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How to Invest 200k? | 4 Solid Ways

How to Invest 200k? | 4 Best Ways to Grow Your Money
Diana Paluteder

If you’ve managed to sock away $200k, congratulations, you’re already ahead of the game in terms of building your net worth. But let’s face it; if you want to hit all your investing targets, you’ll need some savvy investing skills, as well as the discipline to keep saving those hard-earned dollars. In this guide, you will find ideas for how to invest 200k, complete with their pros and cons, as well as more conservative strategies for saving and retirement. So buckle up and get ready to make that money work for you!

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What kind of investor are you?

Before you even think about how to invest 200k, you must ask yourself some key questions:

  • First up, what’s your investing goal? Are you looking for a short-term gain, like saving up for a new car or a down payment on a house? Or are you playing the long game and saving for retirement? This is important because your investment approach will differ depending on your answer.
  • Next, what’s your risk tolerance? Let’s face it, investing is risky, and how much risk you’re comfortable with will determine your asset allocation. 
  • How involved do you want to be? Investing 200,000 dollars can be overwhelming, so you may want to consider seeking the guidance of a financial advisor.

All in all, your age, risk tolerance, investment time horizon, and financial goals all come into play when it comes to your investment style. By understanding who you are as an investor, you’ll be better equipped to adjust your approach as you age and your goals change. So take some time to reflect on these questions before diving into the world of investing.

How to invest $200k?

Here is an unusual problem: you happen to have an extra $200k on hand but don’t know what to do with it. And while there is no perfect way to use this cash, there are various options. Ultimately, the best way to invest $200k is to choose the financial instrument (or combination of instruments) that works best for you and your unique financial situation.

Below you will find our pick for the four best ways to invest $200k:

  1. Individual stocks;
  2. Index funds and ETFs;
  3. Real estate
  4. Savings and retirement. 

Before we proceed

In this guide, we assume that your $200,000 of extra cash is indeed extra and that you do not have any outstanding debt, specifically high-interest credit card debt. More information on the factors that should be taken into account before you start investing can be found below. So before you begin investing your $200k, ensure to make those evaluations. 

Now, let’s dive in.

4 best ways to invest $200k

1. Individual stocks

In this section: How to invest 200k in the stock market?

Investment type: Long-term growth

Risk Level: Varies

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Disciplined investing in the stock market over decades is the key to building serious wealth. And while returns can be up one year and down the next, investors who reinvest their profits may even see compounding gains, which only grow juicier as time passes. 

For example, the S&P 500 (serving as the gauge for the health of the US stock market) brought in a whopping 26.89% return in 2021 amid the post-pandemic recovery. And even though it was down a disappointing -19.44% in 2022, it’s still averaging around 10% since its inception in 1957.

Now, once you’ve set your sights on a particular industry, sector, or company, you can shop for an investing platform. For the hands-on types, this typically means opening an online broker account, such as eToro or Interactive Brokers. Alternatively, investing through a robo-advisor might be more your speed if you’re looking for a little more guidance. 

In this case, however, because you are dealing with a substantial amount of money, it might be worth hiring a financial planner or investment advisor. Because when it comes to investing, you can never be too careful.

Pros and cons of investing 200k in the stock market



  • Potential for high returns: Investing in the stock market has historically generated better returns than more conservative asset classes like bonds;
  • Liquidity: Stocks are highly liquid, meaning you can easily buy and sell them at any time;
  • Low barrier of entry: Most retail brokers offer commission-free trading and no account minimums, so you can start investing with as little as 10 dollars; 
  • Build long-term wealth: Generally, stocks yield a generous annualized return over the long term, so at the minimum, you’ll be able to stay ahead of inflation.


  • Returns are not guaranteed: While stocks can outperform many financial assets over long periods, they may not do well over your chosen investing period; 
  • No short-term gains: Generating profits through stocks generally takes decades, not weeks or months;
  • Volatility: Share prices rise and fall minute to minute, taking the investor on an emotional rollercoaster. The best is, therefore, to check your investment only periodically;
  • Time: When buying individual stocks, you must manage your portfolio yourself. That means regularly following various company health indicators as well as overall market conditions and adapting the asset allocation in your portfolio as necessary. Unfortunately, doing all of that can take a lot of work.

Investing in dividend stocks

Many investors look to dividend stocks to generate additional income through dividend payments. However, when selecting dividend-paying stocks, don’t simply choose the ones with the highest dividend yields. Interestingly, high yields aren’t always what they’re cracked up to be and could be a red flag for a company in distress, i.e., the yield could be above average only because the company’s shares have fallen in response to financial difficulty. So, to avoid getting burned, you’ll need to do your homework and investigate the company’s financial health metrics through fundamental as well as technical analysis.

2. Index funds and ETFs

In this section: How to invest 200k in index funds and ETFs?

