How to Invest $200k-$250k - 6 Best Ways to Invest $250,000-$250k in 2024 (2024)

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Being unsure where to invest 200k is a problem most people wish they had. If that’s where you’re at, congratulations — now let’s talk about some of the best ways to potentially grow your money.

While there is no single best way to invest 200k, there are some general guidelines you can follow to set yourself up for success.

Let me show you.In this article, I’ll give you some of my ideas for how to invest 200k so that you set yourself up for a financially stable future.

The 6 Best Ways to Invest $200k in 2024

Ok! With that out of the way, let’s talk about where to invest 200k. (Note: Not at $200-250K yet? Check out our list of the best ways to invest 50K.)

1. Contemporary Art (Masterworks)

• Risk level: 3.5/5
• Potential returns: Varies; recently, investors have realized 10.4%, 21.5%, and even 35% net returns from their sold artworks.

Investing in contemporary art is not something most people think about when they’re considering their investment options. It’s an understandable position; after all, most people only hear about art when it sells at auction for tens of millions of dollars.

What you may not realize is that companies like Masterworksmake investing in contemporary art accessible to everyone. The platform lets you buy shares of art the same way you buy shares of a public company in the stock market. If the piece appreciates in value, you make money proportional to the number of shares you own.

Another reason to consider investing in art? As an asset class, it appreciated by about 12.6% per year between 1952 and 2022 — outpacing the stock market by 3.6% per year:

To clarify, I’m not saying that artwork is the single best way to invest 250k. However, partial allocation to fine art can offer a medium-risk, potentially high-reward boost to an otherwise well-diversified portfolio.

2. Private Credit

• Risk level: 4/5
• Potential returns: 10%–15%

Another above-average risk option for adventurous investors is private credit investments. The easiest way to think about this type of investment is that you’re on the lending side of a loan instead of the borrowing side. Thinking about it that way should make it clear that private credit investing is risky since if the entity whose debt you buy goes bankrupt, your investment is in trouble.

The good news is that private credit investing is an excellent option for people with a sizable appetite for risk who aren’t sure where to invest 250k. Now, I don’t suggest putting all of your money in private credit, but a solid 5%–10% will give you decent exposure to some potentially big gains.

One of the best ways for accredited investors to invest in private credit is through Percent. Investing in private Credit through Percent is as easy as buying stocks through your broker. Here’s what I like about Percent:

• The platform is easy to use and understand and offers a gentle introduction to private credit investing.
• You get exposure to a variety of debt, including blended note portfolios
• Percent partners with high-quality corporate borrowers. Then, they’re funded by you. Since Percent is discerning about its partners, you get greater peace of mind.

How do Percent’s fees work? Percent charges variable fees depending on the investment product.For direct deals, 0% management + a % of yield For managed products like Percent Blended Notes, 1% management + a % of yieldFor example, if a deal paid 15% APY and the fee charged was 10% of interest, your effective APY is 13.5% after fees.

3. Stocks + Funds

• Risk level: 4/5
• Potential returns: 5%–10%+

Alright, enough fun alternatives; let’s get down to business. Investing in stocks, ETFs, and index funds is not as thrilling as taking a risk on artwork or private credit, but it’s a tried-and-true way to build wealth and deserves serious attention if you’re not sure how to invest 200k.

The great thing about investing in stocks is the freedom it gives you to choose your own investment adventure. If you want to spice things up, allocate 5%–10% of your portfolio to high-octane tech stocks like Tesla (NASDAQ: TSLA) and AMD (NASDAQ: AMD). Want to play things a little safer? Stick with ETFs and index funds like SPY or VTI.

The point is that stocks and funds should make up a sizable fraction of your investment portfolio. If you’re young, having 70% or more in stocks and funds is the norm. When you get closer to retirement age, dialing back the percentage you have in stocks in favor of safer investments like bonds is preferred.

If you’re in the market for a new broker, I encourage you to check out eToro. eToro gives you zero-commission trading, a sleek modern UI, and options access (as long as you qualify). Plus, they offer a unique CopyTrader featurethat lets you follow the trades of pros — one of the best ways for new and seasoned investors to learn from others and gain more insight into the trading process.

4. Bonds

• Risk Level: 2
• Potential returns: 1%–3%

Bonds are the vegetables of the investment world.Everybody knows they’re good to have, but they’re not as interesting as carbs — I mean stocks.

In all seriousness, bonds are an essential component of every portfolio. They provide consistent, low-risk, stable gains that keep your investments grounded when the stock market hits turbulent times.

How much you should allocate to bonds when you’re thinking about where to invest 200k depends on your age and risk tolerance. The general rule most people use is to have their age in bonds (for example, 30% when you’re 30, 60% when you’re 60, etc.). Modern investment strategies suggest that this might be a bit on the high side, but it’s a good starting point.

Putting 100% of your money into bonds is definitely not the best way to invest 200k, but putting at least 10%–20% in bonds is probably a good idea. If you’re not sure where to invest 250k but know you want to put some of it in bonds but don’t want to deal with the old-school U.S. Treasury website, here’s an alternative…

Check out eToro. The company has a solid platform for investing in bond ETFs — and provides some excellent educational material about bonds.

5. Real Estate

• Risk level: 3
• Potential returns: 8%–12%

If you want to know how to invest 200k for passive income, the answer is real estate. How to invest 200k in real estate is another question entirely.

