We are Sarwa

A one-stop shop for self-directed trading and auto-investing. We're making powerful money management tools available for all.
Learn more.

If you have saved enough money to begin seriously planning for the “future you,” asking where to invest $100K is the next logical step to building a healthy, wealthy lifestyle. 

But obtaining that lifestyle requires action. At this stage, the biggest mistake you can make is to assume that casually saving your money in a bank instead of investing it will be the smartest long-term decision. 

Indeed, investing $100K is advantageous over saving for many reasons, including:

  • Investing provides a higher rate of return: The average return on savings accounts in the UAE is 1.5%, which is far lower than the returns on investing. For example, a balanced investment portfolio in Sarwa produces an average 5.25% annual return, according to Yallacompare, and higher returns for more aggressive growth portfolios. 
  • Investing protects you against inflation: Very often, the interest on savings accounts fall below inflation rate. When this happens, the real value of your money will fall below $100K. Instead of growing, your money is depreciating in value. With the inflation rate currently at 1.5%, $100K in a savings account would only match inflation. Put simply, your money will not grow at all in real terms. 
  • Investing allows you to enjoy compound returns: When you invest, you don’t just enjoy higher returns, the returns on your investment will also earn interest. As you continue to reinvest your earnings, your money grows at a compounding rate.

Warren Buffet, the legendary American investor, perfectly summarises why you should invest rather than save in these words: “Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.”

To build wealth using $100K, putting that cash in a savings account is, thus, not a smart strategy.

In this article, we’ll consider where you can invest $100K to generate the best returns, while understanding various levels of risk. 

We will look at: 

  1. Some preliminary investment considerations
  2. The best investment vehicles
  3. Building a diversified portfolio
  4. Automating your investments
  5. Why you should invest your $100K right away

However, before we begin, it’s important to clearly state here that we assume that you have already paid your debt and started an emergency fund

These two tasks are fundamental foundations to the wealth-building process. Without them, your investment plan will be exposed to unnecessary risks and sub-par growth potential. 

Check these off as soon as possible for the following reasons: 

  1. Pay down debt: If the interest accumulated on unpaid debts is higher than the average return of the stock market, then investing your money while your debt remains unpaid hurts your ability to grow your net asset value. 
  1. Build an emergency fund: Similarly, investing $100K without having an emergency fund on hand is also an error. When emergencies arise, you will be forced to borrow at an interest rate that is probably higher than the returns on your investment, or even be forced to liquidate those investments, losing the opportunity to make your money grow.

That being said, if you have these two important situations figured out, then you should now begin to plan where to invest $100K.  

1. Some preliminary investment considerations

Consider the below essential investment principles that will help you grow your wealth. 

Diversification is a must

Many novice investors make the mistake of focusing solely on the returns of their investments while excluding risk factors. However, the advent of the Nobel-Prize winning Modern Portfolio Theory (MPT) taught us that risk is a critical component of smart long-term investing strategies. 

As you consider the return you can get from an investment, you should also consider the risks. Essentially, MPT helps the average investor maximize returns while minimizing risk. 

To minimize risk, the best method is to invest in a diversified portfolio of assets that are not positively correlated. In this way, when one asset goes down in value, others within the portfolio may go up in value, thus compensating for losses. With this strategy, since all your eggs are not in one basket (to use a common metaphor), the loss of one basket will not leave you empty. 

“The beauty of diversification is it’s about as close as you can get to a free lunch in investing,” said Barry Ritholtz, host of the Bloomberg Podcast, Master in Business. 

Diversifying your investments is a smart protective approach to invest $100K while embarking on the path to grow wealth. 

Embrace passive investing

Understanding the difference between active and passive investment is essential to the growth of your $100K. 

Active investing is a strategy where investors try to outperform benchmarks by timing the market and actively managing their investments.

Because of the time for management involved, active investing is more expensive — including more fees and more taxes. Also, in the bid to outperform the market, active investors often underperform the market. 

An S&P Dow Jones Indices report shows that 87.2% of active mutual funds failed to beat the market over a 15-year period. And if they do match market performance, it is only with higher fees and taxes.

In one of his letters to Berkshire Hathaway shareholders, Warren Buffett said, “active trading, attempts to ‘time’ market movements, inadequate diversification, the payment of high and unnecessary fees to managers and advisors, and the use of borrowed money can destroy the decent returns that a life-long owner of equities would otherwise enjoy.”

On the other side of the coin is passive investing. In order to match market performance and minimize fees and taxes, investors should embrace a passive investing approach. 

Instead of timing the market, passive investors aim to build a diversified portfolio of assets and passively watch their money grow. 

This is done by employing the Modern Portfolio Theory, as well as a strategic portfolio consisting of well-researched exchange-traded funds (ETF). 

2. The best investment vehicles

Having cleared the way by understanding the importance of diversification and passive investing, let’s focus now on where to invest $100K by looking at the various ETFs on the market. 

