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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Head of Content, New Verticals 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.
With the above financial bases covered, here's how to invest that $100,000.
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1. Decide how you want your money managed
Deciding how to invest a substantial sum of money 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 advisors, or search for one in your local area. If you go this direction, you can likely skip the rest of the article — the financial advisor will make recommendations based on your personal situation and invest this money on your behalf, considering other investments you might already own as well as factors like your long-term goals.
- I'd like to automate the investing of this money. Robo-advisors are algorithm-based services that offer automated portfolio management. They're not full-service like financial advisors — they generally just manage an investment portfolio for you. (You might get access to human advisors if you have questions, but that's rare and often requires a higher fee or a higher account balance.) But if you simply want peace of mind that this money is invested appropriately based on your goals, risk tolerance and other factors, a robo-advisor may meet your needs. We've rounded up the best robo-advisors so you can compare options.
- 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.
2. Pad your nest egg
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.
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.
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.
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 $7,500 for 2026 ($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.
🤓 Nerdy Tip
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
4. Handle your taxes now
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 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).
5. Stay vigilant about fees
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.
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Are you on track for
the future you want?
NerdWallet Wealth Partners created a free calculator to estimate your financial independence number, see where you stand, and find out how much you might need to close the gap.
NWWP is an SEC-registered investment adviser. Registration does not imply skill or training. The calculator is provided for informational and educational purposes only.
6. Reallocate your portfolio
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.
- 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.
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