It may seem like you will never have a million dollars to invest, but if you invest consistently over the decades, you may build up so much wealth faster than you think. And if you manage to make an extraordinary profit with so many zeros behind it, it is best to realize in advance how you will invest it to continue to grow.
So, let’s say someone decides to give you $ 1 million at random tomorrow. What will you do with him? Well, we hope that you will consult with a professional who can give you advice on the best way to allocate your funds.
But once you’ve decided to do that, the best bet is to choose low-cost, high-reward investment options. And, of course, you will want to diversify your investment portfolio.
So, to do that, here are the best options you can invest in if you have a million dollars.
Think about your investment goals
Before you start investing, you need to know why you are investing. Your goals will play an important role in determining how you invest.
For example, if you are young and investing in a pension, you can afford to own volatile shares. You will probably want to build a portfolio that is rich in equities and easy with less risky investments such as bonds. This can give your portfolio the highest potential returns.
If you’re investing in a shorter-term goal, you’ll probably want to build a more conservative portfolio so you don’t lose your savings even before you need them.
Your goals can also determine the account you use to invest. If you are saving for retirement, you will want to use a 401 (k) or IRA. If you want to help a child pay for college, you could use a 529.
Think about your investment style
Are you the kind of person who likes to manage their money or do you want to take a hands-free approach to investing?
If you are an active investor, look for a brokerage house that offers little or no commission fees and has tools that you can use to research stocks and other securities.
If you are looking for more passive investment, buying and holding, consider working with a company that has low-cost mutual funds, such as indexed funds.
Think about what is important to you
Some people want to put their money where their mouth is when it comes to investing. Before you start investing, we recommend that you consider ESG investments, which focus on environmental, social, and corporate governance factors.
For example, you might want to focus on investing in companies that work for the benefit of the environment or that take steps to ensure that they treat their workers fairly and pay them well.
ESG investments have become popular in recent years and some argue that it can improve performance compared to investing without focusing on these factors.
However, ESG investments are often more difficult or costly because you have to work to assess companies’ commitment to ESG concepts or pay a mutual fund manager to do it for you.
1. Pay each debt
First of all, if you have major debts, you will want to pay them off. There is a debate about whether or not you should pay for your house, so think about it a bit.
But at the very least, you should eliminate any high interest debt. Most of the investments below will not come close to the interest rate of more than 15% you pay for credit cards and personal loans.
So get rid of them first, so that you have an excellent financial base from which to launch your investments.
2. Make sure you have a fully funded emergency fund
Again, before we start talking about investing, make sure you put the financial foundations in place. An emergency fund fully funded for six months or more is the next step.
For this, you will want to put your money in a liquid and secure place, so look for a high-yield savings account provided by FDIC. Some of the best options today are online only and include Chime, CIT Bank, Ally Bank and Capital One 360.
These online options transfer their reduced overhead to customers in the form of higher APY, which right now could be even outpacing inflation.
3. Maximize pension savings first
With a million dollars to invest, you can certainly maximize your retirement savings vehicles first, and using these fiscally advantageous accounts should be your priority every year as much as possible.
If you already have money coming into a 401 (k) company, consider a service like blooom to make sure you get the most out of it. And if you don’t already have an IRA, open one to use with some of the following investment options.
Then maximize those accounts before directing the money to your taxable accounts.
4. Try Robo Advisors or invest on your own for solid long-term investments
Every time you want to make a big investment, high taxes will have an amplified effect. So you will definitely want to look for the options with the lowest fees that have a good return when you want to invest so much money.
One option for this is to invest with a robo advisor. Using algorithms instead of individuals, these services make historically sound investment decisions, but cost much less than traditional investment advisors.
Some of our favorite options, such as Betterment and Wealthfront, have very low commissions and give you access to a variety of investment options. M1 is another option that can be used for free with investment options for a selection of ETFs.
5. Invest in your values
If you are interested in using that million dollars to spread something good in the world, you can do that while earning money through services like Stash. Investing in socially responsible companies is easier than ever.
You can invest in these types of stocks (or any other stock) for just $ 5 in the palm of your hand with Stash, an app that simplifies and democratizes investments so that everyone, from novice investors to professionals, can achieve their financial goals. indifferent. income or level of experience.
6. Consider adding real estate
Even with a million dollars to invest, you may not be able to buy a property in some parts of the country. And if you own property on your own, you’re stuck with the headache of managing it.
If you want to avoid this, but still want to add real estate to your portfolio, check out options like Origin Investments, Fundrise and RealtyMogul.
They are all great options, with pros and cons. For example, RealtyMog can help you invest in specific properties, while Origin Investments focuses on helping you invest in multi-property portfolios.
Another option for budding real estate investors is CrowdStreet. CrowdStreet is an online platform that gives investors access to commercial real estate opportunities in which they might not otherwise invest.
You can buy a stake in projects such as major apartment complexes, shopping malls and industrial parks.
If you prefer not to invest directly in a single property, CrowdStreet also offers real estate funds that allow you to diversify your investment.
You can also sign up for the site’s advisory service, which allows you to work with a professional to build a real estate portfolio that can help you reach your investment goals.
7. Look at loans for high profits
Another way to be pretentious and achieve a potentially significant return on investment is with a peer-to-peer loan platform. Options like Lending Club and Prosper are great for lending money to people who need to consolidate their debts, repair their homes or anything else.
When you invest in these platforms, you can create a loan portfolio that you help to partially finance, so that you can easily distribute your risk on several loans. These platforms have historically been great for investors and could bring some serious profits.