how should i invest 1 million dollars to maximize return?

Question

More specifically, what kind of investments in the stock market are available to investors with a one million dollar initial investment,opposed to investors with less money to invest?

Answer 1

most people, but certainly not all, with 1 million to invest are not looking for maximum return. They are looking for a reasonable return with a reasonable amount of risk.

To get maximum return, you will have to accept maximum risk. That essentually means finding several stocks that you think will at least double in the next year or even just one and betting the whole amount on them or on the one. There are quite a few stocks that will double and even triple and quadruple in price this year. So that will give you maximum return. But if you gess wrong, you may wind up with a substantial loss.

You can also go the stock options route. Even more risk and more potential reward.

Answer 2

Investing in only one of the following saving account, CDs, government bonds, mutual funds, stock market or different investment projects would be a big mistake. As corporations personal portfolios have to be also diversified. Of course, if you have something around 10000 it hard to diversify your portfolio, but in the case of 1 mln. that's the only way to go. Most of the portfolios have a combination of different investments. For example even the interest rates on government bonds are low they are proven to be very safe investment, so the person should definitely think of having it in the portfolio. The market for CDs became very popular in the last decade (NOT LAST DECADE ACTUALLY A LITTLE BEFORE BECAUSE THEY WERE CREATED IN 1961), but it is mainly used by large corporations (BECAUSE THE ARE ISSUED IN 100000 DOLLARS OR OVER ), even though they don't have high interest rates it's also pretty safe investment. Saving account deposit with the option that you can always withdraw money in case of emergency would not be a bad idea. Mutual funds and stock market usually have higher interest rates of return but considered more riskier. Average return on stock market has been about 7%, which is much higher than 2-3% on gov. bonds and saving accounts. And in the end, of course, the investment into the projects usually bring pretty high returns, if successful. In their book "Investment Under Uncertainty" Pindick and Dixit (two economists) consider different types of investment projects and show the methods of hedging the risk(IT'S ANALOG OF OPTIONS). For example, you invest in the company which is going to produce widgets with price either phigh or plow if the price phigh you gain if plow your investment fails. You can choose to hedge your portfolio by entering contract that you'll sell widgets at some price p, so that on average your portfolio will be risk neutral. You can also make it risk-averse depending on your preferences. Hedging portfolios is important thing and can be used by entering future contracts, options etc. Thus, your decision should be made upon the best interest rates of different types of investments, which can be made less risky.

Answer 3

1 million invested:

I'd build an all stock portfolio built on the fundamentals that are expected to appreciate, and possibly put some in bonds to adjust for your risk tolerance.

Otherwise, you could use seperately managed accounts (different investment advisors manage the account, with fees up to 3%). You could qualify to use hedge funds, which have a fee structure like 2% plus 20% of the annual gain. You could put it all in an A share class mutual fund (usually the lowest retail expense class of fund) without paying any commissions. You could qualify for a higher rate money market or CD. You could use exchange traded funds. You could buy an apartment complex. You could put your money in annuities or life insurance even.

If you're really serious, talk to a fee only planner and get more info.

If I gave a good answer, gimme a thumbs up! Thanks!

Answer 4

I tried my strategy with 600K and wish had a million, made about 30% risk free. Here is how it works. Find steller companies with high dividends through yahoo stock screener. I found FRO, AHM, PCU and some canadian royalties like PGH and ERF, but there is a perceived problem with those Canadian Royalties so lets ignore them. If you do not like individual stocks you can try the same with index ETFs like SPY, QQQQ etc. After identifying, buy every time stock drops 1% or any number you choose. Than sell every time it goes up by 1%. you would buy the shares in blocks of 100. You would increase the block size by 1 every time there is consecutive drop or increase, for example if a share dropped 3% on a single day you would have bought 100+200+300 = 600 shares. If you have the stomach you can short the shares if a stock goes up 3% in a day and you do not have enough inventory, I tried that and lost because I ran out of capital, eventually all those shorts that had severe jumps came down to average price but I could not continue shorting as they were going up since I had too many stocks in my portfolio. The strategy works for very small number of stocks in the portfolio, rule of thumb, no more than 1 stock for every 200K in investable cash. I would recommend analyzing this strategy on paper with historical prices before investing a dime. This strategy is very tax inefficient however you are always moving with the market and are cashing your positions an average once a week so you are always in cash therefore are always low risk. The more inventory turns the more you are making. The less inventory turns the longer your money is invested or is sitting idle. It is almost like a retail business. You have x number of items in your store, you buy it at a price (market price) and sell it at a price (retail market price). You replenish what you sold and occassionally you discontinue carrying certain items and on other times you add certain other items. I like to expand this strategy to high divident paying stocks in other foreign exchanges however am having difficulty identifying those stocks.

Answer 5

Mutual funds offer many great benefits, diversification, open disclosure, detailed past performance. There is a great debate between paying commissions to a broker or paying fees.

If you have $1 Million, you can go to a commission broker, invest all worth 1 fund family, and you won't need to pay any fee at all. Your broker will still get paid, so he will essentially provide you with experienced research and knowledge, and you won't have to pay for it!

That's what I would do.

Answer 6

Hedge funds are investments that are available to anyone with 1 million dollars in total net worth, and are worth looking in to. However, with 1 million dollars liquid cash to invest, it would be wise to consult an investment advisor, like Edward Jones or Charles Schwab. Both are low fee investment brokers that can help you diversify properly.. never put your eggs in one basket.

Answer 7

Managed accounts usually require that you have over a certain amount to invest. They manage the account with a diversified plan and the investment grows. Most firms have such sub-companies that handle managed accounts.

Answer 8

you know i found this out in science class ok you can start with a penny and earn a million dollars in a month you double it every time so 1 penny plus 2 iss 2 cents 2 cents plus 2 4 cents and so on...

Answer 9

If you would of invested in "nwacq" in November when I did you would now have 5 times that much...

aaaaaaaaaaaagh life is good !!

Get in now while its still low...

Answer 10

You may be able to get a different type of stock in a company. One with voting rights or more dividends.