People invest money in income-producing assets for many reasons. One of the main reasons is to earn more money to grow the asset. If you are saving money or inherited the money; investing 300k won’t be easy because you will have lots of investment options to choose from. So, plenty of options means you have plenty of opportunities to make mistakes. In this guide, I will discuss some investment options that will help you decide how and where you can invest your 300k. Let’s explore the article!
If you have a large amount of money then it is wiser to invest the money in a different sector. With 300k to invest, you can consider investing in rental properties, bonds, stocks & funds, public or private REITs, business industries, income-generating machines, residual sales income, etc.
12 Best Investment Options To Invest 300k In 2022
1. Stocks & Funds
2. Bonds
3. Rental Properties
4. Buy a Business
5. Open a Solo 401(k)
6. Public REITs
7. Private REITs
8. Crowdfunded Real Estate Loans
9. Exchange-Traded Funds (ETFs)
10. Private Notes
11. Literal Income-Generating Machines
12. Mutual Funds
1. Stocks & Funds
Investing in stocks and funds is one of the simplest and most common options when it comes to a large investment. You can invest in dividend-paying stocks & funds that include stocks, mutual funds, or exchange-traded funds (ETFs). Here the investment process is very simple. You buy shares and that share pays you a dividend each quarter indefinitely. Some share pays more dividend than others, for example, one stock may pay an annual yield of 1% of its share price, while another might pay 5%. So, before investing the money make sure you do enough research to find the best companies to invest the 300k. To make the stock investment safer you can choose to invest in ETFs that own a wide range of dividend-paying stocks. This way you don’t over-invest in any one company. There are lots of ETFs that specialize in high-dividend stocks. The three best ETFs are SPDR S&P Dividend ETF (ticker: SDY), SPDR S&P Global Dividend ETF (ticker: WDIV), and ProShares S&P 500 Dividend Aristocrats ETF (ticker: NOBL).
2. Bonds
Bonds are considered as classic “paper asset” and it pays you interest payments until they mature and you get your initial money back. Bonds are a type of loan from you to the borrower. The best part of bonds is you can sell them on the secondary market to another investor at any time. There are two types of bounds available. They are government bonds and corporate bonds. Some government bonds, including many local municipal bonds, come with tax benefits for investors. Usually, bonds pay a high dividend but recently bonds haven’t paid out the same high returns that they did in the 20th century. So, the interest rate of bonds won’t be as high as you can get from some stocks but it is a risk-free investment option. Moreover, there is no limit on how much you can invest in bonds. So, the more you can invest in bonds, the more you will earn.
3. Rental Properties
Rental properties are a great investment option for large capital. Here you can generate unlimited income without selling your assets. Moreover, you don’t have to worry about safe withdrawal rates or sequence of returns risk. In fact, rental properties drive the net worth higher over time because the properties rise in value! Another advantage of this type of investment is, rent adjusts for inflation so any inflation won’t diminish your returns. The returns of this rental are predictable because you already know the buying price as well as the market rate for rent. This way you will be able to accurately forecast the long-term averages of all expenses and your profit gain.
4. Buy A Business
Investing in a business or buying a running business is a safe investment option. Usually, it is not easy to start a new business therefore if you have 300k to invest then you can consider buying a business. Although, buying a whole business involves some risk everyone but if you can buy a business then you will have the chance to build something that could bring in long-term income for years or decades to come. Moreover, if you can turn your business into a large corporation then others can operate it then you will be able to enjoy a passive income stream for life. While buying a business try to buy a business that has future demand like finance or a local business, IT business, etc.
5. Open A Solo 401(k)
If you have 300k to invest then you can consider opening a Solo 401(k). You can invest various amounts of money in Solo 401(k) investment according to your requirements. It is a safe investment option and you will be able to earn lots of money. Moreover, if you are looking for a long-term investment option then opening a Solo 401 (k) will be a wise decision. With Solo 401(k), you can save more money for your retirement than is possible with a regular 401K. Moreover, the Solo 401(k) allows small business owners and self-employed workers to defer up to 100% of their compensation, and it’s up to a maximum of $19,500 in 2021. You can easily open a Solo 401(k) with help from brokerage firms.
