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Where To Invest A 100k For Passive Income

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I don’t have an extra $100K to invest, but if you do then you’re in the right place because you don’t want your money to create problems, you want to learn to use it to create opportunities for you.

Before Investing 100k for Passive Income

You have a lot of money now. The important thing to do is KEEP IT, and learning to do that doesn’t have to cause you stress or cost you half of that sweet $100K in fees or taxes.

However you may have come upon this money—an inheritance, selling your home, selling your business, successful bank robbery, etc., there are strategies you can use to grow that 100K into $1 million. But first some housekeeping may be in order.

Emergency Fund

You have $100K now, but what if your phone or laptop EXPLODES in your face while you’re reading this, and you need to take time off work! That won’t happen (probably), but if you were injured or had to deal with a sudden and costly expense, would you be prepared? A new furnace or new shingles on your roof will cost you thousands of dollars. An injury that keeps you from working could cost you a lot more thanks to the many expenses that may go along with it: prescription medications, hospital bills, etc.

Common wisdom states you should save between three to six months of typical expenses in liquid cash in case of an emergency. This is not money you invest, though depending on the investment vehicle that may be a viable option. Some basic savings accounts will slowly grow the money you have invested in them by 1% or 2%. Mostly, however, this is just a savings account which you can easily access by clicking a few buttons or visiting an ATM. Obviously no one expects to be injured when they go out their door in the morning. But, being prepared for the worst will give you peace of mind because you’ll be ready if the worst does happen.

Pay Off Debt

High-interest debt kills any wealth you may hope to make or keep. Credit card interest rates are around 20% which far outpace nearly any investment you could make. If you have credit card debt, and you only pay the minimum payment, you may NEVER get out of debt. That’s because the minimum payment mostly covers the interest, and very little of the principle.

So, zero out any high-interest debt you may have lying around with that $100K. This can include credit card debt, certain loans, or car financing. My wife and I used some of the money from the sale of our home to pay off our car loan and some student debt. It felt great to be free from those.

When you pay off debt, especially what is called “bad debt” then your money is just yours; no one else’s hands are reaching into your wallet. You get to decide where your money goes.

If you have high-interest debt, It may be best to use your recent windfall to pay it off. If you have several high-interest debts, consider paying off the one with the highest interest rate first. If you can’t pay off all your debt at once, pay off the debt with the lowest amount first. That way you completely remove one source of debt from your financial life, and you can then focus on another, larger amount.

Whatever you choose to do with your $100K, consider paying off as much high-interest debt as possible. You can’t invest your way out of that hole.

What Is Passive Income?

Now we can move on to what we’re all here for, passive income. But what is passive income? How do you start earning it, and what are the best methods out there to build passive income?

The best way to describe passive income is to tell you what it’s not. Working your 9-5 job five or six days a week (The Beatles worked eight days a week, yeesh) and earning your pay cheque is called Active Income. The money you make is in direct correlation to the amount of time you put in to earn it. You punch the clock, you start getting paid, you punch out, you stop getting paid.

Passive income is different. Passive income refers to money you are making even when you are not “punched in”. Investments are usually the best example of passive income. If you invest some money, say $100K, in the stock market, your money could grow without you doing anything at all. You earn money without actively working for it.

The key to passive income is to set up a system that earns you the most amount of money for the least amount of work. Sadly, passive income is rarely 100% hands-off. There is some work involved. Owning a rental home, however, is possibly one of the most passive sources of income available. You own the house, but the people renting it pay most or all of your mortgage. If any repairs need to be done, you can hire someone to handle them. All you have to do is sit back and collect the money. That’s passive income.

Consider Your Financial Goals and Investment Style

One final point before we get into various methods of earning passive income. You are an individual with goals that may not match those of other people. Whatever future goals you have for your life—travelling, owning a home, starting a business, starting a family, etc., you should also have some financial goals and a method to achieve them.

Your financial goals and how you turn them into reality can be as unique as you are, you don’t have to copy exactly what other people have done. Once you figure out your goals and your investment style, you will know what form of passive income you want to invest in. Now, let’s get into it.

The Best Way to Invest 100k

The Stock Market

Investing in the stock market is a big subject. There are more options than ever for new and veteran investors to grow their money through Index Funds, Exchange Traded Funds (ETF’s), mutual funds, bonds, individual stocks, etc. But it doesn’t need to be intimidating. Most advisors will encourage you to invest some of your 100K into low-risk bonds and mutual funds that offer reliable, albeit low, returns. These are intended to grow over a long period of time–slow growth with basically no involvement needed from you.

The higher the risk, the higher the returns, but that also means you may need to be more involved in the process. If you opt to buy individual stocks for example, you may need to keep track of their performance yourself and make decisions to buy or sell.

Dividend stocks are a great way to build passive income. They may pay out to their investors based on their profits every month, quarter, or year. And, they don’t require any extra effort on your part if you want to keep things as passive as possible.


Investing 100K with traditional brick-and-mortar financial advisors may eat up a good chunk of your money thanks to fees or early withdrawal penalties. The new way to invest your own money is to use a robo-advisor like Questrade or Wealthsimple. Both are available to Canadians and are some of the fastest growing investment apps out there. We’ll get more into these below.

Putting that 100K to work for you can happen in 10 minutes if you create an account on either of these apps and there are minimal fees to start or no fees at all depending on the type of investing you want to do. You can track your investment’s performance from your phone and make your money work for you while still in your PJ’s. It’s no wonder apps like Questrade and Wealthsimple are the new way to invest.

