What to consider when investing $10 million
The best way to invest 10 million dollars will depend on your life and goals. Strategies and investments will align differently depending on where you are in life.
At any level, it’s necessary to consider your time horizon, risk tolerance, liquidity needs, appropriate allocation, tax planning, a well-balanced portfolio, estate planning, and approach.
How to invest 10 million dollars
If you’re investing 10 million dollars, a financial advisor can help you create a complete portfolio strategy, including, but not limited to:
What type of investments to buy
How much of each should go in your portfolio
What type of account may be most advantageous for holding that investment
Types of investments
Stocks: You can invest in individual companies by buying a small piece of them in the form of a share. Your investment rises and falls with the share price.
ETF: An ETF is a group of investments organized around a common idea or investing approach. ETFs offer typically easy and inexpensive diversification.
Mutual fund: A mutual fund is another type of investment with pooled investments compiled by an SEC-registered investment company.
Bonds: Bonds are loans issued by governments and corporations to raise money for a specific purpose. They’re considered low risk and offer guaranteed interest payments to investors.
Real estate: Investors can purchase property in order to receive rent and benefit from the appreciation of the property. It’s suited for hands-on investors willing to become property managers and assume risk.
Private equity: Private equity is a long-term investment where your money is used for privately owned companies. It typically requires higher investment amounts, higher risk, higher returns, and no SEC oversight.
Hedge funds: Hedge funds are private, unregistered investment funds that may use complex trading and risk management techniques to produce returns for investors. The minimum investment is high, and they’re restricted to certain investors.
Venture Capital: As a venture capitalist, you invest directly in a startup company for a stake in ownership. It’s a much higher risk with potentially higher rewards.
How much to invest
Your financial advisor may suggest how much to invest in different types of investments. This asset allocation determines how much of your 10 million dollars should be in stocks, bonds, cash, or other alternative investments. This allocation aims to diversify your portfolio, allowing for a mix of security and growth.
Retirement and investment account providers
You may have heard of traditional, full-service brokerages such as Vanguard, Fidelity, and Charles Schwab. Fintechs such as Betterment, Wealthfront, and SoFi also offer a full range of investment options.
Types of accounts
There are three main types of accounts where you can invest. The main difference between these accounts is how you pay taxes on your investments.
Traditional retirement accounts, such as a 401(k) or IRA. Taxes are paid in retirement, with a penalty for withdrawing money early.
Roth accounts, such as a Roth IRA, Roth 401(k). Taxes are paid before investing your money, but there are limits to be aware of. Money grows and is withdrawn tax-free.
Brokerage accounts. An investment account where money earned from investments is treated as taxable income.
How much interest would 10 million dollars earn?
10 million dollars could earn a substantial amount of interest. Though market conditions and interest rates change frequently, here’s an example of possible interest earnings you might see from different investments.
| Investment | APY | Interest earned for the year on $10,000,000 |
|---|---|---|
| Savings accounts | .40% | $40,000 |
| Checking account | .07% | $7,000 |
| High-yield savings account | 3.90% | $390,000 |
| 6-month CD | 1.60% | $160,000 |
| 24-month CD | 1.34% | $134,000 |
| Bonds | 4.10% | $410,000 |
| Dividend Stocks | 2.45% | $245,000 |
| REITs | 3.88% | $388,000 |
| I-Bond | 3.98% | $398,000 |
| Private equity* | 12-15% | $1,200,000 - $1,500,000 |
| Venture capital* | 13% | $1,300,000 |
| Hedge funds* | 9% | $900,000 |
| Private credit* | 6.5% | $650,000 |
How to invest 10 million dollars for income
Investments that generate income can differ from other types of investments. These are investments where you expect money to come from the principal in the near future (if not immediately).
Examples include:
Real Estate
Investing 10 million dollars in real estate may allow you to acquire a number of rentals and receive steady income through rental payments. Commercial and residential real estate investments would produce a wide variance of returns.
REIT
An REIT (Real Estate Investment Trust) is a way to invest in real estate without directly managing it. You invest in a company that owns and manages properties and pays out dividends to investors.
Annuity
An annuity is an insurance product marketed as an investment that provides a secure income. There are times when an annuity could make sense, but there are likely better investments and strategies your financial advisor can steer you toward.
Bonds
A bond is a relatively low-risk investment that pays interest to investors. You can invest in individual bonds, Bond ETFs, or bond mutual funds for income.
Dividend stocks
Dividend stocks return a portion of the company’s earnings to the investor in the form of a dividend. Enough dividends may be able to provide income for your life.
HYSA or MMA
You can earn interest on money deposited in a high-yield savings account or money market account. For example, if you find a HYSA at a 3.5% rate, then $10,000,000 deposited would earn $350,000 in interest for the year.
Balancing income and growth with 10 million dollars
At 10 million dollars, there are trade-offs between investing for income and growth.
“Balancing growth and preservation at this level is less about guesswork and more about strategy—and understanding that your money has to work for your life and goals,” says Nadia Vanderhall, a financial planner and founder of the Brands and Bands Strategy Group..
“Hitting 10 million dollars doesn’t completely change the approach; it just amplifies the importance of preservation,” says Vanderall. “At this level, even a small misstep can have a bigger impact, so your ‘safe’ portion often gets a little more weight.”
“Growth is still necessary to keep pace with inflation and fund future goals, but there’s a sharper focus on protecting what you’ve built while still giving some capital room to grow,” she says.
Investors may also want to be mindful of safe withdrawal rates. A safe withdrawal rate is the percentage of your investment portfolio that you can spend without depleting your retirement funds.
A conservative withdrawal rate at or below 4% may help preserve your retirement income, assuming you have a proper allocation of investments. For 10 million dollars dollars, that’s around $400,000 per year.
It’s crucial to see an advisor to ensure your withdrawal rate is appropriate for your retirement and timeline.
Other 10 million dollar investment considerations
If you’re looking at what else you need to consider with a sum over 10 million dollars, you may have questions about some of the following:
Tax efficiency: Tax efficiency, or tax planning, is how you strategically invest to minimize taxes. When you’re in the highest tax bracket, this should be high on your priority list.
Estate planning: It’s important to talk with an advisor about estate planning, which is a plan for where you want your assets to go and how you want them managed upon your passing.
Inflation: Inflation impacts how much your money is worth and how far it will go in retirement. Planning for inflation will help you ride out retirement with enough money to last.
Philanthropy: When you need help with your philanthropic desires, a financial advisor can help advise on charitable donations, find causes where you can have a real impact, bring you up to speed on current tax benefits, and warn of potential issues that may arise.
Family Offices: High-net-worth families may consider forming a family office, which is a legal entity designed to manage and preserve wealth. It is recommended for those with a net worth above $350 million.
Work with Unbiased
10 million dollars can last a lifetime, but only if it’s managed properly.
That’s where an advisor can help. With years of experience, they’ll know how to point you in the right direction and what options may be best for your situation.
Find an advisor with help from Unbiased and get your questions answered today.