5 Smart Ways To Invest $100,000

Whether you inherit a windfall or have carefully tucked away money for years, you may be one of the 24% of millennials who has $100,000 saved. That's a significant amount of money, and you might be worried about wasting it or putting it in the wrong place.

Having $100,000 socked away gives you lots of options to improve your financial future. Below are five ways to start investing and make your savings work harder for you.

Reducing your debt isn't something you typically think about when it comes to investing but eliminating your debt is a significant investment in your financial future. 

Whether you have student loans, medical bills, or credit card debt, high interest rates can be costly and cause your balances to grow. By paying off your debt, you can save more money over time than if you let the money sit in your bank account. 

If you have high-interest debt, using your $100,000 to pay it down is a smart way to manage your money.

Most Americans don't have an adequate emergency fund, so they would have to borrow money to pay for a $400 unexpected expense. 

Not having a safety net leaves you at risk; if your car breaks down or you lose your job, you'll be unable to pay your bills. Financial experts generally recommend saving three to six months' worth of expenses in an emergency fund. 

If you have job security and other assets, you may be fine with just three months' worth of expenses. But if you work in a volatile industry, it might be wise to save six months' worth of expenses or even more.

If you're like most people, you might be behind on your retirement savings. According to the Government Accountability Office, 48% of households headed by someone 55 and older had no retirement savings at all.

Some employers offer retirement accounts, including 401(k) or 403(b) plans. They may even match a portion of your contributions, which helps you save even more money for retirement. If you have an employer-sponsored retirement plan, consider contributing up to the annual maximum.

An individual retirement account (IRA) is a retirement account you can open on your own. If you max out your 401(k) — or if your employer doesn't offer one — you can use IRAs to save money for retirement. 

Anyone can open a traditional IRA. But if you meet certain income requirements, a Roth IRA might be a better option for you.

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If you have children, using some of your $100,000 savings to build their college fund can be an incredible gift, helping reduce their need for student loans later on. There are several investment options when it comes to saving for college.

With a 529 college savings plan, you can save for your child's education and receive tax-free growth and tax-free withdrawals as long as the money is used for the beneficiary's qualified education expenses. 

With a Coverdell trust or custodial account, you can contribute up to $2,000 per year toward your child's education. Distributions from the account are tax-free if they're used for qualified education expenses.

With a UGMA/UTMA (Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act) account, you invest on behalf of your child. 

Once your child reaches a certain age — 18 to 25, depending on the state — the money is transferred to the child to use as they wish. UGMA/UTMA accounts belong to the beneficiary and cannot be changed. 

If you've paid off debt, established an emergency fund, and made the maximum contributions to your retirement fund and still have some of that original $100,000 left over, consider putting your money into a taxable investment account.

Taxable investment accounts don't have the same advantages as 401(k) plans or IRAs — your contributions aren't tax-deductible, and you'll have to pay taxes on your returns — but there is a major benefit too. 

You can withdraw money from a taxable account for any purpose and at any time without paying a penalty.

When you have a large amount of money sitting in a savings account, deciding how to invest $100K can be overwhelming. By thinking about your financial goals, risk tolerance, and target timeline, you can come up with an investment plan that helps you build wealth. 

If you still have questions about the best types of investments for you, an investment advisor can offer financial advice that allows you to invest more confidently.

Whether you use your money to pay down debt, bulk up your retirement nest egg, or invest in a taxable investment account, you're setting yourself up for a more secure financial future.