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How to Invest 1 Million Dollars (…to Make Another Million!!)

According to The Global Wealth Report, there are 21,951,000 millionaires in America in 2021. Whether you count yourself among that group, or you’re working your way towards it, knowing how to invest 1 million dollars is crucial to seeing your wealth grow. After all, the saying about the first million being the hardest to make is true. Once you get yourself there, these are the strategies to use to get that million to do the hard work (and to earn your next million!).

Related: 5 Top Ways to Get Wealthy In America

How to Invest 1 Million Dollars in 2021

The basic rule of thumb is to build stability with investments that are lower risk, add in funds with steady growth, and then spice it up with some riskier but potentially lucrative exposure.

And that all sounds great…but how do you actually do it? We’ll explore the principles early in this post, and then the more tactical approach toward the end.

This post was written by our staff writer, Lindsey Smith.

What to Do BEFORE You Invest 1 Million Dollars

Before you decide to how to invest your million bucks, the first thing you should do is figure out who you are as an investor. 

1) Set Your Financial Goals

What do you want your money to do for you?

  • Maybe you want to retire by 45
  • Or have investments that pay a monthly cash flow so you don’t have to work as much
  • Maybe you have a goal to double your money in a specific number of years.

Choosing a financial goal or two will help you decide your best course of action when it comes to where you should invest one million dollars.

Related: Ask Yourself This Question When Setting Financial Goals

How to invest a million dollars in 20212) Create a Timeline

Another important piece to know about yourself is when you want to achieve your financial goals.

You can create smaller goal posts in order to keep yourself on track, and it will also determine what ratio of short-term to long-term investments to go with. This will help you better plan out your million dollar investment. 

If your timeline and potential investment don’t align, then the answer is simple. Don’t do it! Find something else that aligns with the timeline  you’re setting up for yourself.

3) Knowing Your Risk Tolerance

This is deciding what your risk-vs-reward level is.

What level of loss are you comfortable with in pursuit of a gain?

  • For some, it will be relatively low, and they’ll want safer and proven investments.
  • For others, they’re willing to take a gamble and hope for the best.
  • You can also (and probably should) be somewhere in the middle. With a solid foundation of low-risk investments, while dabbling in the higher risk investments with a portion of your portfolio.

When you’re figuring how to invest $1 million, you’ll certainly want to understand your risk tolerance.

  • If your risk tolerance is high and you just park your money in a savings account, you’re going to be going nuts because your million dollars isn’t earning anything. 
  • If your risk tolerance is low and you invest the full million dollars into Bitcoin, then you’re going to be a nervous wreck every minute for the rest of your life!

Learn your risk tolerance and invest according to your comfort level (while investing wisely of course).

Related: Hyperinflation in the United States – Is Your Money At Risk?

4) Have a Strong Financial Base to Build On

Finally, you’ll want to ensure you’ve done a few other financial housekeeping items before you go ahead and invest your million bucks.

  • First, have your emergency fund set up. Life comes at you fast, and having an emergency fund helps keep you in the black when something comes up.
  • Next, if you haven’t already, maximize your retirement contributions. This will give you peace of mind that your retirement is secure and safe for when you need it.
  • Finally, pay off debt. Credit cards, student loans, and car loans should all be taken care of before you figure out how you would invest 1 million dollars.

Ok, now that your financial goals are set, and you’ve secured yourself financially, it’s time to invest!

Below you’ll find a solid 7 ways to invest 1 million dollars.

How to Invest 1 Million Dollars in the Stock Market

Want to know how to invest 1 million dollars in the stock market? Within the market, you could purchase stocks, bonds, ETFs (Exchange Traded Funds), or even REITs (Real Estate Investment Trusts). Those four items might sound intimidating, but honestly, all four are actually fairly simple to understand.

Check out the short descriptions below to see if any of these might be the best investment for you!

Related: What Do The Rich Invest In (That They Poor Do Not!)

how much should I have in my 401kStock Market

This is probably the first thing that anyone thinks of when they hear the word “investing”, and for good reason.

Stocks can pay dividends on a regular schedule, and either pay out or reinvest those dividends to create more wealth. The higher yield stocks (ie. they are likely to earn more) tend to also be higher risk, so evaluate this option against your risk tolerance. 

The stock market can also be a volatile investment. Diversification is important here, across sectors and companies so that you can offset risk in any one particular area. 

If you have a million dollars to invest, I wouldn’t suggest putting it all into one stock, or even a few different stocks for that matter. It’s just too risky. One company can fail at the drop of the hat without anyone seeing it coming.

You can certainly invest some of your million dollars in a particular stock, but please don’t invest all of it! 


The traditional balance of investments is touted as 60/40 stocks to bonds.

Owning bonds is basically about preserving your capital and accruing interest.

There are…

  • corporate bonds,
  • municipal bonds,
  • and treasury bonds…

…And they pay the full value plus any interest at maturity.

