How to Invest a Million Dollars

Ah, $1 million — it seems so grand. Even by today’s standards, $1 million dollars is a large amount of money and a major benchmark for any investor.

The thing is most people are so gung-ho about getting to $1 million dollars that they don’t carefully consider what will happen once you reach that figure. As it turns out, red lights don’t flash on your personal finance, brokerage, or retirement accounts, and champagne doesn’t magically appear in front of you. By all accounts, the figure in your account just changes.

This can be a sobering reality. But it’s an important one. All of a sudden, you have some decisions to make, and you need to weigh your investment options and your risk tolerance.

The Millionaire’s Mindset

A million dollars isn’t a destination — it’s a journey. This is especially true for young investors with decades left in front of them.

The trick is to reach $1 million dollars and then hit the gas pedal. You need to focus on turning $1 million dollars into $10 million dollars, and so on.

The First Million is the Hardest

You might balk at the idea of having to continue to invest after reaching $1 million dollars. After all, having $1 million dollars can seem like an endless figure — enough money to live your days like Scrooge McDuck, swimming in a giant bin of money as a pastime.

It’s true: Life does tend to get much easier after your first million. But the best secret about having a million dollars is that it suddenly becomes a lot easier to make more money.

After all, the road to a million dollars usually starts with having nothing. But as you begin to make more money, interest compiles and helps you earn a higher annual return and eventually build up a nest egg without even doing much. Plus, you’ll have the added confidence of knowing that you can reach this impressive goal. As Albert Einstein once said, compound interest is the eighth wonder of the world.

What to Do Before You Begin Investing

Before you hit the gas pedal, though, there are a few things you should consider before you begin investing, in order to protect your wealth.

Investing in a Post-COVID World

One question that many young people have been asking lately is whether they should be saving or investing during the pandemic.

Of course, I can’t give you a personal answer without understanding your unique financial situation. This is a better question for your financial advisor or financial planner. But what I can tell you is that this depends on a variety of factors.

I’m willing to bet that if you have $1 million dollars, you’re in a pretty solid position to save and invest. Therefore, the first thing you should do is determine where you want to park your money. Do you want a low-cost Vanguard fund, shares of Amazon, or corporate bonds? To figure out what works best for you, start building a budget.

Building a Budget to Fit Your Lifestyle

Many of you will hate the idea of having a budget, and I get it. And as it turns out, many millionaires get by just fine without one. But this is usually because they are a multi-millionaire, meaning they’re bringing in a ton of money and they’re also disciplined about spending.

If you don’t tend to spend a lot of money and have a significant cash flow, then disregard this section. But if you’re the type who wants to live the millionaire’s lifestyle — full of designer clothes, expensive trips, and fancy meals — then it will serve you to have a budget.

The same holds true if you have a fixed income. Instead of viewing a budget like a pair of handcuffs, think of it like a safety belt that will prevent you from going overboard and eating into your funds.

Remember: Our goal here is to help you build an investment portfolio that enables you to accumulate many millions. So, I recommend that you take a look at your income and figure out how much you can set aside to live a conservative but comfortable lifestyle that will position you for future success.

Establishing an Emergency Fund

As you create a budget, if you haven’t already, you should set aside an emergency fund to cover any unexpected issues that may arise. This fund should be able to cover three to eight months’ worth of living expenses.

To create an emergency fund, simply make a budget that you could realistically live off of if you needed to. This should include basic needs like rent or mortgage payments, utilities, and groceries. Depending on your livelihood, you may also want to factor in job security, too. Ask yourself how long it would take to find a new job if you were suddenly displaced due to the pandemic.

What should you do with an emergency fund?

A solid emergency fund will have a few thousand dollars in it, meaning you should think carefully about where to put it.

Best practices call for placing an emergency fund into a location that is both equally accessible and one that will fuel growth. You’ll want to avoid putting the money into places where it will be locked, like a certificate of deposit or a bond.

Instead, consider opening a high yield savings account (HYSA), which will give you the flexibility of a basic savings account but with a much higher APY. For example, American Express currently offers an APY of 0.60%.

You could also break down your emergency savings into different investments. For example, you could keep the first three months in a fluid HYSA account, put the next three months into a short-term CD, and put the rest into a six-month bond. Or you could park some money with a robo-advisor and let technology decide how to invest for you.