Investment type: Long-term growth

Risk Level: Varies

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While building a portfolio around individual stocks can undoubtedly bring in some big-time gains, there is also potential for significant losses, particularly when your holdings are not sufficiently diversified. By spreading your investments across various financial instruments, you can help mitigate the impact of market volatility. So, while it’s tempting to go all-in on a hot stock, spreading your money across various companies and industries is crucial for protecting your portfolio and helping you achieve long-term success.

Index investing offers a practical solution to this diversification challenge. By investing in index funds or ETFs, you’re essentially buying a small piece of all the companies listed in a particular index, such as the S&P 500. This means that instead of trying to pick individual winners, you’re betting on the overall performance of the market or a particular sector. Not only does this strategy lower the risk associated with individual stock picking, but it also typically comes with lower fees and expenses.

Moreover, historical data has shown that, over the long term, most active fund managers struggle to outperform their benchmark indexes. Therefore, index investing can be a more efficient and cost-effective way for investors to gain broad market exposure and pursue steady growth.

The three most broadly tracked indexes in the United States are:

  • The S&P 500;
  • Dow Jones Industrial Average;
  • Nasdaq Composite. 

Pros and cons of investing 200k in index funds and ETFs



  • Diversification: Reduce risk by spreading your money across many companies or sectors;
  • Low fees: Compared to actively managed mutual funds, index funds typically have lower costs;
  • Easy access: Online brokers make access to the stock market easy and inexpensive;
  • Liquidity: ETFs and mutual funds can be bought and sold easily, allowing you to access your money quickly if needed;
  • Transparency: Investors know exactly where their money is allocated as index funds are required to disclose their holdings regularly;
  • Convenience: Little management compared to a portfolio of individual stocks that demand constant research, keeping up with news updates, and adjustment;
  • Simplicity: Taking a hands-off investment approach can eliminate many of the biases and uncertainties that can arise when you pick stocks individually. 


  • Limited control: ETFs are designed to track an index or sector, which means that investors have limited control over which specific companies or assets are included in the fund;
  • Volatility: Index funds follow their benchmark index regardless of the state of the markets, meaning if the market conditions are poor, the index funds will also follow the indexes downward. In this case, a good active manager may be able to limit the downside by hedging the portfolio or moving positions to cash;
  • Slow gains: Buying and holding can be a winning tactic in the long haul, but evening out the risks also flatten out the rewards. 

3. Real estate

In this section: How to invest 200k in real estate?

Investment type: Long-term growth

Risk Level: Medium

If you’re looking to diversify your investment portfolio beyond the stock market, consider adding some real estate exposure to the mix. Here are five ways you can do just that:

  • Real estate investment trusts (REITs): REITs are companies that own, operate, or finance income-generating real estate. REITs (as well as REIT mutual funds and REIT ETFs) are publicly traded, so you can easily buy or sell them through a brokerage account, making them the most liquid form of real estate investment. So if you’re looking for a way to invest in real estate without the hassle of owning physical property, REITs are an excellent option for you to consider;
  • Crowdfunding real estate investing platforms: This method entails pooling funds from multiple investors to finance real estate projects, typically through an online platform that connects investors with developers or property owners. Through real estate crowdfunding, investors can access a wide range of real estate projects, such as residential or commercial developments, without investing large sums of money individually;
  • Residential home: Buying your own home (typically by taking out a mortgage) is the most common way most Americans invest in real estate. Nevertheless, although owning a home can facilitate wealth accumulation in the long run, the average yearly returns may not be as impressive as anticipated, given the additional expenses incurred for property taxes, maintenance, and insurance;
  • Rental properties: Rentals can offer consistent cash flow and the possibility of appreciation over time. Nonetheless, they are one of the most labor-intensive real estate investing methods;
  • Flipping: Flipping is the practice of acquiring a property not for personal use but for the purpose of reselling it at a profit. However, similar to rental properties, flipping requires a significant amount of effort and work, such as renovation projects and developing the ability to identify emerging neighborhoods that have the potential to yield a premium resale price.

If you’re keen to delve deeper into real estate investing, we highly recommend checking out our guide: “Top 6 Real Estate Investing Books for Beginners.” It’s an excellent resource to kickstart your journey and equip you with expert knowledge.

Pros and cons of investing 200k in real estate



  • Potential for passive income: Real estate can generate passive income through rental properties or dividends (REITs);
  • Appreciation in value: Real estate values tend to appreciate over time, serving as a solid hedge against inflation. At the same time, as rents and other sources of income increase over time, mortgage payments generally remain at their long-term fixed rate, potentially boosting your overall returns;
  • Tax benefits: Real estate investment offers various tax benefits, including deductions for property taxes, mortgage interest, and depreciation;
  • Diversification: Investing in real estate can diversify an investor’s portfolio, providing a hedge against market volatility and economic downturns;
  • Accessibility: Real estate investors can venture into real estate investment through various means other than conventional strategies, such as rental property investing or house flipping. A low-barrier option to consider is investing in REITs. 


