Having $10 million in retirement savings and a strategy that can generate long-term income could help you live comfortably for the rest of your life. However, identifying the best investment opportunities for your specific needs can be difficult.
Whether you have millions in your bank account or are just starting to save, you need to make smart decisions to benefit your future finances, especially if you want to enjoy financial freedom and peace of mind during your golden years.
Do you need help developing an investment plan suitable for your particular situation? Read on and find all the information you need!
Oh, and don’t forget to invest in precious metals with your retirement savings ahead of what could be a catastrophic recession. Even a small amount invested could really fight inflation.
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What Will I Learn?
- Things to Keep in Mind When Investing $10 Million
- Investing in a Gold IRA
- Investing in the Stock Market
- Rental and Commercial Real Estate Investments
- Consider a Family Trust
- Conclusion: Seeking Help from a Financial Advisor
Things to Keep in Mind When Investing $10 Million
Even if you only have $10, creating a solid and detailed plan to manage your investment portfolio is essential. Ideally, you should identify your investment style and define your strategy based on the following aspects:
It refers to the risk you are willing to take to get higher returns. Therefore, risk tolerance is one of the main aspects when determining the investment style that will help you make smart decisions.
Those who are still far from retirement may feel comfortable investing in riskier stocks with higher return potential, for example. However, as people get closer to retirement, safer options are more common.
This term defines the time you have to reach your financial goal. In this case, it’s determined by the date or age at which you plan to retire.
Since you won’t get a salary or income stream from your job after you retire, you should use the funds saved for your retirement. Therefore, defining how much money you need to cover your living expenses can help you create an investment plan adapted to your situation.
It’s how quickly you can sell your assets or convert them to cash. Liquidity can be important for those who want to have a plan or potential solution to cover unpredictable expenses, such as emergencies.
Since you can sell them anytime you want, stocks are highly liquid compared to other types of investments, such as real estate. Properties usually stay on the market for a while before being bought.
Many people prefer certain types of investments or are comfortable putting their money in certain companies and funds. If you’re one of them, you can invest in those options as long as you base your decisions on financial facts rather than emotions.
One of the main factors to protect your portfolio and protect your portfolio in the long term is asset allocation. However, many people don’t know it or forget its importance.
Investing much of your money in stocks, cryptocurrencies, and real estate may sound tempting since these assets are highly correlated, and their value tends to go up and down in tandem.
However, it is also important to invest in other alternatives, such as precious metals. Gold and silver are among the favorite choices of successful investors, as both provide a hedge against inflation and are excellent forms of savings with future earning potential.
Choosing investment alternatives that can offer financial benefits is essential to create a successful long-term strategy. Therefore, you must analyze each available option’s characteristics to make decisions adapted to your needs.
Using an asset allocation calculator can help you test a portfolio hypothetically and analyze a combination to determine if it’s right for you before investing.
Investing in a Gold IRA
According to the smartest and most successful investors on Wall Street, including Bridgewater Associates founder Ray Dalio, you should have 10-15% of your assets in precious metals.
Based on what the founder of the world’s largest hedge fund says, a gold IRA account may be the easiest and safest way to buy physical precious metals, such as gold, silver, platinum, and palladium.
When you open a gold IRA, you can buy physical gold and other precious metals in the form of coins, bars, and rounds through your retirement account. Therefore, it’s one of the best ways to diversify your investment portfolio.
What Is a Gold IRA?
If you have a traditional or Roth IRA, you can invest in stocks, mutual funds, cash bonds, or other types of securities. A gold IRA can be both. However, essentially, it’s a self-directed IRA.
Unlike a standard IRA, as mentioned, these accounts allow investors to purchase precious metal coins and bars.
However, a gold IRA must meet the same rules about withdrawals and contribution limits as conventional accounts. In addition, they offer the same tax benefits.
If you open a gold IRA account, you can also invest in other gold-related assets, also known as “paper assets.” The most common include ETFs and shares in gold mining companies, mutual funds in precious metals, and commodity futures in gold, silver, platinum, or palladium.
However, holding paper assets in gold IRAs is not a common move, as most investors prefer to invest their hard-earned money in physical precious metals.
Also Read: How to Move a 401k to a Gold IRA
Investing in the Stock Market
Besides putting your money in precious metals, you can also invest in the stock market, even through gold-related assets. Find some options here.
Mutual Funds Investments
People with a high net worth can invest in mutual funds that require high minimum investment amounts. There’s a reason these alternatives are good for those with a lot of wealth: they usually charge fewer fees.
Also, if you invest in mutual funds, you can generate income through stock dividends and interest. These assets provide an income stream from bonds or the money that goes back into your portfolio.
You can find many brokerage companies that offer these funds to investors who have a lot of money and can meet the high minimum requirements.
However, although the amount to acquire these assets is high, mutual fund investments offer many advantages, including the fact that they are managed by seasoned fund managers.
These experts rely on research and market analysis to decide where to invest the fund money. It gives wealthy investors peace of mind since their money will be in the hands of people who know how to invest it wisely.
Hedge Fund Investments
Since you have $10 million saved up, you can take more risks that are not often suitable for the average investor, including hedge funds.
Investors who buy hedge funds often base their decisions on riskier strategies since they usually have a higher return potential.
Some common hedge funds are stocks, bonds, options, commodities, real estate, and currencies. Since they use borrowed money as leverage, their potential to generate returns is much higher.
Also, these funds are more flexible than other assets since they are not tied to SEC rules.
Investing in Dividends and Preferred Stocks
Investors with lower net worth can also find options for income generation. This group includes stocks paying out dividends since these pay a part of the profits to shareholders.
Payments are usually made each month, quarter, or year. Some are unique and do not recur.
Although payouts are usually in cash, some companies pay dividends in shares.
