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How to Invest 1 Million Dollars & Reap the Profits

How to Invest 1 Million Dollars & Reap the Profits

It wasn’t so long ago that everyone dreamed of the day they would have one million dollars. Fast forward, and due to the ravages of inflation, though a million dollars is still a lot of money, it’s not as rare as it once was, and it doesn’t go as far as you might expect.

Today, there are about 11 million millionaires, just in the US alone. Every one of them probably started their path to wealth with one million dollars already. Beyond that, they were all well informed about what to do with one million dollars once they had it. 

As you’ve probably heard, in order to make money, it’s better to have money in the first place. You may be sitting on a $500k inheritance, or perhaps you are just beginning your journey to riches. Make sure you remember that your nest egg should always be growing.

No matter how you look at it, having one million dollars is a great accomplishment, and if you plan wisely, you can add some zeros to that number.

My Brokerage is here to help you discover the best way to invest one million dollars, based on your current situation and your investment goals.

Remember that even in such uncertain times, it’s always a fact that money begets money. So let’s get started and begin your master class on How to Invest $1 Million!

Our financial experts and team of gifted realtors at My Brokerage can help you enjoy your 1 million dollars - or any savings - and grow them with smart, safe, real estate investments that will increase your annual returns!


Is a million dollars a lot of money?

Money inside the cash bag

Having savings of one million dollars is an important milestone. But this does not necessarily mean you are rich. When it comes to determining the health of your wealth, the answer is never black and white.

Your net worth may be at one million dollars, 10 million dollars – or more –  but consider these questions before you classify yourself as wealthy. Though numbers never lie, when it comes to personal wealth you need to know the variables: your overhead, your lifestyle, personal capital, and your stage of life. These will inform the best way to invest your one million dollars.

These considerations are not the same for any two people. Where to invest one million dollars will vary depending on lifestyle and income. If you are reading this and have one million dollars of your own money to invest, you should definitely be pleased. It isn’t everyone who can reach such a savings milestone! 

Are you rich if you have 1 million dollars? Well, it depends.

Where do you live?  What is your lifestyle?

High Income and High Expenses

Meet Paul. He’s a guy who swore he’d move to a big city and practice law. When most people were still figuring out how to make ends meet, Paul would be posting photos of his gourmet dinners and his designer condo in New York City. To everyone, it looked like he had the world on a string – but you’d be mistaken if you thought that.

That apartment in the city cost Paul $7,500 a month – before utilities. His fancy dinners and hip clothing set him back at least $3,000 a month, and his career as a lawyer, working 70 hours a week in order to become a partner, showed up as stress-induced sleepless nights and weight gain. His salary was $130,000 a year, but he was nowhere near wealthy.

Moderate Income and Low Expenses

In the meantime, Andrea was living in a low-rent apartment, paying well under $1,000 a month and going out once a week for dinners that usually cost about $50, tops. Because she worked in real estate, Andrea was not stuck all day in a boardroom, eating greasy take-out while sitting in on daily, non-stop meetings.

Andrea was always on the move and excited to meet new clients and expand their horizons and hers.  In order to keep up her energy, she got up by 6 AM and worked out most days. Her salary was commission-based and about $50,000 a year.

Where Can They Lead You?

Fast forward ten years and Paul is still renting in New York City because he doesn’t have the time or cash to purchase a one-bedroom NYC apartment, which costs about $1.5 million. After a decade of endless work and expensive habits, he has about $60,000 in savings along with a terrible cholesterol problem.

Andrea, however, has kept her lifestyle simple and has slightly above one million dollars in savings. After learning how to invest one million dollars in real estate investment properties, she purchased a simple, affordable home, boasting low taxes in an up-and-coming neighborhood. Due to her healthy lifestyle, she is ten years older but in the best shape of her life.

So, yes, if you ponder where and how you live, sometimes you can consider yourself wealthy if you have one million dollars. But if you live beyond your means and have no investments that grow your savings, you are most definitely not wealthy! As always, living a healthy lifestyle that extends your life for many active years is the best benefit of all!

Once you hit your milestone of having one million dollars to spare, here are some options and expected payouts to consider on your journey to financial freedom.

How Much Interest Can one Million Dollars Earn Per Year?

