Million-Dollar Investment Strategies: Your Guide to 2024

If you’re fortunate enough to have $1 million ready to invest, you have several investment options to choose from. Before you invest, you need to address several issues about why you’re investing and your goals. Once you lay the groundwork, you can start looking at your options.

Today, you have more investment options than ever before. You can invest in a traditional manner, such as buying stocks and mutual funds. You can also explore newer forms of investing, such as real estate and collectibles crowdfunding.

In this article

• What to consider before you invest
• 8 ideas for how to invest $1 million
• FAQs about how to invest $1 million
• The bottom line

What to consider before you invest

Whether you’re investing with $1 million or a smaller amount like $100, understanding a few basic concepts about how to invest money may help you make smarter decisions.

Your goals

First, you must decide what goals you want to achieve with your money. Some people may need to address primary financial goals; others may be in a good initial position. Your goal could be to generate income to pay your monthly expenses. In this case, you’d likely want a reliable stream of income with little risk of decreasing value.

Others may want to grow their investment account to retire later on. These investors may seek longer-term growth at the risk of shorter-term losses. Once you know your goals, you can move on to other important factors.

Your timeline

Next, you need to understand your timeline for when you plan to use your money. People who don’t intend to touch the money for 40 years have more options than those who need to withdraw the money tomorrow.

You can generally take more risk if your time horizon is longer because you have more time to recover from potential losses. Those who need the money within the next few years may not want to put their money in riskier investments. These investments could potentially quickly decrease in value.

If your timeline is flexible for a short-term goal, such as buying your dream car, you may be able to take more risks. In this case, you should feel comfortable putting off your goal if your investments decrease in value toward the end of your timeline.

Your risk tolerance

Your risk tolerance can help determine which investments fit your investing style. Essentially, this term defines the amount of risk you’re comfortable with before you start to worry about your assets when markets drop. People who would be comfortable with a 50% decline in their investments without selling have a higher risk tolerance than people who would sell their assets if they declined 20%.

Many of the best online brokers and best investment apps offer risk tolerance quizzes to help you determine where you fall on the risk tolerance spectrum. Those with a higher risk tolerance may consider investing in riskier assets. These have the potential to offer higher returns but may come with more extreme price swings and even losses. People with lower risk tolerance generally invest in less risky assets, which may not have as much potential to increase in value.

Whether you need expert help

Perhaps you don’t want to take the time to learn the terms and tools needed to start investing, or you might not feel comfortable investing without expert advice. Hiring a financial advisor could help outsource this part of your finances and give you some peace of mind.

Don’t hire any financial advisor, though. Not all advisors are the same. For instance, robo-advisors are technology-based solutions that help you invest without human financial advisor interaction. They ask you questions as a regular advisor would and help put together a plan to reach your goals.

Robo-advisors like Betterment may handle managing your portfolio, rebalancing your assets, tax-loss harvesting, and other investing maintenance items you may not want to take care of on your own. Because these apps are technology-based, their fees are often lower than the fees of a human investment advisor.

Human financial advisors still have a place in some people’s lives, though. You may feel more comfortable meeting with a human in person and having someone to call for financial advice. If you’re considering a human financial planner, make sure you understand how they make money.

Typically, fee-only financial advisors are bound by the fiduciary standard, which means they have your best interests in mind with regard to your investments. Fee-based financial advisors are typically bound by the suitability standard, and may only recommend suitable investments. Unfortunately, suitable investments could result in the advisor earning larger than necessary commissions from your hard-earned money. For instance, a fee-based advisor could potentially earn a commission if their clients invest in a certain mutual fund or variable annuity.

8 ideas for how to invest $1 million

After you’ve defined your goals, timeline, and risk tolerance, you’re ready to start figuring out where to invest $1 million.

1. Pay down your debts

People with high interest rate debt, like credit card debt, should consider paying it off before investing. Think of this option as investing in your financial well-being, as opposed to investing in a savings or brokerage account. Paying down your debts could be a worthwhile investment, especially if you have high-interest debt.

Being completely debt-free could give you a powerful sense of accomplishment. By paying off debt, you reduce your monthly expenses. That said, paying off low-interest rate debt, such as a mortgage with a 3% interest rate, may result in giving up extra returns you could earn by investing your money elsewhere. Whether this is the right choice for you depends on your financial situation.

2. Build your emergency fund

An emergency fund may not feel like a traditional investment, but it can help your finances in ways you may not think of. An emergency fund gives you a stash of cash you can turn to during rough times, such as a job layoff or natural disaster.

Your emergency may come at a time when your investments have decreased in value. If you invest all of your money without establishing an emergency fund first, you could potentially need to sell at a loss to cover your immediate financial needs.

An emergency fund gives you a way to avoid doing this as long as you can cover the financial emergency with the money you set aside. Most experts advise having an emergency fund of three to six months of your monthly expenses, depending on your situation. Opening a high-yield savings account could be a good option if you're looking to build an emergency fund. These accounts typically offer a higher rate of return than traditional savings accounts.