High Interest Savings Accounts

If your investment style is “slow and steady wins the race”, then guaranteed savings accounts may be just what you’re looking for. Banks and credit unions all offer savings accounts, so shop around and see what will suit you better. If you deposit all 100K into a savings account at a bank, they might offer you a pretty sweet interest rate. Many lenders will increase their offered interest rate based on the amount of money you have in your savings account.

Tax Free Savings Accounts (TFSAs) are a great way to invest money over the long term with low, but reliable interest rates. If you lock your money in for a few years, your interest rate won’t be very high, but if you choose to keep it in the TFSA for a number of years, say 5-10, the rate will be much higher. And, TFSAs are tax free. There’s no charge to put your money in one, and no charge to take it out again–as long as you don’t take it out early).

Peer-to-Peer Lending

It’s not just banks that can make money by lending money. You may want to consider investing some of your 100K into other people.

Peer-to-Peer lending platforms like Lending Loop match borrowers who need money to start a business, for example, with lenders interested in providing loans. Interest rates depend on the borrower’s risk of defaulting on the loan.

With 100K you could lend a large sum to one borrower, or smaller amounts to many borrowers and potentially bump up your own returns through the multiple interest rates.

Retirement Accounts

Registered Retirement Savings Plans (RRSPs) are the #1 vehicle to save for your retirement. The Canadian government allows you to invest a certain amount every year in your RRSP based on your income. The best part is that you can get money back on your income tax return depending on how much money you invested in the RRSP the previous year.

However, don’t forget that this type of investment is a long-term option. You can be penalized for withdrawing money from an RRSP early, and whatever you withdraw will be counted as income, which will be taxed. That’s why the best plan if you choose to use RRSPs is to put money in over the years and only withdraw it when you are not earning much income so you will only be taxed a small amount.


Bitcoin used to be a joke, but it’s not a joke anymore. It is becoming a mainstream investment these days.

Bitcoin and Ethereum are some of the more popular cryptocurrencies but there are thousands of options for investors to consider. I’d strongly recommend doing some research if you don’t know much about these new kids of the block.

Because cryptocurrencies are somewhat new, they are inherently riskier than other investments. So, it may be best to invest only a small portion of your 100K, say 5-10%, and see what happens. Several robo-advisors allow you to buy and trade cryptocurrencies such as Coinbase, Questrade, and Wealthsimple.

Real Estate

$100,000 may be enough to buy a rental property in some parts of the country (not where I live, but it would be a great start on a mortgage!). Investing your 100K in real estate may be the hottest option for passive income right now as properties are soaring in value in most major centres.

However, if you don’t want to put all your six figures into one property–remember that diversifying is usually best–you can invest in the real estate equivalent of an Index Fund called a Real Estate Investment Trust (REIT).

Most REITs have a relatively low cost and your money is instantly invested into a variety of property types and areas.

One potential downside to this investment choice is you have less control over where your money goes once you’ve bought in. But, in my opinion, real estate is a buy-and-hold investment anyway. So, as long as you’ve done your research on which REIT you want to purchase, you’re doing just fine.

Be aware, that some REITs may require you to open a brokerage account and that comes with some hoops to jump through including a heft net worth–potentially $1 million. Fortunately, there are other options available to non-millionaires.

Other Passive Income Strategies

Start a Blog/ Use Affiliate Marketing: If you can find an audience for your blog, you can create a steady stream of passive income for yourself. By allowing ads, doing sponsored posts, affiliate marketing, etc. you can generate income from people reading your articles and clicking ads on your website.Social media is another fantastic way to use affiliate marketing because it doesn’t require a website, just a page on your favourite social media platform.

Use Cashback Apps: You can download certain apps like Swagbucks that will give you cashback just by purchasing specific products at the grocery store, shopping online, or playing online games.

Credit Card Rewards: My wife and I use a credit card that gives us points toward groceries every time we use it. We’ve saved hundreds of dollars on our weekly grocery shopping trips through buying things we would buy anyway. We’re always careful to pay off our credit card every month, though. That part is key! Similarly, there are cards for travel, and other activities.

Best Online Brokerages for Passive Income


Questrade was rated Canada’s #1 discount broker by wealthawesome.com for its competitive fees, excellent customer service, market research tools, and range of trading platforms designed for amateurs and seasoned investors.

This Canadian investment company was founded less than 20 years ago, 1999, and has its headquarters in Toronto. In the last two decades, Questrade has built up more than $8 billion in assets. Combine that with the immense popular support they have on social media, and it’s not hard to see why they are the fastest growing online brokerage.


Wealthsimple was a Toronto start-up back in 2014 and is now the largest online-only financial services company in Canada. It boasts a $0 minimum investment for the basic account and a tool to build a portfolio of socially responsible investment options (SRI’s) for the same management fees as any other portfolio.

Wealthsimple Trade is an excellent online investment centre if you’re looking for relatively uncomplicated decision making when it comes to buying and selling stocks. It’s a rising star in the finance world.

The Bottom Line and Final Thoughts

You have 100K now. Consider yourself #blessed. You have a lot of options now that most people do not and may never have. Whatever you do with your money, do something with it.

Invest for tomorrow, don’t blow it on a fancy car that plummets in value the minute you drive it off the lot. The big financial pressure these days is to look rich. Put your money to work for you, and it will turn into more money. Then you can enjoy the rewards of your wise financial decision for years to come.

Frequently Asked Questions

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