How to Invest $100K to Make $1 Million

Whether you have $100K to invest today or you know you will in the future, here’s my approach on how to invest $100K to make $1 million.

There are so many ways to become a millionaire. The right one for you will depend on your unique goals, timeline, and risk tolerance.

Please note I am not a licensed financial advisor. This information is for education purposes only. Every person has a unique financial situation. The best approach will be different for everyone. Accordingly, do your own due diligence before making any financial decision.

Understand why you want to become a millionaire

Why do you want to become a millionaire? I can hear you saying, well who wouldn’t want to be a millionaire? And I agree, but not all millionaires have the same lifestyle.

Take Graham Stephen, famous real estate YouTuber. If you don’t know him, you may know his colleagues from Selling Sunset.

He became a millionaire at age 26 and at age 30 also makes over $1 million a year. He buys generic brands at the grocery store, splits a meal with his girlfriend when they go out, and sometimes avoids going out entirely to save money.

Does that surprise you?

There’s a difference between becoming a millionaire and staying a millionaire. If you become a millionaire and immediately spend $227K on a Lamborghini Aventador, well you’re probably not a millionaire anymore!

Now that doesn’t mean you have to pinch every penny like Graham, but that’s why it’s important to know why you want to become a millionaire.

Your specific goals will likely influence your investing strategy. (Which then will influence your millionaire lifestyle.)

For example, I intend to become a millionaire so I have the capital to invest in businesses of the future. (This is my starting point goal as the kinds of businesses I want to support will require more capital than that.)

That’s very different than I want to buy luxury sport cars or backpack around the world.

If you woke up tomorrow and suddenly had the $1 million you wanted in your bank account, what would you do?

Not what you would buy, but how would you spend your time?

If you’re a writer, now would be a good time to journal your thoughts!

Your answer to this question explains why you truly want to become a millionaire.

Maybe after reflecting upon this, you’ll realize that you may not need $1 million to do just that.

Now that you know why you want to be a millionaire, let’s talk about 3 ways to invest and become one.

3 Assets I’ve Considered Investing in to Become a Millionaire

There are so many different assets to invest in. Here are the main 3 I’ve considered.

Stock Market

The stock market is my favorite because it’s the easiest for me. Like Warren Buffett, I’m a huge fan of index funds.

It’s because they tend to have low fees and outperform the professionals in suits on Wall Street.

It’s the simplest way to invest: open an investment account, transfer your money to it, and purchase index funds.

Index fund investing is truly passive income because after that’s complete, you can spend your time doing whatever you’d like.

You invest it, then leave them alone so time and compound interest can do their thing.

(I will admit I do check my accounts at least monthly because I’m an avid net worth tracker. Well avid tracker in general but this is my favorite metric to track.)

But this investing approach doesn’t require you to log in to your account everyday. You don’t need to do regular research trying to find underpriced stocks. You don’t need to worry about one company going out of business.

There are many other ways to invest in the stock market too, but we’re keeping things simple today. (I don’t use any other method than this one but felt I should mention it’s not the only way.)

Real Estate

One common pushback to index fund investing is the returns. The S&P returns an average of 10% a year. Some want their capital to earn more than 10%.

Another pushback is stock market investments aren’t liquid. Not liquid like your Margarita from Taco Tuesday last night!

Liquid in this case is comparable to cash. It means your money is in a form that’s easy to spend.

Your index fund isn’t liquid. If it were a Margarita it would be frozen! Your cash isn’t coming out that quickly.

(I also should note, depending on your financial institution and investments, you could sell investments for cash and make it liquid in 2 or more business days.)

Enter fans of real estate investing. Now there are many forms of this, but again I’m going to focus on the one I’ve explored: rental properties.

The 2 most appealing arguments for real estate investing, particularly rental properties, is cash flow and appreciation greater than the stock market.

Cash flow means that you have regular income as your tenants pay rent.

Appreciation means your property value went up, kind of like how the value of your stocks goes up.

While those advantages of real estate investing occasionally tempt me to look at properties and crunch the numbers, the biggest downside to real estate I see for myself is it’s not really passive.

My stocks don’t text me in the winter because the heat is out.

There are so many people who build their wealth through real estate. No doubt it’s a viable option.

But for me, I can’t get excited about this method, no matter how many times I’ve tried to crunch the numbers.

I can’t figure out how it will outperform my stock market investments, once I factor in the opportunity costs of not having that capital invested.

Real estate is a lot of work I’m not eager to do. On top of that, I haven’t found a deal yet that outperforms my 10% in the stock market.

Although I know 90% of millionaires come from real estate, so perhaps I’ll reconsider in the future.

If this one interests you, check out our friend Graham from earlier. Here’s his YouTube channel.

Business

What if you want more than 10% returns but don’t want to pursue real estate? Another option I’m exploring is investing in businesses outside the stock market.

Particularly, I’m looking into buying small businesses. This appeals to me because after religiously following Codie Sanchez for a year, I’ve learned a lot about what it would take to work for me.

I’m intrigued by higher returns than the stock market, diversification, and I live and breathe business so this challenge sounds like a great learning experience for me.

Along those lines, I’d also add you should consider investing in yourself, however that may look.

If buying small businesses interests you, check out Codie Sanchez, the small biz investing queen.

Again there are more assets than the three we just explored. Take some time to think about what interests you and what you would feel comfortable with.

My Plan for how to invest $100K to Make $1 Million

I promised I would reveal my secret plan, not so secret anymore. Here’s how I plan to become a millionaire.

After exploring these 3 methods, I intend to invest in diversified index funds and let time and compound interest do the rest. At least for the time being.

Assuming a 10% average annual rate of return, an $100,000 investment into an S&P 500 index fund would become $1 million in an average of 24 years.

If you want to achieve that goal faster, I’d either invest more into index funds or I’d explore other investments with even higher returns.

That said, higher returns tend to come with higher risks. That’s why it’s always important to understand what you have to lose and what you are willing to lose if things don’t go as you planned.

I also didn’t say this anywhere, but I must emphasize it now. I always, always, always have an emergency fund before investing anything. This is as important for an investor as a parachute for a skydiver.

Conclusion

There are many ways to invest $100K to make $1 million. That said, the best way for you will depend on why you want to become a millionaire, the asset classes you want to choose, and your risk tolerance.

You now know how I plan to invest my money to become a millionaire in ~24 years. You also saw the other approaches 2 millionaires used to build wealth.

Just the fact that you read this all the way through, it tells me you will put it in the effort to make yourself a millionaire.

We have a free community for people like you. It’s called the Wealthy Women Club, all genders welcome.

Check out the free club here.