Do you have $200k to invest? Congratulations. This is an excellent situation to be in!
Maybe you had a financial windfall, inheritance, or you've just been saving money that you want to grow.
No matter how you accumulated such a large amount of cash, defining a strategy to invest your money can be daunting. After all, $200,000 is a significant amount of cash.
In this post, I'll explore how to invest $200k, the best ways to invest $200,000 for monthly income, and much more. Let's get started!
Best Ways to Invest $200,000
1. Invest in Crowdfunded Real Estate with Arrived
Investing $200k in real estate is a great way to grow your investment portfolio and minimize risk.
When it comes to investing in real estate, there are several options. One of my favorites is through crowdfunded real estate platforms like Arrived.
With this platform you can invest in individual income producing rental properties across the country with as little as $100.
This passive investing strategy can generate long-term income for your finances. Unlike other types of real estate investing, you won't need to find tenants, collect rent payments, or deal with the hassle of managing a property.
So, how much can you make with Arrived?
It has a strong history of delivering returns to its users. You can expect to earn anywhere from 7% to over 15%, depending on the year and property you invest in.
With thousands of investors, Arrived is a trusted and safe way to invest in the real estate market stress-free. Create your free account below to get started!
2. Invest in Index Funds with Acorns
Index funds are at the top of the list for many investors. And for good reason. Index funds are a balanced investment that doesn't require hours of research to get started.
These stock market investments are a great way to build wealth and invest $200,000 wisely.
How much can you make investing in index funds?
It's common for many index funds to return anywhere from 8% to 10% annually. This means that your $200k investment would yield anywhere from $16,000 to $20,000 in just its' first year.
To start investing in index funds, I recommend using a platform like Acorns. With over 8 million users, this trusted investing platform is a tremendous way to easily and quickly invest in the stock market.
As a bonus, you'll get $20 completely free when you register with the link below.
3. Invest in Dividend Stocks
Dividend stocks are another great way to invest $200,000 for cash flow. These income generating assets are easy to invest in with your typical brokerage account.
Investing in dividend stocks means you will select individual stocks that pay dividends. You can also invest in a dividend ETF if you want to easily diversify your portfolio.
With this investment strategy you can generate consistent income from your money. Companies that pay dividends can offer these cash payments monthly, quarterly, or on an annual basis.
4. Invest in ETFs
ETFs (also called exchange-traded funds) are another great stock market investment you can utilize to reach your investment goals.
ETFs are a great diversified asset that you can invest in through your brokerage account.
There are many different ETFs to choose from but some of my favorites include:
- Vanguard S&P 500 ETF (VOO)
- Vanguard Dividend Appreciation ETF (VIG)
- iShares Core Aggressive Allocation ETF (AOA)
Want to learn more? Check out the video below!
5. Invest in Commercial Real Estate with Realty Mogul
Another great way to invest $200k is through commercial real estate.
Commercial real estate offers several advantages over residential offerings that can be a great thing for investors. For example, commercial properties tend to have longer lease tenants so there isn't as much turnover.
If you're looking to get started, I recommend Realty Mogul.
With this platform, you can get started with as little as $5,000 and earn a great return on your money while adding some diversification to your portfolio, making it a great way to invest $200k.
6. Invest in Mutual Funds
Mutual funds are another stock market option that some investors prefer.
A mutual fund is a collection of stocks (just like an index fund or ETF) that is traded publicly. The main difference is how they are managed.
Many mutual funds are actively managed. This means that the owners of the fund can choose to change the structure of the fund as they deem necessary.
For example, if the fund believes that technology stocks are on an uprise, they might choose to increase their holdings of tech stocks.
While this might seem like a strategic way to grow your money, mutual funds tend to have much larger fees than other investments.
Many times, it's common for the increased performance of the fund to be offset by the larger fees.
Curious about the differences between mutual funds, index funds, and ETFs? Check out the video below!
7. Invest in Real Estate Investment Trusts
Real estate investment trusts are another way to invest in the real estate market without the headache of having to manage a property.
These investments are traded on the stock market and are an easy way to invest in real estate without a ton of effort.
Basically, when compared to crowdfunded real estate investing, you'll be more liquid with this method. This means you can sell your shares (or “get out”) whenever you feel like it, instead of being locked up for a few years at a time.
Not sure which REITs to invest in? Check out this list.
