The more money you have, the more doors you can open. But while it may be tempting to spend the $200,000 you have at your disposal on a brand new toy or something else that has been pulling your attention, investing this money into your future can often provide you with far greater rewards. With that in mind, figuring out exactly how to invest $200,000 into various investment vehicles can be difficult as there are so many different options you have at your disposal.
Start your investment journey here by taking a look at these 15 investment ideas we’ve compiled.
Focus on These Foundation Investment Ideas First
Investing is exciting, especially when you have more money to spend on investments that attract your attention most. But what few investors consider is that the more exciting investment types often carry the most risk. If you sink too much of your investment cash into the wrong investment, you can put yourself and your money in harm’s way. Before you start seeking out alternative investments consider foundational investment ideas like the options that we’ve listed below.
1. Pay Off Lingering Debt
Everyone has debt in some form or another. Whether you’re paying off a car, a home, or even credit card debt or student loans, chances are that you’re relatively accustomed to the concept of debt. However, while some individuals are excellent at erasing this debt on a monthly basis, others may have lingering debt that’s constantly on their minds and impacting their credit score and financial health as a whole.
Let’s be clear: investing is important. However, making the moves needed to grow your wealth doesn’t do much for you if you have debt that’s still accumulating interest and preventing you from living a financial life that’s always in the green. Before you take any of the below investment ideas into consideration, use some of your $200,000 to pay off any debts you may have neglected up to this point. With this debt erased, you can rest assured that your future actions will help you develop wealth rather than being held back by unsettled debt.
2. High-Yield Savings Accounts or College Savings Accounts
There’s a type of security that comes with having more money at your disposal. But while we may feel stable at all times, that doesn’t mean that disaster can’t strike and impact us at any moment. No matter who you are, the most important thing to have on your side is an emergency fund that you can tap into if the need arises.
The best way to do this is to find a high-yield savings account where you can let your money sit and slowly accumulate interest over time. While a couple of month’s worth of expenses is what you should stash away, you could always put more into your account, just to make sure that you’re not wanting for money should you lose an income stream or find yourself needing much larger quantities of cash than anticipated.
Another excellent idea for your family is to put money into a savings account specifically for them or to focus on an account with a specific purpose, like a college savings account. 529 savings plan, for example, can allow you to either build a fund that your child can tap into once they enroll in a university or lock-in specific tuition prices at a university of their choice long before they pursue their degree.
When you focus on saving for any unforeseen issues and developing your family’s security as well, you can prepare for the future more effectively!
3. Max Out Your Retirement Accounts for 2021
$200,000 gives you plenty of cash to spread around as you see fit. However, if you’re someone who’s looking to max out their retirement account contributions for the year so you can take advantage of your efforts once the time comes to start withdrawing from those accounts, now’s the perfect time to contribute the fullest amount possible towards your future.
But where do you begin, and just how much can you contribute? The truth is that contribution limits can be difficult to find, especially for various types of retirement accounts that you may currently be investing in. Let’s break down a few of these so that you know what to expect once you start transferring money over.
- Traditional and Roth IRA Limits: $6,000 for individuals under 50 and $7,000 for individuals over 50
- Traditional and Roth 401(k) Limits: $19,500 for indivdiuals under 50 and $26,000 for individuals over 50
- Solo 401(k): $58,000 for individuals under 50 and $64,500 for individuals over 50
- Simple IRA: $13,500 for individuals under 50 and $16,500 for individuals over 50
- SEP IRA: $58,000 for individuals over and under 50
Regardless of which retirement accounts you currently have, making the decision to max them out early in the year can ensure that you have taken care of one major investment decision and can allocate the rest of your funds to other options that appeal to you. If you have a retirement fund that has yet to be filled yet, make this one of the first money moves you make!
4. Individual Stocks or Various Index Funds
There are two ways that you can make money through your investments. The first is by investing in an instrument that is expected to grow in value over time, at which point you can earn a profit by selling that asset at a future date. The other way is by investing in an asset that will bring you recurring income the entire time that you are in its possession (also known as passive income). Fortunately, making the decision to put some of your money into stocks will allow you to accomplish both of these things when done right.
