How to Invest $1 Million Dollars

Thats How I Would Invest. What About You?

As of right now, this is how I would invest $1,000,000.  Chances are if you talk to me in three weeks, it would be somewhat changed.  That’s wise, right?  Here’s a bigger question:

“If you had $1,000,000 to invest, how would you do it?” Love to hear your thoughts.

Make sure to check out some of the in-depth investment reviews we have for you on our blog to make sure you know the most you can before you begin your investment journey!

How Did We Come up With This List?

When designing this list, we looked for investment strategies that are available to most people that will help them build a diverse portfolio and earn solid returns. We also considered the cost of the investment strategy, as costs play a direct role in your returns. Every penny you pay in fees can have a compounding effect on your future returns.

We also tried to come up with a list of investment strategies that meet different risk tolerances and investing goals. People who are less risk-tolerant may not want to invest in real estate because real estate investing often involves high risk and leverage. Instead, they might want to focus on safer investments like mutual funds or even CDs.


How To Invest $1,000,000 In 2020

So you want to know how to invest a million dollars: this is what I think would be the best way to invest 1 million dollars if I had to start over.

If I had a million dollars to invest today, I’d put most (at least 60%) of it into VTSAX. This is Vanguard’s total stock market index fund. It has an expense ratio of just .05% and provides exposure to the entire US equity market.

I’d put smaller amounts of money into VTIAX (Vanguard’s international stock market index fund) and VEMAX (Vanguard’s emerging markets index fund). Every year, I’d rebalance. I’d also take advantage of tax loss harvesting when markets drop. This is the best way to invest a million dollars – avoid high fee mutual funds, you do

And if that sounds like too much work, consider a robo-advisor like Betterment. Betterment automatically invests your money in low fee, Vanguard funds. The service also rebalances your portfolio and performs tax loss harvesting. It’s completely hands-off, and you don’t need a financial advisor. Investing has never been easier.

You could also consider real estate investment, and if you put in the effort you’ll likely get a higher return, but it isn’t a truly passive investment.

Real Estate

You could buy a property, or multiple properties, to rent out. You can get a consistent income from your rental property, and the value of your property may also increase over time, which can gain you more money in equity in addition to your regular rental income. Real estate can generate a lot of largely passive income. If you hire a good property manager, you may be able to do relatively little work for a lot of income generation. In addition, owning a physical property can help protect you against high inflation, since the value of your property will generally increase with inflation.

However, if you choose to invest in real estate, remember that closing costs and property taxes will take a chunk of your income. You’ll also need to maintain the property. Keep these costs in mind when considering how much income you are aiming to get.

If you don’t want to actually buy or rent a property yourself, look into a real estate investment trust (REIT). REITs are companies that own income-generating rental properties or own the mortgages on the properties. REITs usually focus on one aspect of real estate, such as commercial or residential. However, you can find hybrid REITs that include both. REIT shares are available for purchase through a company or fund.

How Much Does a $1,000,000 Annuity Pay Per Month?

In today’s low-interest rates environment, a 65-year old person purchasing a 1 million dollar annuity would receive about $5,660 per month. This would last for the rest of your life, though women would receive a bit less due to having longer life spans.

Though it’s a nice amount of money to have guaranteed for the rest of your life, that 1 million will be tied up for as long as you live, so choose carefully!


I recommend a number of books that further detail the investing strategies outlined above. A few of the books either reference or were written by Jack Bogle. Bogle founded Vanguard and gave rise to the “Boglehead” approach to investing.

The Bogleheads’ Guide to Investing by Taylor Larimore is a great resource on investing and retirement. An older title, but one that is still relevant, is The Four Pillars of Investingby WilliamBernstein. The book is a great learning tool when it comes to portfolio construction and investing.

Another book by Jack Bogle worth your time and money is The Little Book of Common Sense Investing. It’s worth exploring the Boglehead forum as a supplement to picking up a book. The discussion on the site is quite interesting and evidence-based.

Is it Really Possible to Save One Million Dollars?

According to Fidelity Investments, the answer is absolutely, positively “YES!”.  For example, the number of 401(k), IRA, and Thrift Savings Plan (TSP) millionaires is setting all-time records. So, if other people can save one million dollars or more, it’s possible for you too.

Here are 8 totally realistic ways to save one million dollars much faster than you might imagine, even if you don’t know a lot about personal finance:

1. Choose the right college degree. 

Careers with the highest median salaries include being a pharmacist, actuary, economist, information security analyst, and petroleum engineer. When you work in an industry that values what you do, your chances of being unemployed are also significantly reduced.

