sense. Even better if you can hold them in Roth versions of these accounts, where withdrawals in retirement are tax-free. In a taxable account, such as a regular brokerage account, capital gains and interest income are subject to taxes.» MORE: How capital gains tax works and how to save
» MORE: How capital gains tax works and how to save » MORE: How capital gains tax works and how to save About the author Dayana Yochim Dayana Yochim Dayana Yochim is a former NerdWallet authority on retirement and investing. Her work has been featured by Forbes, Real Simple, USA Today, Woman's Day and The Associated Press. See full bio.How to Invest $100K
1. Decide how you want your money managed 1. Decide how you want your money managed 2. Pad your nest egg 2. Pad your nest egg 3. Max out retirement (and avoid the IRS while you're at it) 3. Max out retirement (and avoid the IRS while you're at it) 4. Handle your taxes now 4. Handle your taxes now 5. Stay vigilant about fees 5. Stay vigilant about fees 6. Reallocate your portfolio 6. Reallocate your portfolioHow to Invest $100K
1. Decide how you want your money managed 1. Decide how you want your money managed 2. Pad your nest egg 2. Pad your nest egg 3. Max out retirement (and avoid the IRS while you're at it) 3. Max out retirement (and avoid the IRS while you're at it) 4. Handle your taxes now 4. Handle your taxes now 5. Stay vigilant about fees 5. Stay vigilant about fees 6. Reallocate your portfolio 6. Reallocate your portfolio More like this Investment Basics Investing How Much Does a Financial Advisor Cost? Most financial advisors charge based on how much money they manage for you. Fees are typically 1% a year but can be lower. 2 By Andrea Coombes, Taryn Phaneuf Do You Need a Financial Advisor? 7 Ways to Tell You may need a financial advisor if you're facing big life changes, don't have financial goals, have complex compensation, high tax bills or for other reasons. Taryn Phaneuf How to Find Cheap or Free Financial Advice Quality financial advice is more accessible than ever — and much of it is free or inexpensive. Here's how to get it. Anna-Louise Jackson Retirement Calculator Are you on track to save enough for retirement? Use our calculator to check your progress, see how much retirement income you'll have and estimate how much more you should save. 2 By June Sham, Alana BensonGet matched to a financial advisor for free with NerdWallet Advisors Match.
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