8. Invest in Rental Properties
Rental properties are among my favorite investments for one main reason: they have some of the largest income potentials of many investments.
While some real estate investors might avoid this type of investing because of the amount of work and headache it can occasionally be, it is usually worth it in the end.
With a rental property you will collect monthly rent payments – which makes them attractive for some investors. The cash-flowing asset can be a great way to reach financial freedom or retire early if you structure your portfolio correctly.
To get started investing in rental properties, you'll need to have some cash for a down payment on your property.
In most cases, you'll need to have a 20% down payment ready to close on the property. This money can be funded by an investor if you do not currently have access to this amount of money. Depending on current interest rates this could be a wise decision.
You'll also need to have the income to support the mortgage. For your first rental property, you likely won't be capable of using the potential income as a part of the mortgage process.
Once you've been approved for a mortgage, it can take some time to find the right property. It's important not to get overly excited and make irrational decisions. You'll want to crunch the numbers and complete your own due diligence to ensure the property can meet your goals.
Most rental properties tend to be a single-family home, but you can also purchase a duplex or other multi-family properties like an apartment building to increase your monthly income.
Here's a great example of one for rent in my area.
Investing in rentals also comes with many tax benefits that other forms of investing might not offer. There are many tax deductions that you are capable of taking advantage of which can help to make this among the most profitable investments in your portfolio.
9. Build Equity in Small Businesses
Small businesses can be risky investments, but they can also be very profitable.
Some investors don't necessarily have the time to start and grow a small business, but thanks to platforms like Mainvest – you don't have to. Instead, you can invest in an existing business.
Mainvest allows you to invest in small businesses across the country for as little as $100. They have many different types of small businesses you can invest in and the target returns are around 25%. Create your free account below to get started!
10. Start an Online Business
Starting an online business is one of my favorite ways to invest money in the 21st century.
While this is not a traditional investment option like the other methods on this list, it can have extremely strong returns.
What exactly is an online business?
An online business can be a variety of business types that are online. For example, starting a blog can be an online business or selling things on Etsy.
By starting your own online business you can make $10k a month or more all with a computer and internet connection.
Investing $200k in an online business can be extremely lucrative and a great method to make serious money.
11. Peer to Peer Lending
Peer-to-peer lending is a great way to earn additional income from your money. With this particular investment you'll loan your money for a set amount of interest.
The amount of money you can make will depend on the borrower you loan your money to. The interest rates will vary depending on the borrower's credit score and payment history. For borrowers with a proven track record of paying back loans, you won't make as much money but your investment has less risk.
If you want to make more money, you can select a borrower with a lower credit rating, however, this can be much riskier.
There are plenty of peer-to-peer lending platforms you can use like Peerform, Prosper, or Upstart.
12. Grow Your Money with Cryptocurrency
As cryptocurrency continues to gain mainstream acceptance – the chances are it will increase in value.
Now, this is among the most volatile investments on the list and as with any investment you should only invest what you can afford to lose. However, many famous investors are now acknowledging cryptocurrency as a legitimate investment.
There are many different cryptocurrencies you can invest in, but I recommend sticking to the most popular like Bitcoin and Ethereum.
So, how much money can you make from crypto?
It's hard to estimate returns because of how new this investment is. Some investors have made millions of dollars investing in crypto.
To get started I recommend using a platform like Binanace. Binance allows you to invest your money into all of the most popular cryptocurrencies easily. Create your free account below to get started!
13. Consider Art Investing
Art investing is a relatively new concept (although it has technically been around for hundreds of years) because it has become accessible to many investors with the help of platforms like Masterworks.
Previously, it would cost a fortune to invest in art. Many famous paintings sell for millions of dollars making them only accessible to the ultra-wealthy.
With art investing through Masterworks you can grow your money without needing millions.
14. Invest Safely with a High Yield Savings Account
High yield savings accounts can be excellent tools to help you reduce risk when it comes to investing.
With these bank accounts you'll earn much more interest compared to a traditional savings account. While a savings account won't yield the largest returns, it's a safe way to store your money.
My favorite account is through CIT Bank. It's a completely free online bank account and you can earn ten times the national average in interest payments.
15. Grow Your Money with Precious Metals
If you're looking for another safe way to start investing $200k, precious metals can be one way to diversify your portfolio to avoid having all your eggs in one basket.
Depending on your financial situation, using physical gold and other precious metals can be some of the best investment options for financial planning when you're near retirement age.