For some investors, choosing to invest in individual stocks allows them to learn more about the stock market, find some of the most attractive options, and experiment a bit in the process. To start trading individuals stocks and gaining further insight into how stocks function, all you have to do is set up a brokerage account. Some popular brokers that you may wish to open an account with include E-Trade, TD Ameritrade, Fidelity, Schwab, and Merrill. Once your account has been opened, it’s just a matter of finding the stocks that are most attractive to you, buying your shares, and holding onto them until the price rises or receiving regular dividends from them.
Of course, individual stocks may not hold the same appeal to everyone. Some investors are looking for immediate diversification and less risk so that they can build the right foundation quickly. If this sounds like you, you’ll want to consider funds like exchange-traded funds (ETFs) or mutual funds. ETFs are perfect for the new investor as they allow you to put your money into a host of securities (that often track a certain index, hence the term index funds) that are often managed through a Robo-advisor, making them cheaper to maintain and easier to gain access to. Mutual funds, on the other hand, are formed by pooling your money together with other investors are consist of a wide variety of assets that are professionally managed to achieve profitability. These may cost a bit more but are still an excellent choice for investors with $200,000 to spare.
5. Certificates of Deposit and Bonds
If you’re looking to grow money slowly over time (although with $200,000, you will most likely focus on allocating your funds to other areas of your portfolio rather than investing heavily in these options), you may want to consider Certificates of Deposit (CDs) and federal and corporate bonds or other loan instruments.
To provide you with a brief summary of these options, CDs are loans that are given to the bank so that they can use these funds for their own personal investment activity. To offer an incentive to those who wish to offer these loans to them, they will give you a set rate of interest for the term of the loan. Interest rates will often be higher than that of a high-yield savings account, but it’s important to pay attention to the interest rate as well as the term of the loan to determine whether or not it’s truly worth putting your money into. Many will use CD ladders to develop a string of CDs that reach their term at different times, providing them with consistent income in the form of the return of their capital plus interest.
Bonds, on the other hand, are loans that are given to the government (or companies in the case of corporate bonds). Bonds typically appreciate over the course of a couple of decades, and there are other tools like notes, bills, and TIPS (similar to bonds except they adjust with inflation to protect your initial investment) that you can look into as well if you’re interested in receiving your money sooner. Bonds are a bit trickier as they’re not always profitable. In fact, some can leave you without any profit or even put you in the red.
Whether you want to invest in CDs or items like bonds, keep in mind that these safe investments can still be risky when it comes to inflation or even issues paying back the loan. Otherwise, you can spend money that you may not actually see in the future.
6. Accredited Investors, Consider Investing in a Hedge Fund
One item that we have yet to mention in our investment guides is a hedge fund. Why? Unlike other investment vehicles that are available to the wider public, hedge funds are generally only available to accredited investors. As we’ve touched upon in the past, an accredited investor has access to far more income than most individuals and is able to engage in more investments that fall outside the scope of the SEC, largely because they understand the risk associated with such investments.
How do you know whether or not you’re an accredited investor? In order to be considered an accredited investor, you must:
- Be a natural resident of the United States who has made more than $200,000 in the past two years and who anticipates exceeding this threshold as well or who has a joint income with a spouse exceeding $300,000 for the past two years and anticipates having the same joint earnings at the end of the current year
- Be a natural resident of the United States with an individual or joint net worth of $1 million at the time that you make an investment only available to accredited investors (it’s important to note that the primary residence of the individual or individuals in question cannot be included in the overall net worth).
Given that this guide is designed for those with $200,000 to invest, chances are high that you have a much larger income to tap into and will likely meet these requirements.
