How To Invest One Million Dollars

How To Invest One Million Dollars Intelligently

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Not too long ago, becoming a millionaire seemed like something that the average person can never attain. However, in this day and age, due to inflation, a million dollars is no longer that uncommon.

Although it is still a considerable amount of money, it doesn't buy as much as you think these days. 

Currently, the U.S. has about 11 million people who are in the millionaire's club. They continue on their way to wealth, starting with their first million because they know how to invest it well.

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It is true: if you want to make a lot of money, it is easier if you start with a lot of money. Maybe you came into an inheritance of a half-million dollars, or perhaps you have amassed a sizable nest egg in the hundreds of thousands. Whatever you have, you should continue to make it grow.

Regardless of how you made your first million, it is still quite a feat. If you plan well, you can multiply that sum into even a bigger number.

Precious Metals IRA

Intelligent investors know the importance of asset allocation and diversification.  This is why it makes sense to have 10-20% of your portfolio in precious metals, because they are inversely correlated to the stock and bond markets.

A great way to invest in precious metals like gold and silver is with a precious metals IRA. 

gold coins protected by a lock

If you are interested in having physical gold in your retirement account, it should be held in a separate account designed for it, which is a precious metals IRA. Another name for it is a gold IRA.

A gold IRA operates under the same contribution limits and rules of distribution as a regular IRA. The difference is that, unlike stocks and bonds, the assets are not paper holdings.

Rather, a gold IRA holds physical bullion such as gold bars, coins, and precious metals like platinum, silver, and palladium.   

Other holdings in a gold IRA can include shares of stocks in gold mining companies, gold mutual funds which invest in stocks and/or bullion, and gold ETFs.

A gold IRA provides more diversification in your retirement portfolio. You get the benefit of a tax-deferred status and keep your tax advantages.

  • Solid Approach to Diversify Your Holdings

Investments in precious metals and physical gold have proven to be a solid way to hedge against volatile market conditions or political and currency instabilities. Having a part of your portfolio invested in gold and precious metals is a smart way to diversify.

  • Protect From Inflation and Deflation

Inflation devalues your investments. However, gold protects the value of your holdings because it is not affected by inflation or deflation.

  • Strong Profit Potential

Historically, gold and precious metals have gained in value over time. For example, if you had invested in gold in 2000 at $200 an ounce, you would have enjoyed a five-time return on your investment in 2017 when gold was over $1,200 an ounce.

U.S. Treasury Bonds

Right now, US Treasury Bonds can make you a profit of around $33,000 a year. However, it is sensitive to inflation. The amount can change as the economy changes during the term of your bonds.

Your net earnings might be less than what you had anticipated. 

With a bond rate of 3.33% that fluctuates, a million dollars worth of Treasury Bonds will net you $33.3K a year. However, it is not as good as it sounds. 

Your $33.3K annual payout does not account for inflation. Inflation has been going up at least 3 percent annually. So, if you have 30-year Treasury bonds, at the end of the term, your payout would only be about $13,590.

Your initial investment of $1 million would be worth about $412,000. 

So, this is not a very smart way to invest your $1 million. There are other more lucrative options.

Stocks that Pay Dividends

Stocks are a good way to diversify. The stock market promises big gains, but it also comes with big risks. If you have a long investment horizon, you can maximize your returns. 

A lot of people like to invest in stocks that pay dividends. These are usually for people who have a higher tolerance for risk because these stocks can be volatile. If you do your research, you can reap healthy gains from them.

Many stocks pay out dividends. The current dividend yield for some stocks is about 2.11 percent. It is not a high return, and it is not backed by the FDIC.

Dividend stock performance can be unpredictable. Stock prices can plummet without warning, and some companies can suspend dividend payouts.

Even given the risks, dividend stocks are still a good option for investing part of your million dollars if you can hold on to them for the long term. This is when you can see the gains.

The stock prices will rise and fall over time, but in the long run, the dividends will add to your million-dollar investment.

Purchase a Company

You can become part-owner of a business by purchasing shares of its stocks. However, some people with a million dollars choose to purchase an entire business directly. If you plan it well, buying a company can be very profitable. 

You can approach this in two ways: you can use your money to start a business or buy an existing business by yourself, or you can invest in an existing business with a partner.

Launching your own company has greater risks, but it can bring in greater returns. Being an investor in an existing business has fewer risks because you can invest based on the company's performance records.

However, you have to be sure that your business partners can be trusted.  Regardless, investing in a good business can bring you greater returns than more passive investments like stocks and bonds, annuities, and CDs.

5-Year CD

CDs, or certificates of deposits, pay you interest. The longer the term, the higher the interest rate. The CD rates of bygone days were much better. Right now, rates hover around 0.10 to 0.80 percent. 