Precious metals are certainly worth your time and a great option to invest $200k.
16. Utilize Retirement Accounts
While 401ks or IRAs are technically not a specific investment, they are a method to invest your retirement money to save on your tax bill each year.
With these retirement accounts, you can invest in the stock market with tax benefits that a traditional brokerage account won't offer.
As a bonus, many employers will offer 401k match benefits which is literally free money that is invested for you.
However, there are some things to keep in mind when it comes to these accounts. If you plan to withdraw money before the age of 59 1/2, you'll face penalties and taxes that can be hefty. Because these accounts are meant for retirement age, the IRS has strict policies to ensure you use the money for retirement and not a moment before.
How to Invest $200k to Make $1 Million
Investing $200k to make $1 million is certainly a challenge that can take some time to complete.
Depending on the investment strategy you select, it can take several years (if not a decade) to reach your financial goal.
The best way to invest $200k to make $1 million include: investing in the stock market through index funds, real estate investing, and investing by starting a small business.
By combining these investment strategies – you can optimize your returns and turn $200k into $1 million.
Related: How to Invest $150k
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How to Invest $200,000 for Monthly Income
Obtaining monthly income from your investments is easier than you think. There are many investments that pay monthly.
To invest $200k for monthly income I recommend investing in rental properties, digital real estate, peer to peer lending, and potentially some bonds.
How to Invest $200k for Passive Income
Looking to generate passive income from your investments?
While it might sound difficult, investing $200k for passive income can be quite simple.
To make passive income from your investments try these options.
Invest in Real Estate
Real estate is one of the best passive income ideas to make money. When investing $200k, it can be tempting to chase the investments with the strongest returns, but this isn't always the best strategy.
Investing in real estate has been a proven investment that many financial advisors recommend.
For example, if you were to purchase a rental property you could generate monthly rent payments that would be 100% passive income.
Invest in an Online Business
Starting an online business is one of the top ways to make passive income from your investments.
For example, by starting a blog you can generate ad revenue and affiliate income each month without having to actively work for it. This self-employment income can help you to quit your job and reach financial freedom.
Starting a profitable blog will take time, however. For many bloggers, it can take anywhere from 6 months to over a year before they start seeing serious results from their efforts.
Another huge benefit of this type of investing is that it is not associated with any other investments so it can be a great hedge in case other markets have a downfall.
You can check out my guide to start a blog here!
Make Passive Income with Dividend Stocks
As mentioned, dividend stocks are a great way to generate consistent passive income from your investments.
These traditional investments can pay you monthly, quarterly, or annually in the form of a cash payment deposited into your brokerage account.
How to Invest $200k in Real Estate
If you want to invest $200k in real estate, you have a few options. For example, with this amount of money you could likely purchase a rental property outright.
You could also use Realty Mogul to build your income in real estate. Another option is to invest in a real estate syndication. A real estate syndication is a private fund that invests your money for you.
The best way to invest $200,000 in real estate is through a platform like Realty Mogul. This is the simplest way to get started with real estate investing without the headache and stress of managing a property.
How to Double $200k
If you want to double $200,000, I recommend investing with Realty Mogul, Acorns, and Mainvest. By creating a portfolio of these investments you can optimize your returns and double your money in around seven years.
Related: How to Invest $300,000
How Much Money Can You Make with $200k?
If you have $200k to invest, you might be wondering how much money you can potentially make.
Depending on the investments you make, it's possible it earn 10% to over 25% annually on your money.
This means that the first year you could make $20,000 on your money or more!
What to do with $200k
If you're not sure what to do with $200k here are a few options.
- Pay off debt. If you have credit card debt, student loans, or other high interest debts – paying these off is probably the best thing you can do with $200k.
- Invest in yourself. There are plenty of ways you can invest in yourself such as furthering your education or learning new skills. These can provide a lifetime return and help you make more money in the future.
- Invest in safe investments. There's certainly no shortage of investment options available, but you need to be smart where you grow your capital. Try to have a mix of investments with different goals.
Final Thoughts on How to Invest $200,000
There are plenty of ways to invest $200k to grow your money and build long-term wealth.
Between index funds, real estate investing, and alternative investments like digital real estate – it's hard to go wrong by developing a well-diversified portfolio.
When investing $200k, be sure to seek advice from an accredited professional who can help you create a plan for your money that is specifically tailored towards your financial situation.
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