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  • Writer's pictureMichael DiBartolomeo

How to Invest 200k

When people start wondering how to invest 200K, that is a good sign. It means that they have been saving money for a while and want to grow their personal wealth for the long term. If someone can invest that much money and leave it alone for a few decades, they are going to compound plenty of interest and let it do its job.

How much money can a person end up with if they invest $200,000 right now?

Though this depends on how the money is invested and the average return, it is possible to see a lot of money. For example, if a person invests that amount and it sees a 6 percent return on 20 years, that is $641,427 in growth.

The real problem here is to figure out how to invest so much personal money. It's best to work with a personal financial advisor to help with this. That way, the $200,000 is spread out over various investments. Ultimately, a person diversifies their investment to increase exposure within different financial areas to see the personal growth potential.

While a personal investment allocation should vary based on the age, investment goals, and what the person wants to achieve, here are a few guidelines and allocations to focus on:

Places to invest $200,000

The Stock Market

Most personal financial advisors recommend that a person invests between 40 and 50 percent of their $200,000 in stocks and bonds. The risk level varies here, but the personal advisor can help choose low-risk or mid-risk options if that is the personal goal of the investor. Typically, the person wants to achieve long-term growth with this option.

The stock market is where many people already save for retirement. Typically, they use tax-advantaged retirement plans, such as a 401K or IRA. However, it's also possible to invest in bonds, stocks, index funds, and other securities with the help of a broker.

While brokerages don't offer upfront tax advantages, there is the chance to invest in a variety of ETFs, stocks, and more. Plus, when a person opens a personal brokerage account, there is usually more liquid than with other tax-advantaged retirement plans.

Many retirement accounts charge a penalty if the money must be withdrawn before the retirement age. However, by investing in the stock market, it is possible to sell securities and access that money without a penalty whenever it is needed. Just remember that capital gains tax is due each year on the personal tax return with this option and remember the rule of 70.

Getting Started

It's always a good idea to work with a personal financial advisor. They can help find the right brokerage firm and figure out where to go with some of that money.

Who Should Invest in the Stock Market

Investing in ETFs, bonds, and stocks can be suitable for any investor. However, it's best for those who want to leave the money alone (not access it) and let it grow with time.


  • Fair and excellent returns can be seen over time

  • Can diversify over many sectors within the economy

  • Great for the portfolio


  • Some risk involved

  • Lose some/all of the personal investment

Invest in Real Estate

In most cases, a personal financial advisor is going to recommend that someone invest between 10 and 15 percent of their money into real estate. The risk level also varies with this option, but the right personal advisor can help people choose appropriate options. Typically, the goal here is to see some passive income with growth.

It is easy to invest in real estate, and there are various platforms available. Though a person may want rental properties, there are also REITs. Real Estate Investment Trusts are platforms to help the person get in on the upside of real estate investing, but there's no work as a landlord. With that, there are all of the benefits of the rental property without the hassle. On top of all that, the real estate market is always booming, which can open up cash flow and help invest $200,000 in different areas of the market.

* Investing in Real Estate Investment Trusts (REITs) involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained.

Getting Started

Using a platform can make it easy to invest in the real estate genre without taking on all the risks. There's no mortgage to pay, and that person isn't searching for quality tenants. In fact, it's easy to invest in a starter portfolio, and not a lot of money is necessary. The investments are also spread through many residential and commercial properties that are chosen by the platform's managers.

If that doesn't seem exciting enough, it is possible to purchase a property and rent them. However, the person is putting in a lot of money at the start. Though investing 200K like this can be a good thing, it also means that the person has to wait longer to see a good return on the investment.

Returns can vary with time, as well. Therefore, one year may be amazing, while the next has more maintenance and repairs come off the top. The right investment strategy is necessary here. Don't invest in real estate without knowing what could go wrong with the property.

Who Should Invest with Real Estate

Almost anyone can use real estate to their advantage.


  • Easy to do

  • Potential for great returns on investments

  • Diversified portfolio

  • Can do it hands-on or hands-off


  • No liquid investments; takes months to access the cash at times

  • No guarantees for returns

Investing in Gold

Typically, investing in gold is similar to stocks. It's best to invest anywhere from 10 to 15 percent of that 200K into gold. There's a medium level of risk, which means it's similar to most of the other investments listed. Ultimately, the person's goal for such an investment should be diversification of their portfolio.

Many experts agree that investing in gold or other precious metals is essential. These options can often protect somewhat from inflation. Most investors choose gold in an economic downturn, so the price rises, and the person's initial investment increases in value.

Getting Started

It's easy to find various online platforms to help invest into gold. While some vendors focus solely on physical gold, such as in coin or bar form this may not be advisable. Physical or tangible gold can be problematic in buying and selling, and can also be lost or stolen. Rather gold as an asset class in the form of mutual funds or ETF’s may be a better only.

Who Should Invest in Gold?

Investing in gold is a great choice for people who are worried about the turmoil in today's markets. Investors should look to buy valuable commodities that can withstand cash problems and currency fails. Ultimately, gold has stood the test of time and is still around, so it's a worthy investment option.

*The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.


  • Diversifies people's personal portfolio options

  • Gold tends to rise in price over the long-term


  • Can be volatile for short-term needs

  • May not provide the profit hoped for

  • Physical gold is easily stolen or lost

Investing in a solo 401k

Solo 401K

When choosing to open a Solo 401K, the allocation amount varies. Most personal finance advisors claim that it can generate a lot of money with time. Ultimately, long-term growth is the goal here. However, the risk level also varies, though there's an average low for the world.