Now that you have a better understanding of what an accredited investor is and whether or not you can begin to invest in investments only available to such individuals, what is a hedge fund? A hedge fund, like any other fund where investors are able to pool their money together in order to generate returns, gives you the opportunity to have brokerages with extensive experience manage your money to grow your wealth. Since hedge funds have fewer restrictions, however, they’re able to manage your money using more aggressive strategies, which can lead to greater profitability over time.
Because hedge funds are so different from some of the other investment funds, new investors will want to take the time to understand how hedge funds work and which types of hedge funds are the right choice for them. Some of the most common hedge funds you’ll come across include:
- Merger Arbitrage Hedge Fund: A fund that focuses on buying and selling stocks from two merging companies in order to generate profit without risk (managers of these funds will also assess whether or not there is the potential for the merger to fall through or experience significant delays)
- Volatility Arbitrage Hedge Fund: A fund that uses instruments like options to profit off the anticipated volatility that an asset may experience in the future.
- Convertible Bond Arbitrage Hedge Fund: A fund that takes long and short positions in a convertible bond and the stock that it’s tied to.
- Global Macro Hedge Fund: A fund that focuses on developing investment strategies based on the economic and political conditions of the country that the hedge fund is offered in.
- Equity Market Neutral Hedge Fund: A fund that seeks to profit off of taking long and short positions between closely related stocks.
- Long/Short Equity Hedge Fund: A fund that takes the short position for overpriced stocks and long positions for underpriced stocks in order to profit in any market conditions.
Ready to put some of your wealth into a hedge fund? Some of the firms you should consider turning to for support include Bridgewater Associates, Man Group, AQR Capital Management, and BlackRock, just to name a few. Before you sign up with any one firm, make sure to do your research, understand the risks and benefits of hedge funds, and figure out which type of investment strategy you believe will be best for your money before you get started.
Then, Take a Look at These Ideas!
Making sure that you’ve focused on the foundational investment opportunities first will help you get the peace of mind you need knowing that a great deal of your investment activity has gone towards investment vehicles known for being relatively low-risk or only moderately risky. Of course, risk is essential when it comes to investing as profitability and volatility are often closely related to one another.
Whether you’re on the hunt for medium-risk or high-risk investment opportunities that get you excited and ready to see your wealth grow, here are a few ideas that can help you break into areas that may be a better fit for your goals and wants!
7. Diversify Your Portfolio By Holding Some of Your Very Own Cryptocurrency
As time goes on, cryptocurrency continues to prove itself to be extremely popular among major financial institutions and, by extension, investors heavily involved in the finance industry. However, the problem for many new investors is that they don’t understand cryptocurrencies like Bitcoin and whether or not they’re a safe investment to add to their own portfolio.
So, what exactly is Bitcoin? Bitcoin, first introduced in 2009, is a digital currency designed using cryptographic principles and blockchain technology in order to produce a truly decentralized experience. Unlike the U.S. dollar, Bitcoin does not have to be held by banks in order to be safely stored and spent. Instead, users of the network download their own software “wallet”, store their Bitcoin there, and transfer or spend it as they please. This lends itself to many other benefits associated with Bitcoin and other altcoins, like lower transaction fees, quicker transaction times, and the ability to send money across the world with ease.
Of course, a lot has changed since Bitcoin was first brought into the world. Now, there are cryptocurrencies and blockchains like those offered by Ethereum, where the cryptocurrency is not only important but the blockchain gives developers the ability to develop their own coins and decentralized apps that run on the platform. The amount of sheer innovation seen over the past decade and the rising value of these digital currencies is what has attracted many to the space.
With that in mind, there’s a crucial aspect to understand about cryptocurrency. The reason why so many have profited off of this digital asset (and why many others have seen their own investments fall dramatically) is due to the inherent volatility of crypto. With the exception of specific assets like stablecoins (which are tied to fiat currencies like the U.S. dollar), most cryptocurrencies are speculative in nature, which results in the wild price swings that many traders seek to take advantage of. Investing in cryptocurrency means understanding this risk and knowing that your money could plummet should the market go down as well.
