Alright, let’s break down how you could invest $100,000 today. But first, a bit about me: I’ve been in the investment game since 1996, worked in investment banking, got my MBA, and have written a ton of personal finance articles. I’ve got over $15 million in investable assets, which helps support my early retirement lifestyle with my two kids.
So, what can you do with $100,000? Well, you could pay for four years of tuition at a public university, buy a fancy watch or a BMW M4, and still have $20,000 left. But the smart move? Invest it wisely and retire early.
After years in finance, I’ve focused on turning new capital into passive income. Most of us should be able to earn between 3% – 5% in relatively low-risk ways. So, $100,000 should be able to generate $3,000 – $5,000 a year.
Right now, I’ve got about $100,000 in cash, more than I usually keep for random expenses. The cash has been piling up due to a surprise real estate crowdfunding distribution and stronger-than-expected rental income from my vacation property in Tahoe. So, I’ve got to figure out how to invest this $100,000. Maybe you’re in the same boat, with a good amount of cash piling up and looking for investment ideas. Let me share what I’m thinking.
Before investing, it’s a good idea to look at all your existing asset classes. Analyze their investment cases. Remember, every dollar you invest in one asset class is one less dollar you have to invest in another. How much you diversify your investments depends on where you are on your financial journey. If you’re in your 20s, perhaps a concentrated position in your favorite asset class is appropriate.
For me, I’ve spread my chips around because I can’t stand losing a lot of money. That’s also why I like to invest in alternative investments and private funds. The wealthier you get, the more you won’t mind paying a fee to have active managers try and make money for you.
Here’s how I’d invest $100,000 today:
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The S&P 500 – Up To $30,000: With the S&P 500 around 5,090 after a 24% rise in 2023, the market is looking fairly valued. The current S&P 500 10-year P/E Ratio is at about 19.5X, higher than the 10-year average trailing P/E ratio of about 16.5X. As a result, I would invest $30,000 in the S&P 500 at 4,800 and below.
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Bonds – Up To $30,000 Due To High Interest Rates: With the 10-year bond yield at around 4.3%, I invested in Treasury bonds again. You can earn a 5% – 5.2% guaranteed yield in 3-month to 1-year Treasury bonds.
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Speculative Investments / Individual Stocks – Up To $25,000: I’m a buyer of up to $10,000 in various names like Apple, Google, and NVIDIA. I’m always going to invest in tech because tech is where there is usually the most innovation.
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Venture Capital Focus: One of the most interesting funds I’m allocating new capital toward is the Innovation Fund. The Innovation fund invests in Artificial Intelligence & Machine Learning, Modern Data Infrastructure, Development Operations (DevOps), Financial Technology (FinTech), and Real Estate & Property Technology (PropTech).
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Debt Pay Down – $5,000: Whenever I’m not feeling a lot of conviction, I always turn to paying down mortgage debt. I will be spending $5,000 immediately towards paying down my vacation property mortgage.
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Hospitality Real Estate – Up to $40,000: The one thing I’ve clearly noticed is the surge in hotel, Airbnb, and VRBO pricing post pandemic. My stronger-than-expected vacation rental income in Lake Tahoe is evidence that travel demand is back.
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Investing In A Real Estate Fund: Another great way to invest $45,000 is to invest in a private real estate fund from Fundrise, my favorite private real estate investing platform.
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One Last Splurge That Doesn’t Build Passive Income: With the remaining $25,000 in funds earmarked for better entry points in the stock and bond market, I’m thinking it might be time to get a watch. One timepiece which I find interesting is the 42 mm Panerai Submersible with a black ceramic bezel. The cost? $9,800 pre-tax.
So, how would you invest $100,000 right now? What are the most attractive investment opportunities? Or, would you rather spend the $100,000 on luxury goods and experiences? How would you invest $100,000 for more joy?