Thinking about investing 1 million dollars in bonds? I’d hold off on that. It may seem safe, but there still an element of risk here!

Bonds are usually thought of as a safe investment, but they can still lose money if you sell before maturity or if the issuer defaults on payments. There are levels of risk within bonds, with government being thought of as more secure than corporate when it comes to the risk of default.


ETFs, or exchange-traded funds are a basket of securities that track an index, like the stock market or specific sectors like technology and health care.

For example, the Vanguard Total Stock Market Index Fund ETF (VTSAX) or SPDR S&P 500 ETF Trust track the S&P 500 and match their performance. These are a great way to invest in stocks or bonds without having to decide on a specific company to invest in.

Diversification is so important when you’re investing (especially when you’re investing a million bucks!), and ETFs really shine when it comes to that. They help mitigate risk by allowing you to invest in multiple companies at once, or multiple sectors, meaning if one sector takes a hit, you’re probably not going to notice it.

Related: How to Buy VTSAX (And What Is It Really?)

Should you invest 1 million dollars in ETFs?

Honestly, between stocks, bonds, ETFs, and REITs, I would feel the most comfortable stashing the entire $1 million into a couple different ETFs.

  • The earnings on some ETFs are quite solid
  • The flexibility is great (you can buy and sell whenever you please)
  • And, the diversification is there since the ETF is an investment is many different companies under the one umbrella

Want to invest 1 million dollars into ETFs? It’s not super diversified, but it will most likely work out for you. I wouldn’t shake my head at you! 🙂

Real Estate - Passive Income Examples - Real EstateREITs

In the same vein as crowdfunding real estate, REITs, or real estate investment trusts, offer a safer way to group invest in real estate.

They are publicly traded on the stock market and are essentially funds that own and operate income-producing real estate like…

  • offices,
  • shopping centers,
  • and apartments.
  • Sometimes single-family homes as well, though the former are more common.

There are even REITs that own cell phone tower sites and self-storage facilities.

There are more structured rules with REITs as well, such as 75% of a REITs capital must be invested in real estate and 90% of the net income has to be given to shareholders as dividends. The downside is that you can’t use it as a tax break like owning your own real estate. But if you love the idea of owning rental properties but hate how risky it feels, REITs are a great compromise.

Related: How to Invest in Real Estate Without Becoming a Landlord

Should you invest 1 million dollars in REITs?

If you were looking to invest 1 million dollars in real estate, but don’t love the idea of being a landlord, a REIT is a possibility. BUUUT, just like we stated in the above paragraph, it’s not as great an investment as actual real estate.

  • The earnings are less,
  • the flexibility is less,
  • and the tax advantages just aren’t there. 

As with all the other options above, I wouldn’t recommend only investing in REITs, but if you want to sprinkle it into your million dollar investment, then it should certainly yield a return, and it is quite hands-free which is also nice.

How to Invest 1 Million Dollars for Income

Technically, the stock and ETF investments could yield you an income if you set up a consistent withdrawal from your fund. But, if you want something set up where you don’t need to draw down the asset, then these are the suggestions for you.

If you want to learn how to invest 1 million dollars for income, then I’d recommend either rental properties or buying a business!

tips for real estate investorsRental Properties

One of the few investments where you’ll have and maintain a physical asset, investing in rental properties can be a great way to put your money in more than just the stock market.

For some, having a physical property makes them feel more secure in their investment – it’s not so nebulous. And it’s lauded as one of the best ways to make money by some pretty wealthy people!

Related: Rental Properties: Are They a Curse or a Blessing?

Investing in rental properties can give you…

  • passive income through monthly cash flow from tenants,
  • equity appreciation as the property value increases over time,
  • and tax benefits like depreciation.

And with our digital world, it’s easy to invest in real estate in places where properties are lower cost, while having a property manager handling the day-to-day duties.

There are also ways to diversify within the rental property arena, like having a mix of residential, commercial, or industrial property, or land that you can rent for agricultural use. A well-structured plan for owning rental properties can be a lucrative way to achieve financial goals that include cash flow and asset appreciation.

I know if someone else asked Derek how to invest 1 million dollars, he’d probably tell them to look into rental properties! He’s done quite well with his and I’m certain he’ll buy more once the crazy real estate market cools off a little bit!

Invest in a businesBuy a Business

Whether you want to buy or start your own business, or invest as a partner in an existing business, this can be a super profitable way to invest a million dollars (either part, or all of it).

Starting your own or buying a business to own by yourself is definitely riskier and requires a lot more work and effort, but the profit is yours and yours alone.

Investing in an existing business as a partner is a lower risk, because you already know the business has a good track record and is profitable.

You’ll want to make sure your business partners are trustworthy and have established rules around your level of involvement.

Related: How to Start a Storage Rental Business (For Easy Passive Income!)

Investing in Real Estate Through Crowdfunding – Another Option

Maybe you don’t want to throw your whole million into real estate, but still want a portion to be allocated to the property world.

