How To Invest A Million Dollars

A million dollars is a lot of money. With that said, a million bucks isn’t the same today as it was twenty or thirty years ago. Whether you save it up over time, inherit it all at once, or win the lottery — to maximize the utility of that money, you’ll need to invest it.

But how should you invest a million dollars? The short answer is the same way you would invest fifty-thousand dollars or five million. In other words, a sound investment strategy applies to any amount of money you might have.

It’s also worth mentioning that “investing” doesn’t have to mean only things like buying stocks, bonds, or real estate. Paying off debt, for example, is an excellent way to “invest” some of your money because it will improve your quality of life over the long term.

With all of that said, here are some tips and suggestions for how to invest a million dollars:

Debt And Emergency Funds

It’s impossible to overemphasize the importance of paying off debt as soon as possible. Credit cards, car loans, and student loan debt will do nothing but drag you down until they’re paid off. Once they are, the real challenge is to stay out of debt going forward.

Additionally, it’s a good idea to create an emergency fund. Set aside enough money for you and your family to be able to live on for 18–24 months in case something goes wrong. Put that money into a certificate of deposit so that you won’t be tempted to dip into it down the road.

Traditional Investments

Traditional investments like stocks, bonds, real estate, and mutual funds are the core of any long-term investment strategy.

If you’re new to the world of investing, one of the smartest things you can do is to work with an experienced financial planner. Rather than just trying to maximize your return no matter what, a good financial planner will help you evaluate your personal and professional goals and create an investment strategy that will help you achieve them.

Your goals can be anything. Maybe you want to buy a new house, save for retirement, or travel the world. All of these are goals that a financial planner can help you plan for, invest your money towards, and enable when you’re ready.

It’s common for investors, especially new ones, to get caught up in the minutiae of investing and forget about the big picture. The “how and where” you invest will change over time to reflect what your goals and priorities are.

Alternative Investments

In the world of investing, “alternative investments” is a term commonly used to refer to very niche, exotic investments. Things like private equity, venture capital, hedge funds, and other esoteric investment strategies are typically reserved for the mega-wealthy.

However, there are other types of investments worth exploring that don’t require you to be a multi-billionaire. One great example is peer-to-peer (P2P) lending. P2P lending enables individuals to obtain loans directly from other individuals — in this case, you. This process cuts out financial institutions as the middlemen.

P2P lending platforms like Lending Club and Prosper offer a complete solution for those interested in an alternative investment opportunity.

There’s No Need To Rush

Always keep in mind that there’s no need to rush to make a decision about how to invest your money. It’s one of the most commons mistakes people make when they suddenly find themselves with a huge pile of cash.

You already have the money, there’s no need to be in a hurry to spend it or invest it. A few weeks or months won’t make a huge difference and will give you time to adjust to your new circumstances and make a good plan.

To learn more about investing, or to get help crafting a customized investments strategy specifically for you, please contact us today.