A detailed guide to real estate investing is beyond the scope of this article, but here’s my high-level take. If you want to maximize your reward and don’t mind all of the work and headaches that come with owning a rental property, learn how to value properties and purchase one.

If the thought of being a landlord causes you to break out in a cold sweat, consider putting a sizable chunk of money into a crowdfunding platform like Arrived Homes.

Investing in real estate through Arrived Homeslets you share the monthly revenue from a rental property without having to worry about managing the property yourself. It’s a great way for new real estate investors to get in on the action without much experience.

6. Invest in Private Companies

• Risk level: 5
• Potential returns: -100%–100%+

I saved the best — ahem, I mean the riskiest — option for last. If you want to shoot for the moon, take some of your 250k and invest in a private company or startup. You might lose big. Then again, you might get in on the ground level of the next big thing.

While investing in private companies is a pretty sizable risk, doing so through a company like Equitybeeis a fantastic way to get started. The company has a solid track record and an in-depth vetting process. You could stumble around in the dark and choose a company on your own, or you could let Equitybee be a light to guide you.

You need to be an accredited investor to participate, but once you sign up, you can invest in promising fledgling companies as a venture capitalist — monocle and top hat optional.

Investing in private companies is very much the deep end of the investing pool, but Equitybee makes it a surprisingly simple experience for new accredited investors.

How to Invest 250k: Before You Start

I know you’re excited, but there are a few things we should talk about when it comes to where to invest 200k. Bear with me; this will only take a minute.

Pay off Debt

The last thing you want is debt hanging over your head and dragging you down. Before you even think about putting money into any type of investment, you should make sure you have all of your debts paid off.

I recommend paying off your highest-interest debts first since these are the ones that are most likely to cause you trouble in the future. Credit card debt is the most common type of high-interest that most people have, but you should prioritize car loans and student loans as well.

Platforms like Rocket Moneycan help you reduce small debts and get out of debt more quickly so that you can focus on investing and growing your net wealth.

Build an Emergency Fund

Another important thing to do before you go all in on investments is to make sure you have an emergency fund. Some people are comfortable with an emergency fund that covers six months’ worth of expenses, while others prefer to have a full year saved up in case of emergencies.

Decide what size emergency fund you’re comfortable with and start contributing to it on a monthly basis until you reach your goal. I recommend keeping your emergency fund in a high-yield savings account (HYSA). HYSAs offer better rates than traditional savings accounts, often as high as 4.00%–5.00% APY.

I like CIT Bank’s HYSA since it has an outstanding 5.00% APY and no minimum balance requirement.

Get Smart About Saving

Another thing I want to mention before we get into the best way to invest 250k specifically is that saving money is a lifestyle habit. If you’re not used to putting money aside each month for unexpected expenses or retirement savings, the best thing you can do for your financial future is to start building the habit of saving money now.

I like to tell people that they should put some money away for some unknown purpose every month in addition to the money that they save for specific purposes like house down payments or retirement savings. This “any purpose” money will build up more quickly than you think and it will be a lifesaver if you wind up having to pay for expensive car repairs, home improvement projects, or health care emergencies.

If you are not sure where to start, you should use an app like Empower to help you plan your savings. Empower makes it easy to track your savings right from your smartphone, so making saving money part of your everyday habit becomes second nature.

And since you’re working with a higher amount of capital, it’s worth noting that Empower also offers financial services for accounts above $100K. With lower fees than most “legacy” brokers and a variety of bespoke services, it’s well worth checking out what they have to offer.

How to Invest 250k: Tax-Advantaged Accounts

Tax-advantaged accounts like IRAs, 401ks, and 529 plans are extremely important for getting the most out of your investments. Investing the same amount of money in a non-tax Advantage account will lead to smaller gains and a greater tax burden either now or in the future when you take disbursem*nts.

The right tax-advantaged account for you depends on your investment goals. IRAs and 401ks are designed to help you save money for retirement, while 529 plans can help you save money for your child’s college education.

Many brokers offer tax-advantaged accounts, but I usually recommend eToro because it has zero-commission trading, low fees, and a convenient mobile app.

Best Way to Invest $200K: What About Allocation?

Before I wrap up, I want to say a little bit about allocation. Where to invest 250k depends on how much debt you have, whether you have any major purchases on the horizon, and your long-term investment goals.

In order of priority, I recommend paying off your debts and filling your emergency fund to cover at least six months’ worth of expenses. After that, I recommend allocating around 80% of your remaining funds to stocks, bonds, and real estate. You can then use the remaining 20% to invest in something with a higher earning potential, like contemporary art through Masterworks or private credit through Percent.

Keep in mind that there is no best way to invest 250k. Investment decisions should be made based on your specific circ*mstances, and what works for someone else might not be the right choice for you.

Final Word: How to invest $200k

My final word on where to invest 250k is simple: put the bulk of it in stocks and bonds. Save some for opportunities like contemporary art or a startup. How much is up to you, but conventional wisdom suggests allocating no more than 10% to 15% on alternative investments unless you have a very high-risk tolerance.

Remember: how to invest 250k depends on your financial circ*mstances, debt burden, and risk appetite. Don’t let anyone else decide how to invest 250k for you. Do your research and learn how to invest 200,000 dollars in a way that makes sense to you.

Empower Personal Wealth, LLC (“EPW”) compensates WallStreetZen.com for new leads. WallStreetZen.com is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.

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