How to invest $100k and make $1 million

How do you invest $100,000 and make $1,000,000?

The best way to invest for $1,000,000 is to purchase low-cost index funds consistently over time. The more frequently you are able to purchase, the faster you will reach 1 million dollars. An index fund like the S&P 500 is one of the most reliable ways to reach your investment goals.

Imagine, finally reaching $1,000,000. Investing is one of the best ways to build wealth and retire early.

It is possible to turn $100k into 1 million dollars.

Luckily for you, I’ll show you how to invest your first $100k. I’ll even show you some options if you’re an income investor. Consistently investing over time is going to help you make your first million.

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How to invest $100k and make $1 million

The best way to invest $100,000 and make $1000000 is to invest consistently over the long-term. Invest in safe and low-cost index funds like the S&P 500 which have historically returned 10%. Therefore, $100k invested would reach $1 million in around 13.5 years without further investment.

In order to invest, you will need a brokerage account, like Robinhood. A brokerage account allows you to purchase stocks or ETFs by yourself. Essentially, a brokerage is the middleman between you and the stock market. 

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What is the best way to invest 100k?

The best way to invest $100,000 is typically through a low-cost index fund like the S&P 500. On average, the S&P 500 has an annualized return on investment of 10%. The S&P 500 is a well-diversified Index Fund which holds some of the best companies.

It is important that you invest with a low-cost Index Fund. You can buy the S&P 500 through multiple different brokerages, but each charge has their own fee. For example, Vanguard has VOO for the S&P 500 which only charges 0.03%.

Some S&P 500 funds will charge more than 1%! Over the course of your investment timeline, you will be charged hundreds of thousands of dollars for high expense ratios. Therefore, you should always check the expense ratio before you invest in a company.

What’s the Safest investment with the highest return?

The S&P 500 is still one of the safest, yet highest returning investments. Not only is the S&P 500 well-diversified, but has averaged a 15% return on investment over the last 10 years. The S&P 500 contains the United States top 500 companies, so you know it will perform well.

When it comes to the safety of your investment, there is no other alternative than the S&P 500. Sure, there are plenty of other index funds, but the S&P 500 is the benchmark of the US economy.

When you invest in the S&P 500, you are getting ownership in the top 500 companies in the United States. These are strong companies like Apple, Microsoft, Amazon, Google, Facebook, and Tesla. The chances of any of these companies going bankrupt in the near future are unlikely.

As you can see, the investment in S&P 500 is a good way to protect your initial investment capital.

Additionally, the S&P 500 has good equity growth. Over the last 10 years, the S&P 500 has averaged a 15% return on investment. Over the course of history, the S&P 500 typically returns and annualized return of 10%. 

The S&P 500 does pay a small dividend. The dividend is typically small, around 1%. 

What’s the best way to invest 100k for income?

The best way to invest $100,000 for income is through high dividend yield investments. These investments include covered call exchange-traded funds, business development companies, or dividend paying companies. The right mix of investments can yield you a dividend yield between 7 and 10%

For example, having $100,000 invested into different assets with a 7% yield would generate $7,000 per year. 

Covered call exchange-traded funds invest in options to produce income. Typically, there is little capital appreciation, so your return is mainly dividend yield. These investments will typically pay between 7 and 12% in dividends

Some covered calls only invest half of your assets into options. Therefore, half of your assets are also invested in the underlying index. For example, XYLG would invest 50% of your assets in the S&P 500 and the other 50% is call options. As a result, the yield is smaller, around 6%.

Business development companies are required to pay 90% of their profits back to shareholders. You can find some BDCs with dividend yields around 8%.

Alternatively, you can diversify your own portfolio by picking individual dividend paying companies. You can invest in companies like AT&T who currently pays a 7% dividend yield.

Any mixture of these assets can provide you with a high dividend yield portfolio.

How long does it take to turn $100k into $1 million?

Investing $100,000 into the stock market at a 10% return on investment would yield you 1 million dollars in 13.5 years. You can reach 1 million dollars faster by contributing more or finding a higher return on investment. 

How much monthly income will $100k generate?

Most Investments are compared to the S&P 500 which yields 10% return on investment on average. Therefore, you can assume your $100,000 will earn 10% on average or $10k. On a monthly basis, the interest you would generate is about $833.

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Summary: Invest $100k and make $1 million

As you can see, it is possible to turn $100,000 and invest it for $1,000,000. On average, most Investments earn a 10% return on investment or $10,000 per year. Investing in low-cost index funds like the S&P 500 is one of the most reliable ways of achieving $1,000,000.

Make sure you are investing in a low cost fund or you will pay enormous fees as your money grows. Do your homework and find the best S&P 500 fund with the lowest expense ratio. Vanguard’s VOO is one of the cheapest funds to invest in the S&P 500.

Income investors may want to invest in dividend paying assets. Therefore, they should consider covered call ETFs, business development companies, or individual dividend paying companies. 

You can invest $100,000 into the stock market and be a millionaire in roughly 13.5 years at 10% ROI. To reach $1,000,000 faster, find a better return on investment or contribute more. 

John is the founder of TightFist Finance and an expert in the field of personal finance. John has studied personal finance for over 10 years and has used his knowledge to pay down debt, grow his investment portfolio, and launch a financial based business. He is committed to sharing content related to personal finance based on his experience in his career, investing, and path towards reaching financial independence.