Hopefully, you’ll have a reason to know how to invest a million dollars. This article gives you an overview of how to allocate and diversify your giant nest egg. Of course, you need to do more in-depth research and hire a trustworthy financial advisor before putting your million dollars anywhere.
- Write down your goal for investing. Most people who invest a million dollars want a secure retirement, a home, money to donate for a good purpose, and some money for fun, too.
- Know your risk tolerance. The lower your risk tolerance, the lower your potential investment returns, and vice versa. The higher your risk tolerance, the higher your potential returns on your million.
- Hire a fee-based financial advisor who earns no commissions from products he or she may sell you. Check all references and credentials carefully.
- Determine an investment allocation model based on your investment goals, your age, and your risk tolerance.
- Choose the highest paying money market account you can find for some safe, liquid investment.
- Choose some government bonds for low risk investment.
- Buy stock no-load mutual funds that have expense ratios less than one percent. Buy a variety of these including international, domestic, large cap, small cap, and index funds.
- Donate at least 10 percent of your million dollars each year to the worthy charity of your choice. This keeps your tax burden down a bit while doing good for the world.
Tips and Warnings: Take more risk if you’re under 40. Keep an eye on your investments. Keep learning. Nobody cares about your financial life as much as you do and be careful.