Back in the 1980s, CD interest rates were sky-high. You can find CDs paying 18.65 percent. Those were exciting times for CDs. However, that is not the case anymore. 

During the first quarter of 2020, the Federal Reserves lowered the federal funds rate to a range of 0 to 0.25 percent. The intention was to stimulate growth in the U.S. economy. However, this hurt interest rates of bank accounts, which include CD rates. 

CD rates are at their lowest right now, ranging from 0.10 percent to 0.80 percent. If you account for inflation, you will be losing money investing in CDs. This is not a good way to invest your money.

Real Estate Investments

a couple with their child

If you want to earn high interest from your investment, real estate is the way to go. If you invest in the right types of properties in the right kind of market, you can expect to earn at least $1.2 million over ten years. 

According to Andrew Carnegie, nine out of ten millionaires made their fortunes in real estate. Each year, people who invested in real estate enjoy reaping healthy profits from their property investments. You can approach real estate investment in a couple of ways.

Commercial Properties

A piece of commercial real estate can generate a healthy annual income for you in many ways. First, the property value will increase. Secondly, you can get tax write-offs from any money you spend on improving the property.

Then finally, you collect rent from tenants of your commercial property. 

Here is an illustration: If you invest your million dollars in a complex for multi-families, you can expect to earn $195K every year just from rent. Add to that the tax savings, and you will see how much profits you can get. 

High-End Residential Real Estate

Upscale residential rental properties have great potential in generating a good income. The value of your property will enjoy a healthy rise over the long term. Plus, you can charge your tenants premium rent for their luxurious accommodations. 

With interest rates at an all-time low right now, investing in real estate can make your million dollars go far in generating a nice return. Your money won't be tied up in a way that other investments can tie up your money. 

Finally, don't forget that housing is always in demand because people have to live somewhere. Everyone needs a home. So, the rent that you collect from your tenants can be a steady stream of income.

If your rental income is more than your mortgage, you can enjoy a tidy profit and appreciation of your property value. This will surely give your nest egg a boost.


If you ask a typical financial adviser, they will tell you that you should keep your investment portfolio balanced, ideally with 60% in stocks and 40% in bonds. Stocks are for growth, while bonds are for capital preservation.

This is particularly important in the current market of low-interest rates. Bonds come in several flavors which include treasury bonds, municipal bonds, and corporate bonds. 

Bonds come with terms. At the end of the term (i.e. when the bond matures), you get back the face value of the bond plus interest. However, bond prices can fluctuate depending on how the interest rates fluctuate.

If you sold the bond for a lower price than what you had paid, you lose money. If the bond issuer defaults on the payment, you also lose your investment.


Cryptocurrencies have been attracting a lot of investors because they are currently going through a fast growth period. 

This alternative form of investment is very risky and not for the faint of heart. The crypto market is still very new, and much of it is unchartered. 

a bitcoin

Cryptocurrencies experience extreme price fluctuations in a short amount of time. It is one of the fastest ways to make money, but it is also one of the fastest ways to lose money.  

Let's see what happened to Bitcoin. In 2017, the price was about $19,000. However, in 2019, the price fell 79% to around $4,000. If you think you have a strong enough stomach for it, there are helpful guides to start investing in cryptocurrency.

Peer-to-Peer Lending

Peer-to-peer lending is not the same as giving your friend a check to buy a car. You use a third-party app like Lending Club or Prosper to lend money to borrowers who need money for legitimate purposes like fixing up their homes, paying for expenses, etc.

You create a portfolio on the lending platform, and you distribute your risk over different loans. 

Lending Club is the biggest P2P lender in the loan industry. Over the past ten years, Lending Club has funded loans for 1.5 million borrowers with a total amount of around $28 billion in loans.

P2P lending has a unique platform that is worth adding to your investment portfolio.

Invest In Yourself

Spending money on yourself can get you good returns. You don't have to spend your whole million dollars on yourself. Use part of that money to pay for some courses that will teach you skills that can make you more marketable in the job market.

Spend money to attend professional conferences where you can expand your professional network and find business opportunities. This is a good way to invest in yourself.

Before You Invest Your $1 Million, What Questions Should You Ask Yourself?

What is your risk tolerance?

If losing your investment will result in financial hardship, then your risk tolerance is fairly low. If losing your investment will not affect your quality of life, then your risk tolerance is fairly high.

What are your financial goals?

Your investment strategy should get you to your financial goals. You need to set clear goals so you can tell whether your strategy is effective. What are your specific financial priorities?

Are you aiming to retire soon? Are you setting aside funds to pay for your kids' college education? Do you want a stream of passive income?

What is your timeline?

After you have set a clear goal, make a timetable to reach it. This includes how long you wish to keep your investment. If you plan to save for retirement, you should invest for the long term.

If you have a major expense coming up in five years and you will need to use part of that money, you should come up with a short-term investment plan.

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