Crowdfunding real estate can be a great option. You’re essentially loaning money to developers or sharing the cost of an apartment building, and then reaping your share of the rewards.

Generally crowdfunding is an illiquid investment with no guarantee of a return time.

If you’re crowdfunding a new subdivision, you…

  • Don’t have control over when the developer might break ground.
  • You can’t buy or sell the same way you can with stocks and bonds or regular real estate.
  • They also have the power to limit or freeze withdrawals in a bad economy, so if you need the cash, you may not be able to access it. 

Crowdfunding generally only invites qualified investors to participate, those with a certain net worth. One million dollars will do it, but you should evaluate how much you’d have to invest and decide if you’re willing to put that much of your million into one investment.

A side note on crowdfunding: it’s not just for real estate. Although that is the most popular choice, it can also go towards new business ventures or ideas, or even new T.V. series or movies. This can be a potentially fun way to invest some of your money, so keep an ear to the ground for opportunities.

How Much Return on a 1 Million Dollar Investment?

Derek did a great down breaking down this question in a recent article, “What is the Interest on 1 Million Dollars?“, so if you want the full answer to the question of the returns on 1 million dollars, head there. He’s got the full scoop for you. 

But, to help you quickly understand the answer to the question here…

  • A super safe investment can yield 1% a year. This will yield you $10,000 a year.
  • If you get a bit riskier and invest in an ETF or real estate, you might earn 10% per year. This would yield you $100,000 a year.

And then of course you can figure out the amounts in between. 2% would yield $20,000, 5% would yield $50,000, and so on.

If you retire soon, it is possible to live off from a million dollars, but you still have to pay attention and not spend lavishly on anything. If you don’t retire for another 40 years and you think $1 million will be enough at that time, think again. Inflation will make that feel like $250,000. Shoot for $4 million or $5 million instead.

Related: What Will It Cost To Live When You Retire?

How to Invest 1 Million Dollars and Live Off The Interest

Wondering how to invest a million dollars so you can retire and live off the interest? Here are a few examples that might help your long-term planning.

Investing a million dollarsLavish Retirement Example

  • $1 million starting balance at 4% rate of return
  • 30-year retirement (a pretty lengthy retirement)
  • $55K withdrawal per year

Using Bankrate’s calculator, in that example, you’d have $63K left in your accounts by year 30. It’s not an insanely cushy retirement, but it’s certainly not a shabby one! Especially if you entered retirement completely debt free!

Frugal Retirement Example

  • $1 million starting balance at 4% rate of return
  • 30-year retirement
  • $30,000 withdrawal per year

If we cut your spending down from $55k a year to just $20k a year and kept the rest the same, you’d have $1.5 million after 30 years! This would enable you to live a decent lifestyle in retirement, and you can even leave a robust inheritance behind. 

Super-Early Retirement Example

  • $1 million starting balance at 4% rate of return
  • 50-year retirement (retire at 40 and live to be 90!)
  • $30K annual withdrawals

This retirement plan would help you end up with $2.5 million even after 50 years of retirement! Or, you could withdraw/spend a bit more and still be totally fine. Your spending likely wouldn’t stay exactly at the $30K number every year in an early retirement, but you get the idea.

How Can I Make My First Million?

Now that you have an idea of what’s out there, if you haven’t worked your way up to one million dollars yet, here are some ways to get yourself there.

1) Start Early

With the magic of compound interest, the earlier you can start, the better off you’ll be.

A strong, steady approach will all but guarantee you a million dollars to work with. Max out your employer retirement plan, and if you’re self employed, max out your contributions to an SEP IRA.

Related: 14 Steps to Get a Serious Head Start in Life

side hustle ideas - website testing2) Maintain a Good Credit Score

Keeping your FICO score above 740 will help ensure you get the lowest interest rates, keeping borrowing costs to a minimum and maximizing the amount of money you can save.

Related: What Is The Average US Credit Score (and How to Get Yours For Free!)

3) Buy a Home

Owning your own home means you’re putting your money into your own asset, rather than funding someone else’s. You’ll also grow equity and can use that cash in the future as part of your investment strategy.

Related: Your House is a Terrible Investment

4) Create Multiple Income Streams

Not only do multiple income streams help you reach your goals faster, they help you create a more secure financial picture for yourself.

It doesn’t have to be multiple jobs either.

  • Owning dividend-paying mutual funds,
  • starting a side business,
  • or renting out extra space in your house…

…are all examples of ways to create more income, helping you reach your first million that much quicker.

Related: The 7 Income Streams of Millionaires (and How You Can Get There Too!)

Earn Your First Million So You Can Invest Your First Million

Making it to that first million is like rolling a snowball up a hill – it’s going to take focused, long-term effort.

But once you reach the top of that hill, using these investment strategies will roll that snowball down the other side, going faster and growing bigger with little to no effort on your part. What is your million dollar investment strategy?

Did you come here wondering how to invest a million bucks? Did you get your answer? What is your plan?

Grow Rich Investing


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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