Stock ETFs

One of the best ways to build returns from $100K is in the stock market. However, while stocks offer the highest returns of all the investment vehicles, they are also the riskiest. It’s easy to earn huge returns by purchasing a stock, but it’s also easy to lose your money (as many a novice investor will concede).

Smart investors instead endeavour to maximise their possible returns from stocks while minimising the risks through diversification. This means that instead of holding a small group of single stocks, you should diversify your risk by holding the stocks of numerous companies that are negatively correlated; for example, by including companies in very different industries, such as fintech and healthcare. 

The best way to buy stocks to achieve diversification while enjoying the benefits of passive investment is to buy Stock ETFs (exchange-traded funds). 

Stock ETFs provide a higher level of diversification by constructing large holdings of companies across numerous industries, regions, and market capitalisations. For example, if you buy the Vanguard S&P 500 ETF (VOO), you have a stake in the companies that constitute the S&P 500 index.

[To learn more about ETFs, read “What is an ETF”] 

If you want to further reduce your risk, you can buy an ETF that comprises stocks of companies outside of the US. In that way, even if the US market is down, your portfolio is not as exposed to the downturn. An example is Vanguard FTSE Emerging Markets ETF (VWO), a basket of stocks from emerging economies, including China, Brazil, South Africa, etc.

There are also world market ETFs that invest in stocks across the world, such as Vanguard Total World Stock (VT) and ETFs of specific industries, such as Vanguard Healthcare ETF (VHT). 

The level of diversification you can acquire with stock ETFs is in many ways revolutionary.

“Initially, ETFs were only used by sophisticated investors, institutions and fund managers. But the beauty of an ETF is it’s democratic,” says Vanguard’s Mark Fitzgerlad, Head of Product Specialism.

“If you or I want to buy an ETF product, we pay the same price as a sovereign wealth fund. There’s no other share class. There’s no hidden pricing. The cost is the cost.”

“Someone who spends $10,000 will pay the same amount as someone who puts $500 million into an ETF. I struggle to think of another financial instrument that is as democratic,” Fitzgerald added.

Concerning fees, while the average equity mutual fund charges 1.42% in annual expenses, the average Stock ETF charges just 0.53%.

Bond ETFs

While bonds don’t provide the returns that stocks do, they are less risky. Therefore, combining stocks and bonds will minimise the overall risk profile of your portfolio.

Similarly, bonds are negatively correlated to stocks — when one is up, the other is often down. 

“When growth is slower-than-expected, stocks go down,” explains Ray Dalio, former Chief Investment Officer of Bridgeway Associates. “When inflation is higher-than-expected, bonds go down. When inflation is lower-than-expected, bonds go up.”

Therefore, if the stock market is down as a whole, the bond market’s returns will be a cushion for your $100K

“Every portfolio benefits from bonds,” says Suze Orman, personal finance author and podcaster. “They provide a cushion when the stock market hits a rough patch.”

Data from the FTSE All-World Index from 1999 to 2020 shows that bonds have provided an average of 2.2% quarterly return during periods when the stock market has fallen, with the average decline in those periods equalling 8.6%.

Like stocks, the best way to buy bonds is through Bond ETFs rather than individual bonds or bond mutual funds, which charge higher fees and taxes. 

For example, you can buy an international bond ETF like the Vanguard Total International Bond Index Fund ETF (BNDX) or a US market bond ETF like Vanguard Total Bond Market ETF (BND). 

Another way to diversify is to create a bond ladder that includes long-term, short-term, and intermediate-term bonds. There are bond ETFs for each level. 

Like stock ETFs, bond ETFs are cheaper and more tax efficient.


Investing in real estate is not safe. 

Purchasing real estate is expensive and includes many unexpected management fees. Properties are also illiquid and risky, and it’s hard to achieve any sort of diversification to reduce that inherent risk.

However, by investing in Real Estate Investment Trusts (REITs), investors can enjoy some of the benefits of the real estate industry without the risks. REITs trade like stocks. They invest in real estate and mortgage companies.

Like bonds and stocks, the best way to buy REITs is through ETFs. You can buy the Vanguard Real Estate Index Fund (VNQ), which focuses on the US market or/and the Vanguard Global ex-US. Real Estate Index Fund ETF (VNQI), which focuses on the global property market, excluding the US.

[The world of ETFs is large and complex. If you have more questions, learn how an online financial planner can help you make sense of which ETFs will work for your unique profile.]

3. Building a diversified portfolio

Having looked at where to invest $100K, the next thing is to consider how you can build a diversified portfolio with your money. 

Essentially, what you will be doing here is to divide up your $100K between stock ETFs, bond ETFs, REITs ETFs and other asset classes. 

But how do you do that? And which allocation formula is the best for you? 