2. Start saving and investing early. 

If your employer offers a retirement plan, maximize your contributions to take advantage of pretax investments that can boost your annual return. If you’re self-employed, you can do the same thing by setting up a SEP IRA.

3. Maintain a good credit score. 

Your credit score doesn’t have to be perfect, but remember that the better your score is, the greater the odds are that you’ll qualify for low-interest rates. Lenders consider a FICO Score of 740 or more to be very good, while 21% of Americans have an exceptional credit score of 800 or above.

4. Use debt to your advantage. 

There are two types of debt – good debt, and bad debt. Bad debt includes paying interest on credit card balances or borrowing money to go on vacation. Debt can be a good thing if it allows you to invest, for example by taking a  low-interest student loan (assuming you choose the right degree) or wisely leveraging it to finance income-producing real estate to invest in multiple properties instead of just one. 

5. Buy a home.

Another potential good use of debt is buying a home to live in instead of renting from someone else. Owning your own home can grow your equity so that you have access to future investable cash with a cash-out refinance. According to the Federal Reserve, median sales prices of homes sold in the U.S. have increased by almost 200% over the past 20 years. 

6. Invest in assets when they are cheap. 

Investors who buy and hold for the long term take advantage of normal down market cycles to buy assets when they’re relatively inexpensive. 

Real estate investors who bought houses during the Global Financial Crisis of 2008 have seen their home values grow by more than 50%, while buyers of the S&P 500 who added to their portfolios during the recent dip have seen share prices rise by nearly 60%.

7. Create multiple income streams. 

There’s no rule that says you can only have one source of income. The good news is that there are plenty of ways to make more money without having to hold down two full-time jobs. 

Owning dividend-paying shares of a publicly-traded REIT or real estate mutual fund, starting a part-time business by working a side gig that you love, or renting out extra space in your house are three easy ways to generate streams of income that put you on the path to making your first $1 million.

8. Invest in real estate. 

Extremely wealthy people such as John D. Rockefeller and Robert Kiyosaki say the #1 way to make money and build generational wealth is by investing in real estate. Real estate investments can provide reliable passive income, appreciation over the long term, and IRS-approved tax benefits that other assets simply don’t offer.

What Is The Best Way To Invest 1 Million dollars?

Real Estate Rental Revenue

Purchasing real estate investment properties is another option to invest one million dollars. It’s feasible to earn a 9% yearly return on cash flow if you invest in the proper real estate areas.

Let’s pretend you acquired ten houses for $100,000 apiece and rented them out for $1,000 each month. In this case, the net returns could be comparable to those of the private lender, except that you would need to include $3,000 in closing expenses for each home. After five years, your profit would be $120,000.

However, if the value of those properties increased by 3% every year, you would acquire extra equity of $150,000. Thanks to the home equity and cash flow, you could give away eight properties to pay off your debt plus interest while keeping two for yourself. You’d have clear ownership of them, as well as some more cash in your wallet.

What’s more, in case the value of those properties increased by 4%, you could give away 7 of them to repay your debt while keeping the remaining 3 for you. And if they appreciated by 6%, you’d be able to keep 4 of the houses for yourself! Isn’t that a good return on investment?

Lending by Individuals

Private financing is the first option for investing a million dollars. You might, for example, borrow the cash and then lending to someone else for more money, which is precisely what banks do. They borrow money from the Federal Reserve, mark it up by roughly 3%, and lend it to individuals like us.

If you borrowed a million dollars for five years at 6% interest and then lent it to someone else at 9% interest, you’d make $30,000 each year – and more than $150,000 over the five years!

Stock Market Investing (a type of investment that involves putting money into the stock market)

Investing in the stock market has the potential to

Investing in the stock market has the potential to yield good profits, mainly if you invest correctly. The stock market, on the other hand, may suffer both vast and tiny price swings. While there is a chance of seeing large profits, there is also a chance of seeing significant losses. If you decide to invest in the stock market, diversify your portfolio and reduce risk as much as possible by spreading your money across several industries.

Business Investing

You might potentially put that million dollars on a fantastic company venture. If everything goes as planned, your investment might be doubled, tripled, or even quadrupled.

However, according to statistics, this is the riskiest of the other three ventures, as 50 percent of new businesses fail within the first five years. What type of collateral would you own in case you invested in a firm that failed?

