How to invest $1 million

Play it safe or take some risk — but don’t do it alone.

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There’s almost no end to what you could do with a $1 million nest egg. But we’ve laid out five lucrative options below.

How to build a $1 million investment portfolio

How you build your investment portfolio ultimately depends on your goals, needs and risk tolerance. If you’re a conservative investor, you may put more money into bonds than you would stocks. If you’re a young investor, you may choose riskier investments like stocks and real estate.

This is how a $1 million investment portfolio might look for someone nearing retirement:

Investment typePercentage
CDs, bonds and government securities50% to 60%
Stocks, ETFs and mutual funds40% to 50%
Real estate and alternative investments0 to 10%

Before you invest $1 million

Before you invest $1 million, consider the following:

  • Give to charity. Make giving part of your financial plan by donating a small percentage of your wealth to the charities and organizations you care about.
  • Save for your kids’ college fund. If you plan on helping your kids pay for college, set up 529 college savings plans.
  • Build an emergency fund. You’ll need three to six months of expenses in a high-yield savings account, so you don’t have to turn to your investments in an emergency.
  • Create a vacation fund. Pay for your next adventure in cash by keeping a vacation fund in a high-yield savings account.

Invest with a financial adviser

With $1 million in hand, you may opt to work with a financial adviser versus doing it alone.

Pros

  • Years of expertise. Financial advisers have specialized knowledge covering financial planning, estate planning, tax-efficient withdrawal strategies and more.
  • Person-to-person support. Unlike robo-advisors, a financial adviser is there to answer complicated questions, meet with you face-to-face and give you advice based on your unique financial situation.

Cons

  • Some work on commission. Unless you seek out a fee-only fiduciary adviser, some may offer biased suggestions and try to sell you products you don’t need.
  • Takes time to find the right one. You’ll need to research and interview several financial advisers until you find an unbiased one that doesn’t work on commission.
Name Product Available asset types Stock trade fee Option trade fee Annual fee
Facet Wealth Financial Planning
Stocks
Bonds
Options
Mutual funds
$0
Facet Wealth flat fee model allows them to deliver an affordable Facet Financial Life Plan and create greater access for families that are just starting—or with assets in retirement plans
SmartAsset Financial
N/A
Answer a few questions and get matched with advisors based on your needs.
Fidelity Investments
Stocks
Bonds
Mutual funds
ETFs
$0
$0 + $0.65/contract
0%
Get easy-to-use tools and the latest professional insights from a team of specialists.
Northwestern Mutual Financial Planning
Stocks
Bonds
Mutual funds
ETFs
$0
Your personalized financial plan will help you find out how much you’ll need every month in retirement, what type of insurance you need to protect your family and realistic ways to save and invest.

Compare up to 4 providers

Invest in low-cost index funds

Broaden your market exposure and lower your risk by investing in low-cost index funds.

Pros

  • Passively managed. Index funds track the movement of a stock index, such as the S&P 500, so you don’t have to actively manage it.
  • Lower fees. Because you’re not actively buying and selling, less money goes to cover fees and expenses.
  • Typically outperform actively managed funds. Historically, low-cost index funds outperform actively managed funds over the long run.

Cons

  • Investments are unclear. Index funds frequently change, making it hard to pinpoint exactly what shares you own.
  • Produces average results. An index-fund mimics the market, so its performance will never exceed it.
  • It follows the market. Index funds play to your advantage when the market is improving, but they work against you when the market goes down.

Invest with angel investing

Help a budding startup become the next big thing by offering your money and expertise.

Pros

  • Attractive returns. If a startup is successful, you could earn huge capital gains in the future.
  • Crowdfunding site options. Many equity crowdfunding sites have thorough vetting processes and let you diversify by investing in multiple startups.
  • May have partial control over the business. If you’ve run successful companies in the past, you may be able to influence some of the startup’s decisions.

Cons

  • Extremely risky. As the saying goes, over half of new businesses fail, so you could easily lose your investment if the startup goes under.
  • You don’t get repaid. The money you give to a startup is an investment, not a loan. They’re under no obligation to pay you back if the company isn’t successful.
  • Requires thorough vetting. Increase your chances of success by thoroughly vetting startups and only choosing those that have a proven track record for growth.

Invest in high-quality stocks

Invest in high-quality stocks by purchasing shares of stable companies that have higher profit margins and lower debt.

Pros

  • Stability. High-quality stocks are less volatile than stocks from small and mid-sized companies.
  • Passive income. Invest in high-quality stocks and you could earn passive income as the company pays dividends to shareholders.
  • Liquidity. The stock market is open daily, so you can quickly sell shares when you’re ready.

Cons

  • Slower growth. High-quality stocks are known for their stability, but the downside is that they’re not likely to grow as fast as other stocks.
  • High stock prices. A single share of high-quality stock could cost hundreds or thousands of dollars.
  • Must know how to evaluate stocks. You’ll need to research each company’s financial statements to determine which ones are considered stable.

Invest in real estate crowdfunding platform

The digital age has made it easier than ever to invest in real estate through crowdfunding platforms without having to deal with the headaches of property management.

Pros

  • Comprehensive investment options. You get access to offices, retail spaces, hotels and multifamily units across the country when you invest through a crowdfunding platform.
  • Diversification. Real estate isn’t directly correlated to the stock market, so it’s a great way to diversify your overall portfolio while still earning high returns.
  • Passive income. Receive a steady cash flow as tenants make rental payments and the property appreciates in value.

Cons

  • Long-term investment. A tangible asset like real estate can’t be readily converted to cash, so most crowdfunded investments have targeted holding periods.
  • Carries risk. Real estate investments are backed by a single asset, which means you could lose money if something happens to it.
  • Cash flow depends on the investment. You may see instant returns when you invest in an apartment complex, but you may not see returns for years if you invest in a building renovation.
Name Product Minimum deposit to open Eligible investors Available asset types Annual fee Average return
Streitwise
$1,000
All
Real estate
2%
8% to 10%
Streitwise is an online real estate investing company that combines innovative technology and new federal regulations.
PeerStreet
$1,000
Accredited only
Real estate
0.25%
1%
7% to 12%
PeerStreet is a marketplace that provides access to high-quality real estate loan investments, but you have to be an accredited investor.
Fundrise
$500
All
Real estate
0.85%
8.7% to 12.4%
Invest in commercial and residential REITs with as little as $500, but watch out for hidden costs.
RealtyMogul
$5,000
Accredited only
Real estate
1%
Invest directly in commercial real estate through this crowdfunding platform. But you’ll pay variable fees depending on the investment type.

Compare up to 4 providers

Bottom line

There are an endless amount of ways you can invest $1 million. Before you invest a dime, take time to consider your goals and risk tolerance. Once you’ve narrowed down your options, compare investment accounts until you find one that suits your needs.

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