If you invest in preferred stock, you can also earn dividends at a fixed rate. As another benefit, those who hold these shares receive dividend payments before common stock shareholders.
Dividend income can be substantial if you have enough money to make a good investment. If you buy 100,000 shares that pay 10 cents per share every quarter, you can get $10,000 in that period, for example.
Investing in Exchange-traded Funds (ETFs) and Exchange-traded Notes (ETNs)
Many people with $10 million to invest don’t want to take such high risks. If you are one of them, you can also consider exchange-traded notes, also known as ETNs.
An ENT is a bond that financial institutions issue, promising investors or holders a percentage return on an index over a specific period.
Once the ETN matures, the issuing entity must return the original principal amount to the ETN holder.
Do you want to know why ETNs are options you should consider if you focus on income generation? These are the main three reasons:
Since the issuer guarantees that investors will earn a specified return on an index after expenses, ETNs generate predictable cash flow. In other words, you will know how much you can earn in the long run.
While ETFs offer similar benefits and results, ETN returns are more accurate.
Through ETNs, you can invest in a niche. The Financial Industry Regulatory Authority (FINRA), which oversees broker-dealers in the United States, says some ETNs follow familiar indexes that often have broad market coverage.
Additionally, some ETNs track niche indexes that may track those asset classes that are not as well-known or are more complex, new, or exclusive. Consequently, investors can leverage more opportunities to profit from market sectors that are less popular and don’t stay on others’ radars.
These assets are tax-efficient. Therefore, you don’t have to deal with tax implications, as happens with exchange-traded funds or mutual funds.
Moreover, ETN holders do not have to worry about tax deductions on short-term capital gains.
If you invest in ETNs, you’re only taxed when you sell a note and make a profit on that transaction.
Rental and Commercial Real Estate Investments
If you have $10 million saved, another investment option you can consider is real estate. However, this alternative is costly.
Having $10 million can give you an advantage over average investors, but you still need to make smart decisions to leverage these opportunities and benefit your finances.
Additionally, identifying good investment properties is often challenging, and real estate investing requires more active management compared to stocks and ETFs.
While investing in real estate can help you get lucrative returns that are also predictable, you should seek assistance from a financial advisor or realtor with experience in this type of investment.
Getting professional help in selecting the best investment properties can make the process easier, as there are many options available.
Related: Is $80,000 a Good Salary?
You can invest in condos, apartments, commercial buildings, or single-family homes, for example. Choose the one that catches your eye and can benefit your long-term investment strategy.
In addition, focusing on properties that you like and attract your attention can be favorable for your investment as long as you make smart decisions.
An investment property may need upgrades and renovations before it can be sold. That’s something you should consider, as it can increase its value and help you make a profit. Therefore, you should pick options that you like and can improve!
Many people avoid real estate investments because they don’t want to become landlords. Dealing with tenants or having to handle repairs or monthly bills can be challenging and time-consuming.
However, many real estate investors hire management companies that can take care of all these aspects on their behalf.
Real estate investment trusts or REITs are also other options you can consider! They’re companies that make investments in income-producing properties.
When you buy shares in a REIT, you are adding that property to your portfolio and enjoying all the benefits of real estate investments without having to deal with tenant issues.
Consider a Family Trust
With a family trust, you can protect your cash holdings from certain external problems that often affect investments.
In addition, a holding company may be the beneficiary of a trust. That’s why it’s considered a healthy and advantageous investment opportunity.
A family trust works in a particular way that can benefit your future finances. The passive income generated can be directed into the trust and continue to grow with more opportunities to invest and make a profit. Therefore, putting your money in this alternative can be a smart move for your retirement saving planning.
In addition, a family trust often uses the “lifetime capital gains exemption,” which can protect your family from incurring capital gains taxes if they decide to sell the small company linked to that trust.
Check this example to understand it better: You have a small business and its income is put into a trust and a holding company. If it’s sold to investors in the future, it becomes a dividend.
The cash derived from the transaction is directed to the trust. In this case, your profits don’t get taxed due to the lifetime capital gains exemption.
If the exemption is in place, you only have to pay taxes on half of the earnings, and the other half becomes deductions.
Understanding how the exemption works and benefits family trust holders can be complicated, so you can sum it up as follows: your family can keep more money from the business sale with fewer taxes.
Conclusion: Seeking Help from a Financial Advisor
If you want to invest 10 million dollars, there are many options. However, all those mentioned above may be more beneficial to your long-term strategy, especially if you want to enjoy financial freedom during retirement and provide financial security to your family’s future generations.
Diversifying your portfolio with precious metals, stocks, or other investments can also help you generate income. Some are good for beginners, while others have been designed for wealthy investors with extensive experience.
However, they all have a level of risk and reward. Therefore, before deciding where you should put your money, it is essential to understand each option’s pros and cons. This is when a financial advisor comes in.
Investing such a large sum during your retirement, a period when you have no cash flow from a job, can be a difficult decision to make. That’s why seeking help from financial advisors is crucial.
Whether you have thought about buying real estate properties, making private equity investments, or putting your money in precious metals, a financial advisor can be your best ally and help you create a profitable strategy.
With the help of an advisor, you can also identify the best investment opportunities in different sectors, including the precious metal or stock market.
In addition, experts can help you analyze in detail each factor that wealthy investors like you should take into account before putting their money to work, including risk tolerance, time horizon, preferences, and more!
Do you want to earn rental income or plan to hold physical precious metals? Do you prefer bonds with lower interest rates? In any scenario, an investment professional or wealth manager can help you make favorable decisions for your future and manage your money wisely so you can enjoy the financial security, debt-free life, and peace of mind you deserve during your golden years!
Investing 10 million dollars instead of letting that money depreciate in your savings account is one of the best decisions you can make today, but you should do it wisely!