It’s easy to understand why getting a business loan is difficult, even in the event of excellent credit and a brilliant company concept. If the company collapses, you’re left with a debt worth a million dollars and without tangible assets to repay it.

As a result, you must exercise extreme caution when family members or friends approach you for financial assistance with a business concept. If the investment lacks collateral, you should regard it as if it were venture capital, with a 50% probability of getting back your money. And that kind of risk should only be taken by experienced venture capitalists that are able and ready to lose money.

Banks like to lend on real estate. All they care about is that the house’s worth is larger than the loan, your ability to manage the monthly payments and that you can pay off all the debt you have taken.

If you can maintain good credit and pay your payments on time, you will be eligible for the lowest interest rate. You can still receive a loan even if you have a bad credit history. The Federal Housing Administration (FHA) will lend to people that have experienced foreclosures in the last two years! This is because they still don’t believe there is a severe danger. If you don’t pay, they’ll seize your home as collateral.

Real Estate Investment Trusts

REITs, or Real Estate Investment Trusts, have beco

REITs, or Real Estate Investment Trusts, have become more and more famous nowadays. People can go for real estate through real estate trusts without having to own a rental. REIT is a fantastic method to get started in real estate investment without spending a lot of money.

REITs might be a fantastic choice for folks who are just getting started in real estate investing. However, keep in mind that you’ll have very little influence over where your money goes, so make sure you do your homework on the Real Estate Investment Trusts that will handle your assets.


Because the government backs them, U.S. Government Bonds are safer methods to invest a million dollars. Bonds provide revenue to the investor in the form of interest. Returns are generally limited, producing approximately 3% because the government guarantees them. Bonds are an excellent way to invest a tiny amount of money securely and diversify your portfolio–but keep in mind that the returns will be substantially lower than, say, real estate.

Real Estate Crowdfunding

Crowdfunding is a slightly new option for investing in real estate. Individuals pool their funds to invest in more significant real estate developments, according to the concept. The pooled funds are utilized to fund the project, and a fixed cash amount may be gained in return, similar to a loan or a percentage of the project’s income after it is done and providing revenue. Crowdfunding allows investors to invest in large real estate projects without putting up a large sum of money.

Exchange-Traded Funds – ETFs

Instead of buying stocks connected to a single business, investors can buy Exchange Traded Funds, which enable them to buy various equities. ETFs assist in diversifying portfolios while also reducing risk. When you diversify your investments, you will be less affected when one market falls. You can profit from rising markets in one area while reducing losses in others.

It’s also possible to invest in REIT Exchange Traded Funds. Rather than putting all funds into a single property, the investors can use ETFs to invest in numerous real estate projects.

What is the Safest Way to Invest $1 million?

To understand how to invest one million dollars safely, two important considerations are portfolio diversification and hedging against economic fluctuations like inflation. For this reason, we advise you to invest in real estate

Real estate investments offer you a real asset that appreciates over time, protecting your money from inflation. Real estate also has a low correlation to the stock market, so if you’re already invested in stocks, adding real estate to your portfolio will offer diversification benefits during economic downturns. 

5. Invest In Your Values

If you’re interested in using that million dollars to spread some good in the world, you can do that while earning money through services like Stash. Investing in socially responsible companies is easier than ever now. You can invest in these types of stocks (or any other stock) with as little as $5 from the palm of your hand with Stash, an app that simplifies and democratizes investing so everyone from first-time investors to pros can reach their financial goals regardless of income or experience level.

With detailed stock market data and educational materials, personalized portfolio tracking, easy-to-read reports, and personalized notifications on your personal moments of success, this app not only lets you invest without any brokerage fees but also equips you with the tools to make more informed decisions about when it’s time to sell up or down. Learn more in our Stash Review.

Invent Something

If you have a lot of really great ideas, take your best one and monetize it. It doesn’t matter if it’s a product or service, as long as people are willing to pay up for the benefit it offers. For example, Spanx founder Sara Blakely became the youngest female self-made billionaire in the U.S. by inventing flattering undergarments to wear under white pants. Her net worth is currently $1.1 billion, according to Forbes. Beanie Babies’ creator Ty Warner amassed a fortune from his stuffed animal empire. He wisely created an expansive product line and sold it in limited quantities, which caused the items to surge in popularity. Forbes estimates the former Dakin Toy Company sales rep’s net worth at $4.2 billion. Maybe your invention solves a problem experienced by many or entertains the masses. Either way, people are willing to spend money for something that adds value to their life.

