It is always great to plan for investments when you still have the power to do so. Unfortunately, it’s not always easy to determine where exactly you need to cast your die, especially when considering factors like:
- Return on Investment (ROI)
- Long-term stability
- Security
And that is why we decided to compile this investment guide specifically for those with some 200K to spare. Why $200,000? Because it’s a decent amount of cash that if used wisely can easily create an empire yet if used poorly can easily diminish as well.
Eager to find out how to invest 200000? Let’s break this down for you.
Contents
How to Get Started Investing Your $200,000 in 2023
If you've just inherited or received a sizeable sum of money, it's tempting to splurge on a new car or a vacation. That said, you want to keep in mind that you have other options. For instance, you can invest your money and grow it into something even more valuable.
Actually, buying appreciating assets is the best way to make your money grow and there are many ways to do it. Here are several ingenious tips to help you get started:
Best Ways to Invest $200,000 in 2023
With 200K to invest, you can afford to take risks and get creative with your investments. The options are virtually endless, but some of the tried, tested, and proven ones include the following:
1. Investing in a Gold IRA
Gold has an amazing ability to appreciate and hedge inflation over time. Let’s put this into perspective - an individual who happened to buy an ounce of gold in 1970 only needed to pay $38 for it then.
Today, the same quantity of the precious metal is valued at $1799 meaning its value has technically risen 47-fold. And if that’s the case, imagine what a 200K investment can do over time if turned into gold.
On the contrary, if the same $38 was kept somewhere in cash, its purchasing power would have declined 8-fold. Yikes!
What point are we trying to put across here? That gold not only surpasses the inflation rate but also maintains stability even when times are tough. For example, the value of gold rose steadily during the 2008 recession even as other sectors took a beating.
That said, investing in physical and movable assets like gold can be risky in itself as one would need to provide storage and security for such on their own.
Luckily, there are laws in place to make it possible for you to make a safe investment through a self-directed IRA. Simply put, this is an Internal Revenue Service (IRS) approved account that gives you the same dependability of a traditional IRA.
How Exactly to Do It:
In case you’re interested in gold as an investment, all you need to do is open a gold IRA so you enjoy the flexibility you need to buy coins, bars, and other IRA-approved precious commodities.
Talking about gold IRA one provider comes to mind – Goldco. This is a relatively popular precious metals IRA brokerage firm that can hold your hand and help you create an IRA account as required by law. They can even help you in case you need to rollover your current 401k plan into a self-directed IRA without incurring penalties.
The company has been around since 2006 and within that time has managed to cement a strong reputation complete with an A+ rating on the Better Business Bureau (BBB) platform.
Not only do firms like Goldco help you navigate the murky waters of IRA creation and rollovers but they also provide you with access to insured storage facilities. In other words, they make the entire process as painless as possible thereby enabling you to focus more on things directly contribute to your progress in life.
2. Real Estate
Real estate is one of the best investments you can make. It’s also one of the most expensive, so it may not be an option for everyone. However, if you have $200,000 to invest and want to put it toward this popular investment vehicle, here are some things to consider.
Rental properties
Now, obviously 200K is not enough to buy an apartment but thankfully there are other ways to go about this. One option is to invest in a rental property through a real estate investment trust (REIT).
REITs are publicly traded companies that buy and maintain income-producing properties like apartments and office buildings. They pass along most of the income from those properties to investors in the form of dividends. They also give investors access to real estate without having to manage it themselves and without having to pay taxes on its profits.
Fixer-uppers
There are two ways you can get into this type of investment: buying a fixer-upper yourself or finding someone who will do all the work for you for a share of the profit when it sells later on down the line
3. Stocks
As long as you're willing to embrace their risk and volatility, stocks are a great way to grow your money over time. Stocks are different from bonds because they give investors ownership in companies and enable one to make huge returns in the event of spikes.
Stocks tend to rise in value during strong economic times and fall when the economy weakens, but they can also fluctuate wildly without warning at any time during a given year or even on any given day.
If you're willing to accept that risk and volatility, however, stocks offer the best chance of earning higher returns over time than any other type of investment available today.
Mutual Funds
A mutual fund is a collection of stocks, bonds or other securities that are purchased and held by a fund manager. The fund manager chooses a portfolio of investments to suit your goals and risk tolerance, then they buy and sell those securities to match the fund's target portfolio.
Mutual funds allow you to diversify your investments with just one transaction.
Mutual funds also provide professional management, which can save you time and energy. While there's no guarantee that your money will grow, by investing in a fund managed by professionals you'll likely get better returns than you would if you tried to pick the right stocks yourself.
Mutual funds are relatively low-cost compared to buying individual stocks and ETFs, but they still have fees associated with them. This means that mutual funds may not be the best choice for smaller portfolios.
4. Cryptocurrency (but with caution)
Cryptocurrency is a very volatile investment. However, if you can stomach the risk and have a long-term investment horizon, it may be a good place to start.
The key to investing in cryptocurrency is to choose the right currency at the right time. With that in mind, let's take a look at some of the top cryptocurrencies out there today.
Bitcoin (BTC)
Bitcoin is the most well-known digital currency, and for good reason — it's by far the largest by market cap. It's also been around for a while and has survived many crashes along the way.
Ethereum (ETH)
Ethereum is similar to Bitcoin in many respects but with one major difference. It has its own Turing complete internal code which allows for applications that are run on its blockchain not just on Ethereum but potentially also other blockchains too.
This makes it much more flexible than BTC in terms of its use cases and future potential as an investment vehicle.
Ripple (XRP)Ripple is probably best known as "the bank-friendly cryptocurrency" due to its focus on providing solutions for banks and other financial institutions rather than consumers directly like BTC or ETH do.
5. Start a Small Business
If you're an entrepreneur at heart, starting your own business is one of the best ways to make money. It's also one of the most risky investments out there because it takes time and effort before you start making money.
Nonetheless, if you're willing to take the risk and put in the hours, starting a small business can be incredibly rewarding. In fact, most self-employed Americans say they would do it again even knowing what they know now about risks and challenges involved.
That said, here are some tips that will help you succeed once you start a small business.
Learn about your industry.
What is the current market demand? What is the competition like? What resources do you need to start? Learn as much as possible before you even consider starting a business.
Research your idea
Take time to explore whether your idea is viable and if there's a need for it in the marketplace. Do thorough research and determine if there's demand for your product or service before investing any money or time into it.
Create a business planA business plan will help you organize your ideas, plans and goals into one document that can be used as an investor pitch or guide for running your company later on down the line when things get busy.
FAQs About Investing $200,000
The best thing to do as far as short-term investment is concerned is to be modest with your expectations on returns. Avoid (and we repeat) avoid get-rich-quick programs. Go for safer, low yield investments like short-term corporate bonds and FDIC-insured money market accounts to mention but a few.
Interestingly, you don’t need a lot of money to start investing. In fact, we live in a world where fractional shares and zero-brokerage fees are a thing meaning you could get started with as little as 10 bucks.
Conclusion
Investing is a good way to grow your money and build wealth over time. However, not all investments are created equal.
If you've got $200,000 to invest and are wondering how to go about it, we do hope that some of the examples discussed above will provide you with the inspiration you need.
Remember, there’s nothing like a perfect investment opportunity. They all come with their fair share of conditions and limitations.
Trading Review’s mission is to help you become a better and smarter trader/investor through in-depth reviews of courses, trading software, and more.