If a person already owns a business and doesn't want to sell it, it's easy to stash a large chunk of that income into a Solo 401K for retirement purposes. This can also work for self-employment income. With this account type, investors can save more for their retirement than is possible with a regular 401K. Contributions made are also part of the tax-advantaged option, so there are no costs and taxes paid if no money is removed from the fund. However, if money is taken out of the fund, this can lead to taxation.

With a Solo 401K, small business owners and those who are self-employees can defer 100 percent of their compensation for a maximum of $19,500, depending on the year. If the person is over 50 years old, this bumps up to $26,000.

Meanwhile, it's also possible to contribute 25 percent of a person's compensation for being their own employer. This has a maximum cap of $58,000 for contributions for most people. However, this doesn't count any catch-up contributions.

Though it's not possible to use it as capital for the business, it's a great way to see full appreciation by the time a person reaches retirement age. A personal financial advisor can help with this. Just note that it isn't possible to access the fund amount without seeing penalties. The advice from most personal finance advisors is to use this for money that is not needed for a very long time.

Getting Started

No one needs much free time to get going on a Solo 401K. It's easy to open one with an online brokerage firm. However, some people find that a little worrisome. Therefore, it's also possible to go to a regular broker to take care of this situation. Most personal financial advisors can also give advice on how to see the most profits with less capital. Ultimately, most people choose to work with Charles Schwab and Fidelity, but there are others.

Who Should Open a Solo 401K?

Investing in the Solo 401K is ideal for anyone who has self-employment income. However, if the person doesn't work for themselves, this is not an option. Still, a regular 401K is ideal through an employer if that's an option. Otherwise, an IRA can be a great return on investment for retirement years.


  • Save more money for retirement

  • Select the funds for the Solo 401K

  • Reduce tax bills for that first year of contribution (profit)


  • Can't access the money before retirement without significant penalties

  • Doesn't draw equity and no profit options are available until retirement age

  • Requires more paperwork for the IRS

Savings Accounts with High Interest Rates

Many personal financial advisors recommend that some of the money invested go into a savings account. It's best to choose a high-yield one because they pay higher interest rates than regular ones. Plus, they tend to have a better return than a checking account offers. Any amount can be invested, but it's best to choose 10 to 20 percent of the overall $200,000.

There are four things to focus on when choosing the right high-yield account. These include the minimum amount to deposit, annual percentage rates, minimum balance, and the withdrawal options. While the goal is to keep the money in there for the long-term, it can also be used to dip into for high expenses. Just make sure that the minimum balance stays in the account. Otherwise, there could be steep penalties, or the account could be closed. These funds shouldn't be used at all ideally. Instead, have a regular account and a high-yield one. Dip into the normal one for expenses and leave the other one alone.

Getting Started

It's possible to find an online bank to open up a savings account. However, a brick-and-mortar (physical) one is also a great place to get started. Just make sure that all of the important aspects are considered, such as the minimum balance, minimum deposit, and more. Ultimately, it's best to shop around to find the highest annual percentage rate possible. The best way to do this is to research online or call various banks if necessary.

Who Should Open Savings Accounts with High-Profit Yields?

Everyone should have a savings account. However, if the goal is to see high yields from it, then go for one with a high interest rate. Typically, these funds shouldn't be touched so that they are there for when a person retires. This can be a great personal asset, and it's possible to get access to it if absolutely necessary. Though it doesn't generate income, these accounts can store cash and make sure it sees a return.


  • Offer higher APYs than regular ones

  • May have low minimum balances and no monthly fees (check with the bank first)

  • Can gain access to the money if absolutely necessary

  • Mobile apps available in most cases for easy money management

  • Ability to transfer money between accounts

  • FDIC-insured, so there's no risk at all


  • Typically only found online

  • Not all banks provide them

  • Could be a lag when transferring funds from one to another

Investment Styles

While any of these investment options are great for that $200,000, it is important to think about personal goals here. Though some people are ready to buy a house, others want to retire with enough cash to be comfortable.

If long-term investing is the goal, it's important that the strategy doesn't have to change with time. For others, a quick profit is the goal. Others want access to their money if something happens. All of these things are different based on the investment options chosen.

It's important to consider how soon the person can access the money. If it's designed to ride for a decade or two, that $200,000 investment should sit pretty and rake in the interest.

Bottom Line

Having that much money to invest can help to become financially stable and stay that way. However, personal needs might be different for each individual. Whether a house is in the future or the ability to access funds is essential, that plays into where the money is invested.

Personal advisors can help figure out where all that money should go. However, it's also up to the person with the money. To invest $200,000 is a large undertaking, but it's easy with the right help! Now, how to invest 500k?


Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Stratos Wealth Partners, LTD., a registered investment advisor. Stratos Wealth Partners, LRD. The Kelley Financial Group, LLC are separate entities from LPL Financial.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. The content is developed from sources believed to be providing accurate information.

No investment strategy assures a profit or protects against loss.

Investing in mutual funds involves risk, including possible loss of principle. Fund Value will fluctuate with market conditions and it may not achieve its investment objective.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawal prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% penalty tax. Limitations and restrictions may apply.

The prices of small and mid-cap stocks are generally more volatile than large cap stocks.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The market value of corporate bonds will fluctuate, and if the bond is sold prior to maturity, the investors yield may differ from the advertised yield.

Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate or return and fixed principal value.

Municipal bonds are subject to availability and change in price. They are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax free but other state and local taxes may apply. If sold prior to maturity, capital gains tax could apply.

ETFs trade like stocks, are subject to investment risk, fluctuate in market value, and may trade at prices above or below the ETF’s net asset value (NAV). Upon redemption, the value of fund shares may be worth more or less than their original cost. ETFs carry additional risks such as not being diversified, possible trading halts, and index tracking errors.

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