Smart Strategies for Investing $1 Million in the Current Market

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People often say your chances of winning the lottery are 1 in 10 million. Well, today must be my lucky day because I just won—yeah, baby! Okay, so I didn’t actually win, but let’s pretend for the sake of this post.

I once had a client ask me, “Jeff, if you had a million dollars, how would you invest it?” There are countless strategies I’d personally use to invest a million dollars and grow this seed money over time. If you’ve got a million to invest or even close to that, the steps below can help ensure your money lasts a lifetime.

Steps to Invest a Million Dollars:

1. Start with liquid-generated income.
2. Pay off debt.
3. Boost your emergency fund.
4. Give some away.
5. Invest in real estate.
6. Buy bonds.
7. Consider an annuity.
8. Look into actively managed portfolios.
9. Track your retirement.
10. Invest in stocks.
11. Invest in crypto.
12. Explore alternative investments.
13. Build or grow your own business.

As a kid, I used to pretend I was He-Man, imagining a big cardboard box was Castle Grayskull. Those days are behind me, at least until today. For fun, I’m pretending I hit the jackpot and ended up with a cool million to invest. Just so we’re clear, this is all hypothetical and not actual investment advice.

How Would I Invest a Million Bucks?

First off, a million dollars is a lot of money, and investment decisions should be made after assessing your financial situation and goals. A financial professional is invaluable here. Also, remember that being rich and being wealthy are different. For instance, many people earn a million dollars but spend it all trying to keep up with the Joneses.

Hello, Mr. Check!

Imagine the big day when you receive a $1,000,000 check. It’s a surreal feeling. But even with a million dollars, you might wonder if it’s enough to retire on. You’ll need to invest to keep up with inflation and reduce risk over time.

Investing with a Plan

Before investing a million dollars, having a plan is crucial. Financial advisors emphasize the importance of a clear goal. Investing should be a means to achieve a future goal, not the goal itself.

Here’s how I’d start the process of investing a million dollars:

Step 1: Start with Liquid Guaranteed Income
First, don’t rush into anything. Sit on the money for at least three to six months. Save it and figure out your next steps. You can park the money in a Certificate of Deposit (CD) or an online savings account. CDs add a barrier to poor decisions as withdrawing early results in penalties. Online savings accounts offer flexibility and competitive interest rates.

Step 2: Pay Off Debt
Next, address your debts. Pay off high-interest debts like credit cards and personal loans first. For low-interest debts like a mortgage, it’s not necessary to pay them off immediately. Focus on clearing any debt with double-digit interest rates.

Step 3: Boost Your Emergency Fund
With a large influx of cash, it’s wise to keep 18 to 24 months of expenses in a high-yield Money Market account or a CD. This serves as your Ultimate Emergency Fund.

Step 4: Give It Away
Consider giving 10% to a cause or your church. I’d write a $100,000 check to support our church. It’s a personal choice, but one that makes a positive impact.

Step 5: Invest in Real Estate
Investing in Real Estate Investment Trusts (REITs) is a great way to put your money in real estate without becoming a landlord. Platforms like Fundrise allow you to invest in eREITs with just $10, making it easy to get started.

Step 6: Bonds, Bonds, and More Bonds
Allocate about $250,000 to bonds. This might include municipal bonds, short to intermediate corporate bonds, and Series I Savings Bonds, which currently offer high-interest rates. Bond funds and ETFs are less hassle than choosing individual bonds.

Step 7: Consider an Annuity
Annuities can offer guaranteed income during retirement, but they have downsides too. Only invest if you’re sure an annuity fits your plan.

Step 8: Look into Actively Managed Portfolios
I’d allocate around $100,000 to actively managed mutual funds with 60-70% in stocks and the rest in bonds. Robo-advisors like M1 Finance can help grow your wealth in curated portfolios.

Step 9: Track Your Retirement
Use tools like Personal Capital or New Retirement to track your investments and retirement plan. These platforms help you get a holistic view of your finances.

Step 10: Invest in Stocks
I’d invest in individual stocks with a portion of the money, treating it as a “slush fund” for more risk-tolerant investments. Ally Invest and E*TRADE are good platforms for stock trading.

Step 11: Invest in Crypto
Despite recent downturns, now could be a good time to invest in cryptocurrencies like Bitcoin and Ethereum. Use reputable exchanges like Gemini and Coinbase, and consider hardware wallets for added security.

Step 12: Invest in Alternative Investments
Platforms like YieldStreet and Masterworks offer ways to diversify further, investing in private markets or artworks.

Step 13: Build or Grow Your Own Business
Invest in growing your business or starting a new one. This could include new technologies or expanding your online presence.

That’s How I Would Invest a Million Dollars — How About You?

This plan would likely change over time with new investment strategies. How would you invest a million dollars if you had the chance? I’d love to hear your thoughts and ideas in the comments below.