3 Questions to Ask Before Investing a Windfall

  1. How much cash do I need over the next 5 years?

First, think about how much cash you’ll need over the next five years. Factor in both month-to-month expenses and large one-time purchases like home renovations, traveling, or paying for a child’s wedding. As a general rule, one should not invest money needed over the next five years in the stock market (although one can argue in favor of investing for short-term goals).

Setting aside five years of expenses serves another purpose, too. It helps create mental preparation for the market potentially going sideways or down for that period of time. Historically, there have been a number of periods where returns stayed flat or gone down over a five year period. For that reason, cash is king over short time periods. 

  1. Do you invest in one lump sum or dollar cost averaging

My approach has always been to invest a windfall in a lump sum rather than dollar cost averaging over an extended period. It’s the approach I followed when I received bonuses at work. It’s also the approach I took when I sold my business a few years ago. Further, studies show that lump sum investing beats dollar cost averaging most of the time.

Notice I said most of the time. There will be periods of time when it would have been better to dollar cost average into the market. The key here is to accept that we cannot know the future, and therefore, we cannot know which approach would be the best at any given point in time.

If it makes you feel more comfortable to dollar cost average of say a 12 month period, that’s perfectly reasonable. Just put your plan in writing and follow it.

  1. What are your specific investing goals?

The last thing to consider is how hands-on you want to be with your portfolio. Many investorsprefer to be hands-off and automate the management of their investments. Others enjoy investing and what to handle everything from fund selection to rebalancing on their own.

There is no right or wrong choice here. What you chose to do, however, may affect how you invest and where you keep your money. A DIY investor may open a standard brokerage account. Someone who wants an automated service, by contrast, might select a robo-advisor such as Betterment.

Participating Cash Value Whole Life Insurance

Not many people think of life insurance when it comes to investing. For most people, it’s really not a good choice.

That said, whole life insurance can provide a real advantage to an investor with at least $1 million. That’s because the policy can be used to build cash value, but also provide a tax-free benefit to their loved ones upon death.

But only certain types of whole life insurance policies make the cut.

“Participating Cash Value Whole Life policies can be a very suitable and valuable way to grow your money,” advises to Michele Lee Fine, CEO and Founder of Cornerstone Wealth Advisory . “Participating cash value whole life plans are the least profitable product for the insurance company, as they provide the highest guarantees and transfer all of the risk to the company, providing multiple layers of guarantees and growth for the policy owner. Long-term. You’re getting the safety and security of a bond-like portfolio, but the performance of a long-term, best-in-class performing stock but without the volatility, and with more benefits along the way.”

Participating cash value whole life insurance can also provide an important diversification away from stocks.

“You’ll participate in the insurance company’s profits in the form of a tax-free dividend,” Lee continues, “the values are completely uncorrelated to the stock market so when the market crashes, your values are unaffected by market volatility or losses. In fact, your cash values are guaranteed to rise every single year. And while cash values are low in the early years to compensate for that, over time your values compound income tax-free as long as the policy stays in force.”

Funding Your Policy

The policies can be pre-funded with a lump sum, or contributed to annually. And unlike retirement funds, which are tied up for decades and fully taxable upon withdrawal, cash values within these policies, once credited to your plan, are available to use along the way.

Max Out Your 401(k)

The government gives you a wealth-building gift: the 401(k) account. Here’s how you can use it to make your first $1 million: Enroll in your employer’s program and invest the maximum amount allowable by law — that’s $20,500 for 2022, and an additional $6,500 catch-up contribution for those over age 50.You gain an immediate reduction in your taxable income for any contribution to the 401(k). So if your income is $60,000, and you contribute $19,500, you’re only taxed on $40,500.As long as the money remains in the account, it grows and compounds tax-free. In practical terms, if you contribute $19,500 annually to your 401(k), and earn 7% by investing in an average stock mutual fund, you will be a millionaire in 23 years. Invest less or earn a lower return, and it will take longer to make your first million. “You don’t need to be the next Richard Branson to make your first million,” said Grant Bledsoe, founder of Three Oaks Capital Management and blogger at Above the Canopy. “Just take what the IRS gives you.”

Investing Tips

  • Consider talking to a financial advisor about investing $5 million for income. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • While you’re deciding what you want to do with your $5 million, you can put some of the cash in an interest-yielding savings account. You’ll earn interest while deciding if you want to find a longer-term investment. And don’t worry, you can withdraw the money at any time.

Photo credit: ©, ©, ©