Man getting money from his wallet

A $1 million investment can earn interest from $33,000 per year invested in US Treasury bonds to around $1.2 million invested in real estate after a ten-year investment term. If you want to know how to earn a million dollars to live off the interest, it all depends on where you invest your money. 

There are many roads that will lead you to earn different rates of interest or profits when you invest your 1 million dollars. Before you roll the dice with your money, it’s better to make sure you’re not too averse to risk since your potential profits will vary tremendously.

As you will see from the list below, the stand-out method to grow your million dollars is investing it in real estate. There is never a 100 percent sure winner in any investment, but real estate, time and time again, is a sure-fire way to grow your 1 million dollars because you actually have assets you can rent or sell if necessary.

Where to Invest a Million Dollars

US Year Treasury Bonds

Investing in US Treasury bonds could currently earn you up to $33k per year. However, this investment is not protected against inflation so interest earned will shift with economic changes over the term of your investment. You may not be earning as much as you think.

With a fluctuating US Treasury Bond rate of up to 3.33%, your one million dollar investment will reap  $33,300 a year. If it sounds too good to be true, that’s because it is!

Your $33,330 is not adjusted for inflation, which will grow at least 3 percent, so in 30 years your payout will be worth only about $13,590, and your $1 million principal will have dwindled down to about $412,000.

Unless you are very young and looking to park your extra 1 million somewhere, we don’t recommend this investment at this time.

Dividend Stocks

Investing in the stock market is a high-risk and high-reward game. It adds great diversification to your portfolio but it’s better to invest in the long term if you want to achieve maximum returns.

Dividend stocks are popular, and many people invest in them. Their volatility makes them a good choice for those with higher risk tolerance, but if you do your homework, you can benefit from this type of investment.

There are many dividend stocks you can purchase, and currently some yield about 2.11 percent. It’s low, and of course, it is in no way guaranteed by the FDIC. 

One downside is that dividend stocks can fall at any time, and companies can always just suspend dividends.

But in order to greatly enhance your one million dollars, taking some risk with dividend stocks can be exciting and extremely profitable. Just remember this one caveat: you must think long term.

You will experience some ups and downs along the way, but overall, if you are patient, your dividend stock should add a healthy profit to your investment of one million dollars.

Here’s a case in point: NerdWallet’s investment calculator shows a  $5,000 investment that grows at 6% annually for 20 years, and could grow to over $16,000. Bump that up to 8% growth to include dividends, and that $5,000 could grow to over $24,000.

CD for a 5-Year Term

Man watching graphing result with his tablet

Certificates of deposit earn you a higher interest rate the longer you sign on. Historically they were a greater investment strategy than they are today. CD rates are currently between 0.10 percent to 0.80 percent.

Once upon a time in the fiscal world during the 1980s, CD rates were booming, offering whopping rates of up to 18.65 percent. This was a magical time, but alas, those days are long gone.

In March 2020, the Federal Reserve lowered the range for the federal funds rate to 0-0.25 percent as a means to stimulate US economic growth. Unfortunately,  this created a  widespread lowering of interest rates on deposit accounts, including CDs.

Currently, CD rates are exceptionally low, from about 0.10 percent to a high of 0.80 percent. By the time you take your interest, you will be losing money due to inflation!

This is not an option you should consider.

Investing in Real Estate

A real estate investment is the best way to earn high interest on your investment. Depending on the type of real estate and the market you invest in, you could earn $1.2 million or more over a ten-year investment term.

Billionaire Andrew Carnegie once wisely said that 90 percent of all millionaires made their profits by buying real estate. Every year, real estate tends to be a very healthy source of profits for anyone looking to turn their investments into a growth-churning machine.

Commercial Real Estate

Owning a commercial property for the long term can bring in profitable income year after year. As your asset, the actual property grows in value, and, not only do you get tax write-offs, but you also enjoy the annual income from renting out the properties.

For example, a $1 million investment in multifamily properties could earn you $195k annually from rental income. That’s not to mention your tax savings!

Upscale Residential Properties

Young Man is reading

If you want to know how to invest one million dollars for income, look no further than high-end rentals!

Investing your $1 million in upscale residential properties is your best bet for reaping high annual profits since you will see the valuations of your high-end assets go up as your tenants are more than willing to pay a premium to live in splendor!

