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Ways To Invest Money Once You Have Over 1 Million in Financial Assets

Okay, it’s 10 years in the future and you’ve already made your first million (much like Bytta)!  And now you’re midway thru working on your 2nd million.

So the question is…. “Do you invest the same way you did with your 1st million?”  Or if you’d like to think of it this way, how do you invest differently now that you have your 1st million under your belt?

Hmmm, if not for the 1st million, but how about after you reach your 2nd, or even your 5th million?

I have a friend that didn’t change his strategy, so during the downturn I estimate that he temporarily was down close to $1 million.  I say temporarily, because he didn’t panic and pull his money out of the stock market, he let it ride (as I did, but my temporarily loss was much smaller because I don’t have 5 million dollars).

Only after he recovered did he talk about how nervous he was.

So, I was thinking, what would I do if I had that much money…

I think I would diversify my money into different asset classes.

  • a small amount of precious metals (gold, etc)
  • real estate (local and global)
  • foreign currency (a small speculative amount in emerging countries)
  • definitely US Treasuries bills
  • solid company bonds
  • investments in small established solid businesses, maybe franchises like McDonalds?

What other ways would you invest money amounts over 2 million?


13 Responses to Ways To Invest Money Once You Have Over 1 Million in Financial Assets

  1. I like that you put gold on there, i would invest in energy stocks, defense stocks, treasury bills, real estate, mutual funds (a mix between aggressive and moderate) and party with the rest.

    • For a beginner or for any person for that matter investing there money in the right place to reap rich dividends, your information was really useful.

  2. This type of question should be asked to people who already have that NW or greater, instead of guessing.

    Once you do get to this point, your allocation does change. For example you can allocate a small portion ($10k say) to risky investments without fear of losing it all. You can take much more calculated risks. When you had only 10k savings people are typically much more conservative.

    With regards to franchises like McDonalds you need much more than that to invest. McDs typically need $1-2 mil of cash to invest.

    “What other ways would you invest money amounts over 2 million?”

    This is a very open ended question. Depends upon age, skills, tolerance to risk, goals, etc. Each person is going to answer this differently.

    You mention FOREX, what exactly for? If are doing pure commodity trades for most people it’s a losing game stacked against you (though could apply to my 10k speculative investing)

  3. @Investor Junkie
    My friend has a net worth over 5 million, but he still invests as someone at my level would invest (well maybe a little more conservatively).

    I was hoping to offer him some suggestions based on any comments that were suggested.

    As for the currency, I wasn’t really planning on a speculative play, at least not from a trader’s perspective. My friend really isn’t interesting in playing the market (nor am I for that matter). But an small investment in a foreign currency for a period of 5 to 10 years could really pay off. I wouldn’t invest a lot, just enough for a little bit of juice if it really goes nuts.

    I agree about the emergency fund at that high of a networth, it’s just called cash 😉

    Oh, my friend does own bonds, real estate, and a few small businesses and, well shoot… He has everything that I mention except precious metals and foreign currencies.

    Now that I think about it, I guess he doesn’t invest much like me at all 🙂

    To be honest, I believe that thinking and planning in advance helps formulates plans of actions once you react that point in your financial life. Or perhaps during your upward climb. I’m already thinking about real estate and small businesses at this stage in my financial progression.

  4. @Vic @ MoneyRelease
    I didn’t mention that my friend has a few small businesses already. In fact, that is how he made his money.

    He also owns business real estate too, perhaps he’s beyond owning residential real estate…

    I didn’t realize it, but he is already more diversified than I imagined (especially at the asset class level).

  5. Ok I have a NW of $4.5 with liquid assets of $3.2 million, after selling my business. I have focused on diversification through non-correlated assets. I have actually reduced my risk level as i have accumulated more assets. My approach to investing is:

    US and Foreign Market exposure through ETF’s including Emerging market (50%).
    Tax Free Municiple Bond Funds (20%)
    ETF’ Base Metals; Precious Metals; Timber; Energy; Industrial; Real Estate (domestic and international)(10%); TF short term bond fund (10%). I have been slowly adding will adding High Yield Fund and will add longer term duration bonds once interest rates rise.

  6. @Steve
    I like your approach of using the ETFs for investments in the different asset classes like Precious Metals; Timber; Energy, etc…

    IHMO, This is a much better way than buying a bunch of gold or silver and trying to store it!

    Your name usage of “non-correlated assets”, is what I was trying to say when I used the name “asset class diversification”!

    I think I like “non-correlated assets” better, it sounds more comprehensive!

    Thanks for the great ideas Steve!

  7. When most people consider Asset class diversification they consider stocks and bonds, with the diversification within each of those categories (small; mid; large; international stocks and short; med; lt bonds. Commodoties (base metals; precious metals; timber; energy; industrial and real estate) are often ignored because they are consider more risky. When in fact, if added to your portfolio in even a small quantity (say 10%) they can reduce volatility in your portfolio. Excluding September 2008, where all asset classes fell in uniform, commodoties have been a very good hedge in a portfolio.