Of course, this being a complex market means that there are some other helpful tips you should adhere to. Here are a few to help you get started!
- Understand the Projects That You’re Investing in: Although Bitcoin failed to reach its original goal (becoming a fully-decentralized currency that’s truly accessible to everyone), many projects that have come out since its inception offer some great potential in both the decentralized finance space and beyond. If you are fascinated by cryptocurrency, take the time to learn more about the different assets available and what they seek to do. Who knows? You may end up investing in something that explodes in value over the next year!
- Pay Attention to the News: The news has a major hold over this 24-hour market. If there is bad news regarding new regulatory conditions, the market can see a downturn. If there is positive news or mentions, there may be a price spike. Look for all new developments that could impact the crypto market and act accordingly.
- Consider Investing in the Underlying Technology: Sometimes, it’s not crypto that holds the most promise, but the blockchain technology that supports it. Consider looking for companies that are leveraging this technology to their advantage and investing in them rather than just crypto.
Cryptocurrency most certainly comes with this feeling of FOMO (fear of missing out), but giving in to FOMO can prove to be detrimental rather than profitable. If you’re interested in crypto, set aside some time to learn more about it and get started on building your own portfolio with exchanges like Coinbase (which has a program that will pay you to learn more about certain types of crypto), Kraken, and Binance, just to name a few!
8. Launch Your Own Franchise Location
Let’s be very clear: running any type of business requires hard work, dedication, and drive. No business is necessarily easy to set up or maintain. With that in mind, making the decision to open a franchise location can make the launch process far smoother as you’re tapping into an existing brand that already has the recognition and reputation needed to get people into your physical location or online shop.
When it comes to franchises, you generally have more access to recognizable names with more capital to invest in your new location, which gives you a fair amount of access to desirable franchises with $200,000. For example, just a few names that you may recognize under the $200,000 threshold include Allstate Insurance Company, Jimmy John’s Gourmet Sandwiches, and Liberty Tax Service, just to name a few.
9. Start a New Business or Side Hustle That Has Business Potential
Businesses often require an investment of both time and money. With $200,000 to spare, you can certainly find a great business idea if you can find the time to develop it as well. With $200,000, the sky’s the limit for what you can achieve when you put your mind and money to it. A couple of business ideas that you may want to consider if you think that your own business is the next step forward include:
- Developing a software-based business that sells important software solutions to individuals and businesses (you can use your capital to launch your business as well as enlist the help of part-time, full-time, or freelance individuals to develop your application)
- Starting your own creative business, such as one in graphic design (you can start selling t-shirts on platforms like Redbubble, Spreadshirt, or Zazzle) or writing music, for example
- Launching your own personal brand where you focus on items like nutrition, marketing, or self-development services and create a host of services and products designed to help other people improve their lives
- Designing luxury items that people are willing to pay for because of their quality or brand (this can range from furniture to cars to fashion)
- Opening up your own physical store where you sell your own products or services
There is no guarantee that a business will make it off the ground, but with the right research and strategy, you can begin working towards a business that you’re passionate about and interested in. Consider the ideas above to help you figure out what you may want to do or gain some inspiration needed to find your perfect business idea.
10. Invest in Someone Else’s Business
Starting a business is not for everyone, especially if they have lives that are already quite busy. However, that doesn’t mean that you can’t reap the rewards of business without having to set aside the time to build your own business. In fact, one excellent way to invest your money is to consider putting it into someone else’s startup.
Investing in someone else’s business comes with unique advantages and disadvantages that make for a great investment opportunity. By purchasing equity in a business, you’re able to earn money back in return for your investment, meaning that you get to earn the rewards without having to do any of the work required to grow that startup. That being said, you’re also at risk should the company not move forward as planned and you lose the investment that you’ve contributed to the organization.
As an investor, it’s important to understand exactly what risks are associated with investing in businesses as well as doing your own risk assessments and analysis of their business plan and financial forecasts. However, if you’re willing to take that risk, you can easily find platforms that will allow you to connect with startups and provide them with the funding they need to scale.