  • Capital-intensive: Tangible real estate investments typically require a large amount of capital upfront;
  • Risk: Real estate investing carries a high level of risk, including economic and housing market risk, interest rate risk, tenant and vacancy risk; 
  • Illiquidity: Apart from REITs, real estate is considered an illiquid asset, meaning the money you invest is usually tied up for a considerable time period; 
  • High expenses: Real estate investment comes with a host of expenses, including property taxes, maintenance costs, insurance, and more; 
  • Time-intensive: Real estate investments, apart from REITs, require a significant time commitment, from researching properties to managing tenants.

4. Savings and retirement

In this section: How to invest 200k for retirement?

Investment type: Long-term growth and retirement

Risk Level: Low

While investing allows you to grow your money and build a solid foundation for a more secure financial future, savings provide a cushion to achieve short-term goals. Ultimately, both are essential components of a healthy financial plan, and the sooner you start, the better off you’ll be in the long run. 

If you just aren’t quite sure yet how and where to invest, here are a few of the safest ways to park your money:

  • Savings accounts: These are interest-bearing deposit accounts offered by most banks and credit unions. While savings accounts typically pay a modest interest rate, their safety and liquidity make them an excellent option for holding cash you want available for potential short-term needs. In addition, the money in a savings account is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per bank;
  • High-yield savings accounts: Though the interest rates on high-yield savings accounts can be up to 25 times greater than with traditional savings accounts, they often require a minimum balance, and access to the account is limited;
  • Certificate of deposits (CDs): A certificate of deposit is an FDIC-insured fixed-term savings product. Unlike in savings accounts, the deposited funds must remain intact for the entirety of their term or risk penalty fees or lost interest. The trade-off for this reduced liquidity is higher interest; also, longer periods generally have higher rates. Investors with balances of $100k or more can even opt for a jumbo CD in return for higher interest rates;
  • Money market funds: Money market funds are mutual funds that invest in highly liquid, near-term instruments, such as cash, cash equivalent securities, and high-credit-rating short-term debt instruments. They should be used as a temporary placement of funds before investing elsewhere and are unsuitable as long-term investments;
  • Money market deposit accounts (MMDAs): MMDAs offer higher interest rates than traditional savings accounts, as well as check-writing and debit card privileges. These financial vehicles are FDIC-insured and provide a safe place to store your money, though they are generally more helpful in the short term than as a long-term investment. 

Alternatively, to boost your retirement funds, consider these options: 

  • Individual retirement accounts (IRAs): An IRA will be your go-to retirement option if your employer does not offer retirement plans or if you want different investment offerings than those provided by your workplace. IRAs let you invest in various asset classes, including bonds, stocks, ETFs, and mutual funds. There are two flavors to choose from: the traditional IRA and the Roth IRA. The traditional IRA gives you an upfront tax deduction, while the Roth IRA lets you make tax-free withdrawals during your golden years. In 2023, contributions of up to $6,500 (or up to $7,500 for those over age 50) are allowed per year into an IRA;
  • Annuities: An annuity is a financial product offered through insurance companies that provide a fixed stream of payments to an individual, typically in the form of monthly income in retirement. The payout amount for immediate annuities depends on market conditions and interest rates. Because invested funds are illiquid as well as subject to withdrawal penalties, they are not recommended for younger individuals or those with liquidity needs;
  • Treasury Bonds, Bills, and Notes: Treasuries are debt instruments in which investors lend the US government the purchase amount of the bond. In return, investors are paid interest or a rate of return. Then, when the bond matures, investors are paid the face value of the bond. Treasuries have different maturity dates and can pay interest in different ways. However, all have zero default risk since they are guaranteed by the full faith and credit of the United States government. Remember, treasury yields can fluctuate depending on the market and economic conditions. 

Remember to take advantage of employer-sponsored retirement options

While a cash deposit into an employer-sponsored retirement plan such as a 401(k) is typically not an option, these plans (when offered) are the leading instruments for retirement planning. Not only because they come with tax advantages (you can deduct your 401(k) contributions from your tax return in the year you make them) but also because employers may offer to fully or partially match your contributions. If your employer provides this option, it is highly recommended that you enroll in the plan. It’s essentially free money!

How to invest $200k safely — things to consider 

Before you get carried away with investing your $200k, it’s essential to take a step back and evaluate your financial standing and ensure that you have fulfilled the following: 

  • High-interest debt is taken care of: Repaying high-interest debt, such as credit card debt or payday loans, should be a top priority. Paying off these debts can help avoid accumulating interest charges that can eat away any potential investment gains. Mortgages and auto loans, on the other hand, don’t need to be repaid before you start investing;
  • You have an emergency fund set up: Create an emergency fund to serve as a safety net for unexpected expenses before you start investing. A good rule of thumb is to set aside six months’ worth of living expenses in a deposit account like a savings or money market account, where the principal is not at risk. After all, having this fund readily available can prevent you from dipping into your investment portfolio or relying on high-interest credit cards or loans. 

