Best Ways To Invest 100K – And Manage Risk

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100K is not a small amount of money. But such an amount needs good management and some opportunities to increase the amount of money you own. 

In his book, Rich Dad, Poor Dad, Robert Kiyosaki suggests that investing is a good way to generate income.

Investing is the way to put your money at work – but, of course, it is important to know what are the best investment opportunities. 

Let’s see what are the best ways to invest £100,000 – always considering that any type of investment comes with risks. 

What are the best ways to invest 100K? 

The current financial system offers countless ways to invest your money. £100,000 is a significant amount to consider for investing – if you know what to do. 

In fact the first step is always to get a deep understanding of the assets you want to invest in.

Fortunately, today you can find several ways to invest even if you’re still not an experienced investor: social trading, impressive amounts of information, and professional investors that share their knowledge on social media. These are just some of the methods you can use to better understand how to invest. 

Here are some ways to start your journey as an investor. But remember: experienced traders and beginners can both benefit from the asset categories we’re going to list to know what are the best ways to invest 100K.

Stocks

Stocks are financial instruments that represent the ownership of a part of the companies that issue them. Stockholders receive, in return, part of the profits of the company – according to the amount invested in the same company. 

Stocks are one of the most common types of investments, and today, it’s far easier than in the past, since investors can buy stocks on online platforms – as well as they can more easily get information about companies. 

Stocks can be both inexpensive and costly, but whatever your choices are, 100K is more than good if you want to diversify your stock portfolio. 

Moreover, when you invest in stocks you can choose basically any sector available. 

Cryptocurrencies

Cryptocurrencies are more volatile and risky assets if compared to stocks, but also returns can be higher. 

Digital currencies are relatively new assets, but there are already valuable cryptos that revolutionised the financial space. An example is Bitcoin, which is even considered a safe haven, on pair with gold. 

Cryptocurrencies offer various options for earning passive income. Staking is one of these and, along with investments in stablecoins, manage to offer less risky ways to invest in cryptocurrencies. 

CFDs

CFDs – contracts for difference – are interesting financial instruments because they can represent different types of assets. 

Contracts for difference are contracts between a broker and an investor, which represent underlying assets that can pertain to different categories, like stocks or cryptocurrencies. 

CFDs, like stocks, can help you diversify your portfolio – but they can be less costly. In fact, CFDs can even represent just fractions of stocks or other assets, giving you more opportunities to invest your budget.

But remember, if you invest 100K in CFDs, you’re not really owning any assets – you’re just owning a contract that represents assets. 

ETFs

ETFs – exchange traded funds – represent one of the best ways to invest 100K. They allow you to invest not in individual stocks, but in a basket of assets – also divided by categories. 

They can be traded on stock exchanges, and this favours liquidity. 

Moreover, ETFs usually track indexes – an example are ETFs that track the S&P 500 Index. 

If you feel comfortable with other types of financial products, ETFs cover a number of markets – including real estate. 

They differ from another financial product, mutual funds, in the sense that mutual funds are less liquid and are managed by people – while ETFs are also available with robo advisors. 

Moreover, mutual funds tend to be more costly. So, it’s up to you to choose the right product according to your needs. 

Real estate

Investing in real estate is costly, and 100K might not be enough. 

But the current financial market is so sophisticated that it can also offer people with smaller budgets the opportunity to invest in this market that is not so liquid. 

There are a few ways to invest in real estate – even if your investing budget amounts to 100K: 

• REITs – real estate investment trust. These instruments are very similar to exchange traded funds, but in this case, the focus is on real estate. 
• Crowdfunding. In this type of investment, people put together their budgets to make a common real estate investment – and then share the possible profits. 
• Real estate NFTs. Non-fungible tokens are an important part of the blockchain-based world. They have the peculiarity to be more secure than traditional assets – since they’re recorded on immutable blockchains – but they also favour fragmentation. When it comes to real estate NFTs, you cannot only invest in digital real estate, but also in real assets represented by NFTs. An example of this business model is Omni-PSI: people can buy the NFTs from the company, and when they reach a sum that is enough to buy a specific property, each NFT owner owns a fragment of that property. Then, since the property is rented out, NFT owners receive profits according to the amount invested. 