A few platforms worth looking into if you wish to fund other businesses include AngelList, CircleUp, and SeedInvest. With the right care and platform at your disposal, you’re on your way to financing potentially lucrative businesses and receiving a considerable stake in return for your funding!
11. Fund Your Own Passion Project
We all have our passions and interests, but with everything that we have going on in our lives, it can be difficult to find time to pursue some of our own dreams. Although it’s not necessarily considered a traditional investment, you may wish to use your $200,000 to invest in yourself. Specifically, using these funds to maintain your lifestyle while you’re working on a project that doesn’t immediately yield profits.
Are you a passionate writer looking to transform your ideas into entertainment? Consider spending some time working on a new book, play, or screenplay that you can publish proudly later on. Do you love playing music? Set aside some time to record music, push your tracks, and look for places where you can perform. Have you always wanted to create masterpieces that would be appreciated for years to come? Plan a nice getaway where you can focus on creating some of your best art.
Sometimes, making an investment that we care about to something that could yield profits and certainly makes you feel happier is an excellent use of your money. No matter what your own passion project may be, use some or all of your $200,000 to work towards making it a reality. Even if it doesn’t perform as well as you expected, it definitely feeds the soul and may put you on a path towards a different career altogether.
12. Continue Your Education (for Personal or Professional Reasons)
With $200,000 to spare towards your investment strategy, chances are that you’re in a place in your life where you may already have the highest possible degree or have established yourself at a company where you’re making a much higher income (and don’t anticipate that changing any time soon).
However, while this may be the case for some readers, others may simply be in a situation where they were able to get a higher salary without meeting the higher education requirements.
If you belong to the latter group, making the decision to go back to college is one that can come with a host of benefits. Just a few of these benefits include:
- Greater Potential to Move Up in Your Company: Many companies will require college degrees as you move into higher positions. Take a second to look over open company roles and ask yourself, would I be considered seriously as a candidate without a college education? If not, now may be the time to pursue a degree so that you are taken seriously should you wish to move up.
- Higher Pay: A college degree doesn’t always mean higher pay in every role, but it does open the doors for better job opportunities and greater pay in some industries. If you want to make more in the long-run, a degree can be an invaluable tool to have on your side.
- Increased Job Freedom: Let’s imagine that you’ve joined a startup where you’ve received a high position in management. Although this is something that you can put on your resume and use to find future work rather easily, you may still not be considered for higher management positions at another company because of your lack of education. If you only feel confident about your job at your current company but not at other companies, consider college as well as certification courses to bolster your resume and make you a viable candidate at every company.
- More Skills That You Can Leverage in Your Ideal Role: The key to growing as an employee is constantly learning new things that you can use in your current role as well as future positions. Both college degree programs and online courses can help you build your skills set and boost your value as a working professional.
A degree is not for everyone, especially if you’re already making the money you need without a degree. However, if you find that any of the above points apply to you, a degree may be worth pursuing, especially since you will most likely be able to cover college with your $200,000.
13. Make Real Estate a Major Focus of Your Investment Strategy
Stocks, bonds, and other traditional investments are great to help you develop passive income over time. However, for those who may be starting later in their lives or who are looking to develop short-term profits and income rather quickly, not all of the recommendations above are going to meet their needs. Fortunately, that’s where real estate comes in!
Real estate is valuable as an investment because, no matter the condition of the market, your investment is always going to be needed by others. After all, while investments like cryptocurrency have a speculative value, real estate has an inherent value and a constant demand. If you’ve been looking for ways to invest in real estate, consider options such as:
- REITs: Real estate investment trusts are developed by real estate companies so that investors can purchase collective stock rather than having to invest directly into real estate property. This provides greater liquidity for new investors who are still hesitant about investing in their own property.