Before deciding on an allocation formula, the first step is to identify your risk-tolerance level. According to Sarwa, there are six types of investors, based on individual risk-tolerance levels:

  • Very conservative: A very conservative investor will have almost all of his investments in bonds since they are the safest. 
  • Conservative: A conservative investor is open to more stock and real estate investments in his portfolio. They tend to seek a 50:50 allocation formula (50% in bonds, 50% in stocks and REITs)
  • Moderate conservative: A moderate conservative is open to having more stocks than bonds. They normally approach a 40:60 allocation formula.  
  • Balanced: Balanced investors are open to having less bonds in their portfolios.  
  • Moderate growth: They have more bonds than aggressive growth investors. 
  • Growth (aggressive): Aggressive investors have the lowest level of bonds in their portfolio (10% or less) 

Your general attitude toward risk and your time horizon (how close you are to your expected retirement age) will determine your risk tolerance and where to invest $100K.

If you are closer to retirement, you might be on the conservative side (whether very conservative, conservative, or moderate conservative). 

If you are not close to retirement, you should be on the growth side (balanced, moderate growth, or growth), depending, of course, on your individual attitude to risk. 

So ask yourself this important question: how much risk is the right amount for me? 

Are you far away or close to retirement? Are you risk-averse, risk-neutral, or risk-seeking?

Once you decide, you can choose the investment portfolio that best allocates your $100K between stock ETFs, bond ETFs, and REITs ETFs.

[Read more on how an online financial planner can help you.]

4. Automating your investments

Deciding on an allocation formula is not the end; rather, it’s just the beginning.  

You will still need to choose the particular ETFs that will constitute each category (stock, bond, REITs, etc.). 

However, instead of doing all the laborious research into each ETF’s holdings, you can automate your investments through a robo-advisor.

A robo-advisor will ask you questions that will help determine your risk tolerance. Your risk tolerance will then determine the portfolio (including allocation formula) that is most appropriate for you (e.g., conservative or moderate growth). 

Once determined, the robo-advisor automatically allocates your money based on that allocation formula. 

Through expert research carried out by financial advisors in line with the Modern Portfolio Theory, robo-advisors identify the ETFs that provide the best diversification (maximum return, minimum risk) under each asset class (stocks, bonds, REITs). 

They then allocate your funds accordingly. All of this is done with very low fees

To invest $100K, you can open an account with a robo-advisor like Sarwa and put your $100K to work in a diversified portfolio that matches your risk tolerance. 

Sarwa also employs smart financial technology that automatically rebalances your portfolio any time the allocation formula shifts because of a change in your assets’ value.      

5. Why you should invest your $100K right away

Many investors believe it is better to invest their cash in multiple streams rather than a lump-sum. Some of them prefer to observe the market and spread out their investments.

This includes passive investing techniques like dollar-cost averaging — a system where you invest a certain amount of money at regular intervals irrespective of the condition of the market at the time. 

The first problem with this approach is that you make your cash idle when it could be working for you. Instead of $100K generating returns for you, this capital is sitting idly in a savings account (and probably losing value due to inflation). Secondly, you lose out on compound returns, which is the heartbeat of wealth creation. 

However, when you invest a lump-sum, money begins to generate returns and the returns generate new returns. 

“One of the downsides to dollar-cost averaging is the opportunity cost of holding onto extra cash,” commented Kristin McKenna, senior contributor at Forbes. “Especially if you plan to invest cash over a longer period, you’ll likely miss out on dividends and income during this period.”

Similarly, a study by Vanguard shows that lump-sum investing outperforms dollar-cost averaging an incredible 64% of the time over six months and 92% over 36 months (for a 60/40 portfolio).

Instead of timing the market or using dollar-cost averaging, financial experts agree that investing your $100K right away is the best strategy to start building your wealth. 


  • Diversification and passive investing are essential to long-term successful investing.
  • Invest your $100K in stock ETFs, bond ETFs, and REITs ETFs. ETFs provide broad diversification, with lower fees and tax obligations. 
  • Build a diversified portfolio of ETFs and automate your investments through a robo-advisor.
  • Invest your $100K right away to enjoy the compounding effect. Don’t time the market.
Want to know more, talk to our advisory team they will be happy to help. Ready to invest in your future?
Important Disclosure:

The information provided in this blog is for general informational purposes only. It should not be considered as personalised investment advice. Each investor should do their due diligence before making any decision that may impact their financial situation and should have an investment strategy that reflects their risk profile and goals. The examples provided are for illustrative purposes. Past performance does not guarantee future results. Data shared from third parties is obtained from what are considered reliable sources; however, it cannot be guaranteed. Any articles, daily news, analysis, and/or other information contained in the blog should not be relied upon for investment purposes. The content provided is neither an offer to sell nor purchase any security. Opinions, news, research, analysis, prices, or other information contained on our Blog Services, or emailed to you, are provided as general market commentary. Sarwa does not warrant that the information is accurate, reliable or complete. Any third-party information provided does not reflect the views of Sarwa. Sarwa shall not be liable for any losses arising directly or indirectly from misuse of information. Each decision as to whether a self-directed investment is appropriate or proper is an independent decision by the reader. All investing is subject to risk, including the possible loss of the money invested.