6. Public REITs
If you have a brokerage account then you will be able to buy publicly-traded REITs just like stocks and bonds. In fact, it is one of the most liquid options for investing in real estate. In public REITs, the companies usually payout 90% of their profits in the form of dividends. It means you will be able to earn more money but it has limited growth potential. Therefore, if you want a fast and easy way to diversify your portfolio and add real estate, public REITs are the best option.
7. Private REITs
Private REITs are privately owned funds and they usually invest in commercial real estate like apartment buildings to allow the individual investors to buy shares in the funds. Unlike any public REITs, private REITs don’t offer much liquidity. Private REITs are long-term investments and the minimum time required is at least 5 years. Here, if required then you can sell your share early but you have to pay a fine. So, if you have a large amount of money and you won’t mind parking the money then private REITs will be a great option to invest your 300k.
8. Crowdfunded Real Estate Loans
This is an indirect way to invest in real estate as a hard money lender. Here you will be able to make short-term purchase-rehab loans for house flippers. Here you will lend money to flippers to buy and renovate a house. Then the borrowers will recoup that money through investors like you. This investment option will allow you to pick and choose individual loans to fund. After the investment, you will be able to receive interest based on the degree of risk in each particular loan. The best part of crowdfunded real estate loans is, they are short-term loans like 6 to 12 months. So, you don’t have to invest your money for a long time.
9. Exchange Traded Funds (ETFs)
ETFs stands for Exchange Traded Funds and it allows the investors to purchase several different stocks, instead of stocks tied to just one company. This is also an excellent investment option because it provides portfolio diversification and helps minimize risk. If you invest in various companies of different sectors then you’ll be less impacted when one market drops. You can take advantage of growing markets in one sector and offset losses in other sectors.
10. Private Notes
The working procedure of private notes is quite similar to real estate crowdfunding. Here the main difference is the lender. In private notes, you directly lend money to another person or company. There is a significant risk involved in this investment option. If the borrower doesn’t pay you back then you don’t have many options at your disposal beyond guilt-tripping them. Therefore, be careful about this investment option because the risk directly correlates with how well you know the borrower and your confidence in their experience.
11. Literal Income-Generating Machines
This is an excellent investment option to invest a large amount of money. You can invest money in income-producing machines, like laundry machines, ATMs, arcade games, bar games, or vending machines. Here, you have to find a building or open place where you can install your machines. Once you install the machine, what you have to do is, service them occasionally to keep them running and periodically stop by to collect your coins. This type of investment is safe and you can generate a handsome profit.
12. Mutual Funds
Investing in mutual funds is a great way to diversify your investment portfolio. Mutual funds will get you exposure to stocks and bonds so you don’t have to make individual picks and manage so many different stocks. When you invest in mutual funds, you can earn money from dividend payments, capital gains, or net asset value. Some common mutual funds to invest are –
1. Fidelity Advisor Series Growth Opportunities Fund (FAOFX)
2. Fidelity Advisor Growth Opps Z (FZAHX)
3. Fidelity Advisor Growth Opps I (FAGCX)
4. Fidelity Series Growth Company (FCGSX)
5. Fidelity Series Blue Chip Growth (FSBDX)
6. American Century Focused Dynamic Gr Inv (ACFOX)
Final Thoughts
Finally, how you can invest 300k largely depends on your investment objective, future investment goal, risk tolerance, and how long you want to invest the money. However, if you find it overwhelming to invest 300k on your own then you can contact a financial advisor to short out what to do with your money.
References
https://www.forbes.com/sites/michaelfoster/2021/04/17/got-300k-these-funds-could-let-you-retire-now/
https://www.nasdaq.com/articles/5-funds-that-pay-%242375-a-month-on-a-%24300k-portfolio-forever-2020-08-03
Last Updated on August 5, 2022 by Ana S. Sutterfield
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.