- Real Estate Syndications: Real estate syndications (not to be confused with crowdfunding, which is another alternative that offers you profits in the form of loan repayments) give you the opportunity to partner with other investors and pool your resources to purchase property, giving you a stake of that property in return. Without worrying about management, you can continue receiving passive income from syndications rather easily.
- Purchasing Your Own Property and Flipping or Renting It Out: If you’re someone who prefers outright ownership, purchasing your own homes or apartment buildings and renting them out may be more suitable for you. Not only do you have a say over how your properties are run, but you get 100 percent of the profits as well. Just keep in mind that there is a greater risk and financial strain associated with ownership.
- Raw Land: Farmland, raw land, and even air rights are all other investment ideas to consider if you’re looking to diversify your portfolio.
Real estate can be tricky. However, if you’re willing to put in the work and learn more about how the market operates, this is arguably one of the most crucial and lucrative investment ideas at your disposal.
14. Use Your Money to Fund Your Love of Collectibles
No matter who you are, there is likely some type of item in your life that you love to own. This could be something as minor as wooden trinkets to something as serious as rare books. For your more expensive tastes, why not invest in collectibles?
Collectibles are great investments because they already have value to you and may retain their value over time. Take, for example, an individual who may have invested in Star Wars or Star Trek memorabilia early in the series. Now, they most likely have extremely rare goods that people are willing to pay a small fortune to own. Not every collectible will gain value, but there are some items that do tend to be safe.
For example, vintage items produced by high-end designers, old cars, artwork, and wine are all examples of items that you may collect that will likely pad your wallet down the road when you finally want to sell them. Just know that there is always the potential to lose money, so you should approach your collecting strategy with the goal to find items that bring you joy, not just finding items that may or may not bring you money later on.
15. Get Creative With Your Cash
With $200,000 to spend, chances are that you’re going to run out of ways to spend your money and begin your journey for new, creative investment opportunities. Luckily, we have come up with a short list of creative investment ideas that will help you break free of the traditional recommendations and find something more up your alley.
- Investing in Horses: Horse breeding isn’t typically brought up in conversations about investing, but investing in horses (or even your own horse farm) that are known for their speed, strength, and build can help you make money when selling them to other owners or racers. If you know a lot about horses, this could be a great way to make some extra money on the side.
- Buying Rights to Songs: Owning songs helps you earn royalties each time that song is played. Some songs actually still gross at least $10,000 a year or more, which is excellent side income for any investor. Certain platforms like SongVest can help you find and purchase the rights to songs so that you can start earning royalties from these popular bops.
- Purchasing and Selling Digital Land or Goods: Video games are another overlooked investment opportunity for most investors, but not for the reasons you may think. If you play video games that have an expansive in-game world, you can make a great deal of money finding premium quality in-game products or land and selling them to other users through the platform or outside of it.
- Buying Tax Liens: We all know that failing to pay back property taxes is never a good idea, but what many investors may not know is that you can actually purchase these tax liens certificates through auctions and make money through interest rates, which can range anywhere from 5 percent to 50 percent and take effect almost immediately after purchase. This investment idea may not be appealing to everyone, but it’s definitely an option.
- Hoarding Old Currency: Most of the change in circulation today has retained its same value. However, older currencies and even ancient currencies have grown in value, making them great for investors looking to sell these to museums or even enthusiasts. Coins are a very tricky investment, so it’s important to learn about their value, how to preserve them, and what you should be looking out for before you begin buying up considerable amounts of old currency.
- Buying Up Domain Names and Websites: Websites and domain names are similar in nature to real estate as the most popular plots need to be scooped up by up-and-coming businesses at some point. You can use your money to invest in domain names or whole websites to increase their value and sell them once you come across the right buyers.
No matter where your interests lie, there’s sure to be an investment opportunity out there for you!
Start Your Investment Journey Now!
At $200,000, there’s no telling where someone may be in their current investment journey. However, there are plenty of ideas to help them get started at any point. No matter how much you’ve invested so far, use the guide above to dive into low, medium, and high-risk opportunities and start your investment journey now!