How Would You Invest$100,000?
If $100,000 were to fall into your lap, the money could offer more retirement security or help you invest in a dream project. A windfall like this may seem like easy money, but there are different strategies for investing the sum. These suggestions from local business leaders—serial entrepreneurs to real estate executives to investment managers to multimillionaires—run the gamut.
Principal, Gray Swan Solutions
“For me, the answer is always invest in yourself. So if you have $100,000, you would definitely start a business. A lot of people say, ‘Oh, it’s a down economy, this is a bad time to start a business.’ I really see it in quite the opposite fashion. I believe that a down economy is as good a time to start a business as any, if you start the right business. That $100,000 can go very far if you’re starting an Internet business. In a time like this there are many resources available at a discount because nobody else is starting a business; for example, you can rent space at a lower price. The key is finding a business that is valuable to people in a down economy, or in any economy.”
Former chairman and founder, Vengroff, Williams & Associates, and owner IIYF Inc.
“We do have it, and we do invest it. We buy houses, usually short sales, for somewhere between $20,000 and $35,000, and we rent them. We have 1,400 now between Venice and Bradenton. We’re in the very bottom of the market. We buy a house for $25,000 and rent it for somebody for $600 a month; it’s a terrific investment. We also [invest] in entrepreneurs who come through the door. You can take somebody who started with zero, and if they have the idea and if they’re an entrepreneur who is willing to put forth the effort, then we’ll fund them. Then we’ll take half the company.”
Financial planning manager, Goar, Endriss and Walker, P.A.
“The logical thing to do is to place it in a diversified portfolio, quite probably at this point with an emphasis on high-quality, tax-free municipal bonds, and some equities, or equity mutual funds. But I always ask the client. For a younger client who just inherited $100,000, we would ask them what their goals are. Do they need to buy a house or pay off school loans? Are they raising a family and need an emergency reserve because maybe one spouse is going to take some time off work? Have they fully funded Roth IRAs and retirement plans? All of those things would go into the mix before we would say a word about where to invest the money. If an 80-year-old inherited $100,000 and was of average means, they might need to supplement the interest that their existing portfolio is earning because their rates are so low.”
Carol B. Green
Director, First America Bank, and former president/CEO of Weight Watchers of the Rocky Mountain Region and Franchise Systems International; author, Spiritual Transformation in America
“I would put it into a Global Real Estate ETF. I think that real estate is really beaten up in many places, and a good fund internationally would see where the real estate appreciation is taking place. In my economic situation and age, this is the investment I would make. If I were young and didn’t have sufficient funds, I might consider buying a duplex and managing it myself. $100,000 would be a substantial down payment.”
Chief investment officer, Cumberland Advisors; author, From Bear to Bull with ETFs
“The best combination is some of each: tax-free bonds, precious metals, the stock market, real estate and cash reserve. Diversification of risk is the soundest principle of investing. You can have a certain amount in cash. You can buy a tax-free bond mutual fund. You can buy an exchange-traded fund for a position in gold (GLD is the world’s largest exchange-traded fund). You can buy the Standard & Poor’s 500 index in an exchange-traded fund (SPY). You can participate in real estate, but that is much more difficult. Real estate is the least liquid of all of the asset classes. There’s growing evidence that the real estate market is bottoming in some places in the country. Sarasota could be one of them. There’s growing evidence that the overhang of unsold residential units in Sarasota is gradually being absorbed. So if you add a long-term time horizon for real estate, this might be an opportunistic time to venture back into real estate.”
John B. Harshman
President and licensed real estate broker, Harshman & Co.
“I believe that we get our greatest rate of return when we invest in human resources. So I would look at investing in organizations like the Y Achievers, who provide college scholarships to bright, local, dedicated students who are financially challenged. This investment has great payoff potential and quite possibly a direct payoff in that the students would return to the area. The key is finding the students who will use the scholarship wisely and be a success themselves, using that as a springboard for their success and not the only means for their success.”