Then, as you begin your investment journey, make sure to: 

  • Diversify: By allocating your investments across various financial instruments, industries, and categories. You can spread your risk and protect yourself from unforeseen events that may impact one particular asset. Moreover, a diversified asset allocation is vital in determining whether you will achieve your financial objective. For instance, if your portfolio does not carry enough risk, your investments may not generate a sufficient return to reach your goal;
  • Spread out your investments: Additionally, you can try utilizing a dollar-cost averaging (DCA) strategy, which involves dividing your investment into periodic purchases of a target asset over time instead of investing all your money at once. This approach can help lower the impact of price volatility and decrease the average cost per share;
  • Stay wary of fraud: Scams are getting increasingly sophisticated. Moreover, con artists are often highly articulate, charming, and knowledgeable, with credible websites, testimonials, and documents that are difficult to distinguish from genuine ones. However, the old adage holds true in this case: if something sounds too good to be true, it probably is. Therefore, ensure you thoroughly understand the investment before entrusting someone with your funds. Begin by searching for the company’s financial statements on the Securities and Exchange Commission’s (SEC’s) EDGAR filing system. You can also refer to the Financial Conduct Authority’s (FCA) list of warning signs here and the SEC’s list of questions to ask about your investments to ensure their legitimacy here

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  • eToro USA is registered with FINRA for securities trading.

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eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.


As you decide how to invest your 200k, focus on building wealth for the long term. And luckily for you, with such a substantial amount of cash at the ready, plenty of options are available, from the stock market to real estate. 

But before you dive headfirst into investing, take care of the basics. Pay off any debt you have, make sure your retirement plan is funded, and build up that emergency fund. Rest assured, taking care of these expenses first will pay off big time down the road.

Finally, consider your risk appetite and financial goals and create a solid financial plan that aligns with those factors. And if you invest that $200k wisely, who knows, maybe someday you’ll be researching how to invest $1 million.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

FAQs about how to invest 200k

How to invest 200k?

Your best way to invest $200k is to spread it across various financial assets, including stocks, index funds, and real estate, as well as more conservative alternatives such as bonds or CDs. 

How to become a millionaire with 200k?

Turning $200,000 into $1 million will require a lot of work and a bit of luck. One thing to keep in mind is that investing always involves some level of risk, and there’s no guarantee that you’ll make a million dollars or even that you’ll make any money at all. But if you’re willing to put in the time and effort and are smart about your investments, you might just have a fighting chance. 

Where to invest 200k?

Where you invest your $200k will hinge on your age, risk tolerance, investment time horizon, and financial incentives. Nonetheless, a well-diversified portfolio will combine several asset classes, which carry different levels of risk. 

How to invest 200k for monthly income?

There are various options for investing $200k for monthly income, including index fund investing, dividend stocks, crypto staking, P2P investing, as well as investing in rental properties or REITs. 

How to invest 200k in real estate?

You can invest in real estate through REITs or crowdfunding real estate investing platforms, as well as by investing in your own residency or rental properties.

How can I invest 200k in stocks?

To invest 200k in stocks, start by establishing clear investment goals and risk tolerance. Consider diversifying across sectors and regions using individual stocks or ETFs. Consulting with a financial advisor or using robo-advisors can also guide you in building a balanced portfolio tailored to your objectives.

What's the best approach to invest 200k for passive income?

Investing 200k for passive income can be approached in various ways. One effective strategy is to allocate a portion of the funds into indexes—buying index funds or ETFs that track the overall market or specific sectors. This provides broad market exposure, reduces the risk of individual stock picking, and typically comes with lower fees. Complement this with other passive revenue sources like dividend-yielding stocks and real estate ventures, like REITs or rental properties. Combining these assets can create a steady flow of income while also allowing for potential capital appreciation.

Where can I invest 200k now for income?

If you’re looking to invest 200k for a steady income, consider dividend-paying stocks, or real estate (either through rental properties or REITs). Money market accounts and CDs might offer lower returns but can be safer options for preserving capital while generating some income.

What's the best way to invest 200k short-term?

For a short-term investment of 200k, prioritize liquidity and capital preservation. Consider high-yield savings accounts, money market accounts, short-term bond funds, or CDs with durations aligned to your investment horizon. Ensure you’re aware of any withdrawal penalties or fees before committing your funds.

Highly Rated Stock Trading & Investing Platform

  • Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.

  • 0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit

  • Copy top-performing traders in real time, automatically.

  • eToro USA is registered with FINRA for securities trading.

30+ million Users
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

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