P2P lending

Peer-to-Peer lending is a form of lending that directly involves two parties without needing the intermediation of banks. 

Today, there are platforms that facilitate this procedure and also guarantee you that the borrower will repay the loan. 

This form of lending can guarantee profits due to the interests the borrower has to repay and represents a good source of passive income.

Retirement plans

If you want to make a choice that is always useful, you can choose to invest your 100K – or at least part of your investing budget – in a retirement plan. 

While employed people can benefit from workplace pensions, disposed of by the employee, if you’re not employed, or you’re self-employed, or you simply want to benefit from a larger fund for your retirement, you can choose a personal retirement plan. 

You can choose among different providers and set the payment conditions that work better for you. 

Tips to consider for successful investments

Even if there are no totally secure investments, there are some precautions you can take to manage your investment activity with more peace of mind. Some of these tips work good if you’re a beginner, but in general, they’re the precautions followed by all investors when they begin their journey. 

• Start with the market you know better. This is pivotal for two reasons: first off, it is important to understand markets to make informed decisions. Second, if you know the market you’ll feel less overwhelmed during your activity, since it’s easier to feel that you master the topic. 

• Never risk more than you can afford to lose. Another top tip for trades and investors. In reality, a professional like Warren Buffett, The Oracle of Omaha, says that the only rule when it comes to investing is never lose money. But people like Warren Buffett are rare, and it’s very likely that you will lose some money at some point during your activity as an investor. The most imèporant thing, in these cases, it’s important not to lose more than you can afford. This avoids two things – dramatic financial consequences, which would negatively affect your life, and the loss of your passion for investing. 

• Invest according to the level of risk you’re comfortable with. Every time you deal with something new, or with a complex thing, it is very important to analyse yourself first. This is pivotal if you want to fully understand what’s your attitude in general, and risk in particular. Try not to go beyond your limits, at least at the beginning, and only deal with the level of risk you feel comfortable with. As you become more experienced, you might also choose different levels of risk over time. 

• Always plan – and follow the plan. This is another fundamental tip to follow. A plan has to do both with setting your budget and the kind of portfolio you want to own. When you set a budget, respect it – to avoid losing more than you can afford. Moreover, choosing a specific type of portfolio is important because it needs to be something that reflects your attitude. High-risk investors who expect possible higher profits may be interested in this activity. They will choose more aggressive portfolios. On the other hand, investors who don’t want to deal with risk, and prefer more secure earnings – even if lower – will choose conservative portfolios. If you want to find a middle ground, and something more dynamic, you can choose a balanced portfolio – able to balance profits and risks. 

• Avoid emotional investing. This is extremely dangerous in trading and investing. Your decisions should always be based on factors as objective as possible. If your decisions are driven by emotions, you’re very likely to lose more money than necessary. Avoiding emotions is something that distinguishes good investors from bad investors. In fact, a good investor knows that most traders and investors act irrationally, and he profits from this. Most techniques to trade and invest rely on the fact that even if markets change, human beings always feel the same emotions. This is reflected by price charts, but mastering them is more an art than a science. When you avoid emotions and learn how to take advantage of other people’s emotions, you’re on the right track. 

Conclusion 

100K is a great amount of money that allows you to choose among countless opportunities to invest. This activity can generate additional profits, since investing is actually the best way to put your money at work. But, of course, all this is not risk free. 

It is important to understand this point, because there are no secure investments – and the safest usually make you earn lower profits. 

It’s up to you to choose the right financial product for you, especially according to your needs, goals and levels of risk.  

In this article, we showed you the best ways to invest 100K – but you have the final say!

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