Once you have some basic funds set aside to cover your basic needs and any unexpected emergencies that arise, you should feel good about investing — even in this crazy world that we are living in, where nothing is set in stone.

How to Invest $1 Million Dollars

The first thing that you’ll need to do when you reach the $1 million dollar mark is to stop viewing it as one lump sum but many different smaller pots. It’s time to put your money to work.

Here are the 4 best ways to invest $1 million dollars:

  1. Stock Market
  2. Real Estate
  3. Life Insurance
  4. P2P Lending

1. Dive into the Stock Market

The stock market is an incredible investment vehicle if you manage it properly. Putting together a robust portfolio of stocks, bonds, index funds, ETFs and mutual funds will spread risk, and help you establish a plan that accounts for both conservative long-term growth while still allowing you to maximize short-term gains.

Since you’re reading this article, chances are that you’re already familiar with how the stock market works. If not, I suggest you read my quick primer on the topic.

As a reminder, the stock market is a very broad term with a full menu of options to choose from. Your brokerage firm should enable you to invest in a variety of securities, including the following.

Individual Stocks

Stocks are individual shares of a publicly traded corporation. Buying shares of a company will help you accumulate more ownership.

Stocks are highly volatile, as their prices fluctuate depending on how companies perform. Yet, some are much more than others. Remember to choose carefully when buying stocks, too, as you’ll have to pay taxes on any gains when you sell them.


A bond is an instrument of debt that essentially acts as a loan to the borrower. When a borrower issues a bond, they promise to pay you back with varying interest rates. There are multiple types of bonds that range in value, like corporate and government bonds.

Bonds are generally considered secure. But keep in mind that you can still lose money on a bond if you sell it before it matures. So before you invest in one, make sure that you’re comfortable holding it.

Mutual Funds

A mutual fund is an account that pulls money from multiple investments, in order to purchase securities.

One of the biggest benefits that mutual funds will provide is market diversification. Mutual funds tend to offer conservative, but steady growth over time making them an excellent long-term investment. Just make sure to watch out for heavy fees.


Exchange traded funds (ETFs ) are collections of securities, including U.S. stock, with prices that fluctuate based on supply and demand. Some of the most common types of ETFs include niche passive equity, diversified passive equity, and active equity.

Index Funds

Index funds track specific market indexes. They can either be actively managed, meaning they are managed by professional investors, or passive meaning they are automated and designed to follow specific markets. Generally speaking, automated index funds tend to outperform passive funds while also offering lower fees.

2. Real Estate

Real estate can be an incredible investment. Unlike buying a car, which will lose value as soon as it leaves the lot, a piece of property can increase in value. This is why people often flip houses, buying them at a reduced rate, fixing them up, and selling them above market value.

Commercial vs. Residential Real Estate

If you decide to move forward with real estate, you’ll first need to determine which market segment is best for you.

In the past, commercial real estate was limited to accredited investors and institutions. However, recent advancements make it possible for less traditional investors to put their money into commercial real estate opportunities in office space, retail, industrial, or specialty properties.

It should be noted that right now, commercial real estate can be a very risky play due to COVID-19 due to shutdowns — even for business opportunities that used to seem like a lock. For example, Chipotle recently opened a digital-only restaurant, which could be a game-changer for restaurants if it’s successful.

The residential real estate market has also been greatly affected by COVID-19. In April and May, nationwide home sales dropped to their lowest levels since the financial crisis of 2007 before picking up slightly during the summer. Many metro areas were also hit, as homeowners flocked to rural and suburban areas for more room and lower prices. It remains to be seen how the market will fare in 2021.

Invest in a Rental Property

If you are considering entering the residential real estate market, you should strongly consider investing in a rental property in a populated area where you can rent it year-round. Investors often do this in places near beaches or ski areas, where there is a steady stream of tourists who need temporary lodging.

When investing in a rental property, your top financial goals should be to find a place that will allow you to at least break even until the mortgage is paid off. Then, when mortgage payments are complete, you can turn around and sell it. This is how you turn a $40,000 investment into $200,000. If renters are paying your mortgage each month, that’s like putting money in your pocket.

Invest in a REIT

If you want to take more of a hands-off approach to investing in real estate, look into a strong real estate investment trust (REIT). You can find these as publicly traded companies in a stock exchange, meaning you can buy shares and profit just as you would with any other company. REITs can generate strong dividend yields, along with healthy long-term capital appreciation opportunities.

