6 Ways To Invest 200k For Passive Income

When you’ve saved or inherited a substantial sum of money, it’s natural to wonder what the best way is to invest it so that you can grow it and create passive income from it.

If you have the nice problem of wanting to invest 200k for passive income you have a few choices to consider.

After all, if you want to live the same lifestyle as before, but with the option of making paid work optional, then you need to find ways to invest that money and make passive income from it.

There are plenty of ways you can invest money so that it generates an income for you without requiring much additional work on your part. By investing instead of spending everything immediately on dinners out and new clothes, you’ll be able to afford those things while still having a nest egg for later in life.

Read on to find out what might be the best way to invest 200k for passive income.

invest 200k for passive income
Photo by Ibrahim Boran on Unsplash

How to invest 200k for passive income

The key to investing 200k is to understand yourself in terms of your skills, experience, and interests.

And to add to this what you are prepared to learn about.

Once you know yourself then you can align your interest with the various investing options out there.

It’s not just about which will make the most money – which is probably unknowable – but how will you react to the ups and downs of your chosen investment.

The best way to invest 200k depends a lot on you and your behavior and what you are trying to achieve by when.

Investments that have worked in the long term are:

  • Property
  • The great companies of the world (Stocks and shares)
  • Businesses

Below are a few of your options with a few pros and cons for each.

Real estate

Real estate is a great way to earn a passive income.

No matter where in the world you are, there are always people who need a place to live, and it’s the job of the real estate investor to make sure that those people have somewhere to go.

Most investors start out by buying a home that they can then either rent out or sell for a profit.

If you buy a home that you plan on renting out, you can make money from it simply by charging enough rent to cover your mortgage, taxes, and other expenses.

The rest is profit that you can put into your investment account.

Depending on where you buy your home and how much you pay for it, commercial real estate can be a great investment.

Index and Exchange-traded funds (ETFs)

Index funds and ETFs are investments that you can buy in order to make money on the stock market.

These funds represent a large number of different stocks, so you’re benefiting from the rise and fall of the entire market instead of just one or two specific companies.

A big advantage of index funds is that they don’t require much maintenance. Once you’ve chosen an index fund, you don’t need to do anything else. You can just let it sit there and earn money for you while you go about your life.

Many brokers will offer to let you buy a single stock instead of an index fund. However, this isn’t really the best investment for someone who just wants to invest $200k and earn a passive income. Why?

Because you’ll have to spend a lot of time researching and following the stock market to try to time it perfectly to sell at the top of the market.

An index fund lets you set it and forget it, letting it slowly earn you money while you’re off living your life.

Index investing might well be the best way to invest 200k for passive income as it will certainly be the most hands off.

Becoming a business owner

You can invest in yourself and become the owner of your own business.

This is a long-term investment that requires some start-up capital and a lot of hard work and dedication.

However, it can also be incredibly rewarding, especially if you find a niche that you truly love.

If you have some great ideas for a business that you can run from home, then this is a great way to invest your $200k and earn a passive income.

You can start small, selling your knowledge, experience or goods online or setting up a booth at a local market, and once you have the profits, reinvest them into growing your business.

If you have a good business idea that you think is worthy of investment, then you can also pitch it to potential investors. This way, you’ll be able to get your business off the ground and be generating a passive income from it almost immediately.

Start an online business

If you’re an expert in a particular subject, then you can start an online business around that.

This is another long-term investment, but if you have the right skills, you can earn a lot of money from it in a short amount of time.

There are plenty of different ways to go about this, but they all require you to have a skill or expertise in a particular field.

If you are an expert, then you can create content around your hobby or subject matter and earn a passive income from it. There are different ways to go about this. You can create a blog, an e-book, or even a course around your subject matter.

Once you have that content, you can sell it to people who are interested in what you have to say.

Become an angel investor

If you have a large amount of money that you’d like to invest for a passive income, you could consider becoming an angel investor.

You’ll need to find a start-up company that’s in the early stages of developing a product or service and has a great founder.

You can then meet with them and discuss the nature of their business and what they’d like to do with the money that you’re investing.

Once the company gets off the ground, you can sit back and let the profits roll in.

You can also get involved with the company and offer your advice to its management team.

This way, you’ll be able to feel like you’re actively involved in the business, even though you’re not working long hours in an office.

FAQ best way to invest 200k for passive income

What should you do with 200k?

There are a number of things you can do with 200k. First, you need to think about what will have the most positive impact on your life. Creating an emergency fund, paying off debt, investing in the stock market, starting a business, or improving your skills and qualifications. And having some fun with it!

How much interest will 200k earn?

200k will earn 8k a year at 4%. 10k at 5% and 12k at 6%.
The interest rate you get and how long you want the money to last might be a balancing act.

If you have this money invested in the stock market you will need to think about what your sustainable withdrawal rate is so that you don’t run out of money too soon.

Is it possible to retire with 200k?

It is possible to retire on 200k but that all depends on what sort of lifestyle you are hoping for and what other sources of income you might have.

200k invested in the great companies of the world might generate you 8k of income at a 4% withdrawal rate. From this, you can figure out if is this enough or do you need to save more or create additional income sources to supplement your 200k retirement pot.

Can I retire at 60 with 200k?

You could retire on 200k and use the 4% sustainable withdrawal from a global portfolio of stocks and bonds to create an 8k income per year (not guaranteed). You would then need to work out will this be enough for you alongside any other income vs your outgoings to last you 30-40 years.

How long will 200K last in retirement?

Aha, the 200k question. How long 200k will last in retirement depends on what it is invested in and how much of it you are spending per year. Spend too much and it won’t last too long. Finding your goldilocks formula is the answer. Sometimes people say ist withdrawing between 3-4% of the portfolio could last something like 30 years. But you might well need to adjust these figures depending on the circumstances around you.

How to invest 200k?

How and where to invest 200k depends a lot on your skills, experience, and interests.
If you have no interest in toilets and tenants then property is possibly not right for you.
If you can take the ups and downs of the stock market then guess what this might not be your preferred option.
You also have the question of how passive you want your investments to be, some work, a lot of work, or completely hands-off.

How should I invest 200k

Do you want to own the great companies of the world and share in their growth?
Would you prefer to have a tangible investment you can see and improve yourself?
Would you like to be your own boss and create your own income?
Answering these questions should help give you the initial direction to find out more about the pros and cons of various ways to invest 200k.

Best investment for 200k

The best investment with 200k is the investment you can stick with through the ups and downs.
Your long-term actions are how you build wealth not hopping in and out of the latest thing.
Investing in the great companies of the world has always (so far) been a great way to build your wealth over the long term.

Conclusion: Invest 200k For Passive Income

200k is a decent amount of money and investing it one way or another will be an essential part of your financial success.

It’s important to choose the right types of investments for your situation.

There are many different ways you can invest your money, so it’s important to choose the one that best fits your needs.

Real estate, index, and ETFs, starting your own business, and becoming an angel investor are all great ways to invest $200k and earn a passive income from it.

No matter which approach you go with, make sure that you are investing your money wisely for your future!

Creating your own GAME Plan

If you would like to find out more about making a life and financial plan, figuring out how to reach your favourite future and creating the assets and income you need to pay for this get in touch below or set up a call with us.

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