Another financial benefit to opening real estate is that you don’t tie up your money as you would with other investments. With the low-interest rates sweeping the market right now, investing your 1 million in real estate is the winner by far in how to grow your $1 million in the most robust manner.

Lastly, people will always need a place to live. Just like taxes, having a place you call home is a necessity of life. Investing in real estate can be a major boon for your nest egg!

While real estate investment is a great way to grow wealth and build financial freedom, it's laden with money traps and bad deals. It's essential to understand a good investment from a bad one, and an expert eye can help you make the right decision.


Lend a Helping Hand for Big Returns

For those really stuck on what to do with one million dollars, a creative way to reap a hefty return on your investment is to consider peer-to-peer lending. This does not mean you are writing checks to fund an addition to your neighbor’s house!

By lending money via a 3rd party App such as Prosper or Lending Club, you can loan money to people who need to use it for home improvements or other legitimate needs.

The concept behind peer-to-peer lending is to create a diversified portfolio on one of the well-known lending platforms so that you can spread your risk among a number of loans. Doughstarter reports Lending Club “has created $28 billion in loans to more than 1.5 million borrowers over the past 10 years, making it the largest P2P lender in the industry.” 

As part of a mix of investments, this is a great option!

What is the Safest Way to Invest $1 million?

To understand how to invest one million dollars safely, two important considerations are portfolio diversification and hedging against economic fluctuations like inflation. For this reason, we advise you to invest in real estate

Real estate investments offer you a real asset that appreciates over time, protecting your money from inflation. Real estate also has a low correlation to the stock market, so if you’re already invested in stocks, adding real estate to your portfolio will offer diversification benefits during economic downturns. 

Can You Live Off the Profit from $1 Million Dollars?

Pink Piggy Bank

Living off the interest or profits from $1 million dollars depends on how you live, where you live, and what your goals are for your future. As we explained prior, these are all things that are very personal.

But beyond your choice of location or lifestyle, it’s important to look at your age and your expectations of when you’d like to retire.

Can a Couple Retire on 1 Million Dollars?

In today’s world, people retire at any age as soon as they feel they have enough money to leave behind the stress of working. But most people have not built up their nest egg to one million dollars until they’ve reached their fifties or sixties.

If you have saved one million dollars and you’re under the age of fifty, it is critical you create a strict plan to see if you can live off your money when you retire. Remember: your future life expectancy is long when you are young, and as you age, you will have to battle inflation, shocking world crises that upend the economy (such as the current pandemic), and a potential decline in your health as you enter your later years. If you own your home outright and have very little taxes, it is  wise to consider working part-time and not totally retiring to live off your 1 million dollars.

Consider Your Age and Your Current Investments

Sadly this amount of savings will not last long enough to properly fund your long life. If you are under 50 years old and male, you have a life expectancy of 81, according to the SSA’s new life expectancy calculator.  Once you become  67 years old, your life expectancy grows to 84.4 years, and if you hit 70, the average life expectancy is 85.3 years. For women, the life expectancy is a few years longer.

By looking at your age and your investments you can make the best decision about how to invest one million dollars, or decide whether you can kick back and live off your one million dollars. If your overheads are low and you invest in an income machine such as real estate, you may be able to pull this off. But be sure to meet with a financial planner because today’s one million dollars is not as secure as you may believe.

How Much Does a $1,000,000 Annuity Pay Per Month?

In today’s low-interest rates environment, a 65-year old person purchasing a 1 million dollar annuity would receive about $5,660 per month. This would last for the rest of your life, though women would receive a bit less due to having longer life spans.

Though it’s a nice amount of money to have guaranteed for the rest of your life, that 1 million will be tied up for as long as you live, so choose carefully!

Enjoy Your $1 Million and Invest Wisely

No matter how much money you save, whether it’s one million dollars or 100,000 dollars, you are saving money in very difficult times. Enjoy your savings wisely. With low overheads and a plan to earn profits or steady income from your savings, you will see your money grow and, along with it, your freedom.

Contact our team of professional and expert realtors at Tim Stout & Associates to navigate the chaos of buying real estate. Who you work with matters. 


Tim Stout

Tim Stout is the leader of My Brokerage, a group of realtors in Fayette county that have one goal in mind – give back to the community. These real estate professionals help people find their dream house, sell their homes, or acquire lucrative investment properties.

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