3. Life Insurance

Just hear me out on this one:

If you have loved ones, then you need life insurance. It’s that simple. And for every year that you delay buying life insurance, you’ll increase your risk of accumulating a terrible disease that could reduce or even eliminate your chances of obtaining a reasonable rate. Get life insurance while you’re young and you could wind up paying a small premium of less than $100 per month.

There’s also a cool aspect about life insurance that not everyone knows about. Certain life insurance policies can have tax shielding benefits, much like a 401k or an IRA. In other words, you can choose to pay a bit more and pump money into an account so that it can accrue over time, allowing you to access the money while you are still living. In addition, the account will also have a nice payout for your family upon your eventual demise.

So, go get yourself a life insurance policy that aligns with your needs — even if you have no intention of finding a spouse or having kids anytime soon. You may want them later, and you will need to be in a position to provide for them.

4. Consider P2P Lending

You don’t have to be a billionaire to help fund other companies. Businesses often need small loans to help pay the bills, and you can help by using peer-to-peer lending services like Prosper, Upstart, and LendingClub. Using lending apps can help provide a variety of metrics, helping you determine whether a borrower is trustworthy or not.

Just like other types of alternative investments, P2P lending can still be classified as very high-risk. However, you can produce modest returns on your income while also helping fund other organizations if you choose carefully.

How to Deal with Friends and Family While Investing

One challenge that you will almost certainly face as you become more successful is protecting your money from friends and family. At some point, someone is probably going to notice that you are rising up in the world, and will approach you for a loan. And if you’re not prepared, things could get awkward.

I’m not going to advise you on how to deal with friends and family. But what I can tell you is that if you’re in a position to give money to someone, treat it as a gift and don’t expect it to be paid back. If the money comes back, great. If not, move on. End of story.

Also, remember that just because you’re a millionaire doesn’t mean that you have to consistently pay for everything. This is where people start to get into trouble. Be intelligent about spending or your wealth will dwindle.


Is artwork a solid investment strategy?

Artwork can be a great investment vehicle simply because it’s shielded from the outside market. A painting, in other words, won’t decrease in value with the surrounding market. It has a value of its own. However, artwork can also increase in value over time.

There are many things to consider when investing in art, though. You’ll want to buy insurance, in case your house burns down or someone steals your investment. In addition, it pays to go through proper channels to reduce the likelihood of buying a fake item. Buying art can be risky.

If you don’t want to own the paintings yourself and also want to ensure that the art you’re investing in is real, there are a number of emerging crowdfunding art investment companies like Masterworks, where you can invest in a share of a painting with others to distribute your risk.

Should I donate to charity?

Donating to charity has two great advantages. First and foremost, you’ll be helping others. And second, there are potential tax-free advantages if you donate to the right places. Just be smart about how much you give, as you don’t want to offer beyond your means.

Is Bitcoin a good investment?

Bitcoin is extremely risky but has a massive potential payout. The market is also impacted by high volatility, so if you decide to invest in Bitcoin you should be very careful about how you go about it. Over the last few months, Bitcoin has been generating considerable interest. However, there is no telling how the market will fare in 2021.

Is a million dollars a lot of money?

The short answer is that it depends on a lot of factors. This includes your lifestyle and spending habits, long term goals, and the amount of credit card debt that you have.

By all accounts, a million dollars is a heck of a lot of money. But in some ways, it’s not that much — especially for young people. The trick is to look at $1 million as a launchpad and seek ways of growing it to accumulate even more wealth.

The Bottom Line

If there is one piece of financial advice that I can give you, it’s that accruing $1 million — however you do it — is just the beginning of your financial journey. It’s what you do with the money after you obtain it that really matters. If you make the right decisions, you could wind up earning a lot more over the course of your life, setting you and your loved ones up for considerable success.

However, one million dollars can go very quickly too. By investing your money, you can protect your net worth and make your money go a lot further. And protecting your money can provide excellent peace of mind.

My goal is to help make this a reality.

Stay safe, keep learning and investing, and thanks for reading! See you next time.

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    michael meller
    These are some helpful units of advice that could work for most investors at this beginner's level. I urge you to follow this method of discipline while crafting your wealth portfolio, and you should do just fine. Instead of collecting artwork though, I might suggest firearms or estate-sale treasures that have immediate mark-up value. From there you will have to determine which sales outlet will help you turn it into a profit, much like house-flipping. You just have to develop a knack for it, is all, as is true of most collecting.