How To Invest $1 Million Without The Stock Market

&l;span style=&q;font-weight: 400;&q;&g;If you invested money into the S&a;amp;P 500 in 2009 and reinvested dividends, you would have enjoyed a hefty 191.835% return as of early 2019. That&a;rsquo;s an 11.305% annualized return after adjusting for inflation, which is pretty darn sweet.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;Had you invested your money in the year 2000, however, the results aren&a;rsquo;t quite as rosy. Your investment would yield only 35.395% total, for an annualized return of 1.608%.&l;/span&g;

&l;img class=&q;dam-image ap size-large wp-image-c15d13d184214a24a2591d2b9d798420&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/c15d13d184214a24a2591d2b9d798420/960×0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g;

&l;span style=&q;font-weight: 400;&q;&g;This just goes to show &l;a href=&q;https://www.forbes.com/sites/brettsteenbarger/2018/10/14/the-psychology-of-navigating-a-volatile-stock-market/#1e450fe4615c&q;&g;how volatile investing in stocks can be&l;/a&g;. Your return depends a lot on where you invest your money, but the results can be skewed drastically by &l;/span&g;&l;i&g;&l;span style=&q;font-weight: 400;&q;&g;when you invest&l;/span&g;&l;/i&g;&l;span style=&q;font-weight: 400;&q;&g;, too.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;With that in mind, not everyone wants to drop a ton of additional cash into stocks &l;/span&g;&l;span style=&q;font-weight: 400;&q;&g;&a;mdash; &l;/span&g;&l;span style=&q;font-weight: 400;&q;&g;especially not when they&a;rsquo;re close to retirement age.&l;/span&g;

&l;b&g;Where to Invest $1 Million Dollars&l;/b&g;

&l;span style=&q;font-weight: 400;&q;&g;Recently, a reader contacted me for this exact reason &a;mdash; he had $1 million dollars to invest but didn&a;rsquo;t want to &l;a href=&q;https://www.goodfinancialcents.com/guide-to-basic-investing/&q; target=&q;_blank&q;&g;invest all of it into the stock market&l;/a&g;. He wanted to know where else he could invest his money where he had the potential for a great return without as much volatility and risk.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;While it&a;rsquo;s not easy to score market returns without any risk, there are plenty of tools and platforms you can use that could lead to serious returns &a;mdash; or perhaps more peace of mind.&l;/span&g;

&l;b&g;Online Savings Accounts, Money Market Accounts, and CDs&l;/b&g;

&l;span style=&q;font-weight: 400;&q;&g;One of the most secure options available comes in the form of online savings accounts and certificates of deposit (CDs). While a savings account may make it easier to access your money, CDs tend to offer a slightly higher rate of return in exchange for locking your money away for several months or years. With a 12-month CD from Marcus by Goldman Sachs, you can qualify for 2.75% APY right now. A minimum balance of $2,500 is required.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;Financial advisor Mitchell Bloom of&l;/span&g;&l;a href=&q;https://bloomwealth.com/&q; target=&q;_blank&q;&g; &l;span style=&q;font-weight: 400;&q;&g;Bloom Financial, LLC&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400;&q;&g; says he advises clients to explore online savings accounts or money market accounts with competitive rates. On a personal level, he keeps his emergency savings in a Capital One 360 Money Market account with no fees of any kind. The current rate on his account is 2.0% APY for balances over $10,000. &l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;&a;ldquo;This money market is totally liquid and has no constraints,&a;rdquo; he says.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;You can also consider a high-interest savings account from an online bank that offers exceptional returns. With the CIT Bank Savings Builder Account, for example, you can get 2.45% APY on your money with a minimum account balance of $25,000 or a minimum monthly deposit requirement of just $100.&l;/span&g;

&l;b&g;TIPS or Short-Term Bond ETFs&l;/b&g;

&l;span style=&q;font-weight: 400;&q;&g;Another option is investing all or part of your nest egg in TIPS or Short-term bond ETFs. TIPS stands for Treasury Inflation-Protected Security, which makes it obvious TIPS are meant to protect against inflation. TIPS pay interest twice per year based on a fixed rate, and they are offered in terms of five, ten, and thirty years. You can buy TIPS from TreasuryDirect.gov or from a licensed broker.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;A&l;/span&g;&l;a href=&q;https://www.forbes.com/sites/baldwin/2018/06/20/best-etfs-short-term-bonds-3/#53a89d9b6816&q;&g; &l;span style=&q;font-weight: 400;&q;&g;short-term bond ETF&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400;&q;&g; is an ETF (exchange-traded fund) made up of short-term bonds with maturities lasting less than three years. These portfolios are geared to more conservative investors who prefer less volatility over the long run.&l;/span&g;

&l;b&g;Super Saver Accounts&l;/b&g;

&l;span style=&q;font-weight: 400;&q;&g;Whether you use a traditional financial advisor, save with a robo-advisor, or manage your own investments, you can also explore Super Saver accounts offered by major online financial services companies.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;Betterment, for example, offers a &a;ldquo;Smart Saver&a;rdquo; account that moves your excess cash into a low-risk bond portfolio for higher returns than you would get with an average savings account. At the moment, the robo-advisor says their accounts are&l;/span&g;&l;a href=&q;https://www.betterment.com/resources/short-term-investing-savings-account-alternative/&q; target=&q;_blank&q;&g; &l;span style=&q;font-weight: 400;&q;&g;earning 2.23% APY&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400;&q;&g;.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;Wealthfront is also reportedly rolling out a high-yield cash management account that works similarly to a savings account with an annual return of 2.24% APY.&l;/span&g;

&l;b&g;Annuities&l;/b&g;

&l;span style=&q;font-weight: 400;&q;&g;Annuities could provide another way to earn a reasonable return outside the stock market, but &l;a href=&q;https://www.forbes.com/sites/jrose/2016/10/11/beware-of-the-annuity-illustration-optical-illusion/#148a5c6c5ecc&q;&g;they tend to be difficult to understand&l;/a&g;. It doesn&a;rsquo;t help that there are several types of annuities, including variable annuities &a;mdash; a&l;/span&g;&l;a href=&q;https://www.forbes.com/sites/jrose/2015/03/28/5-reasons-why-you-should-never-buy-a-variable-annuity/#162680114c6b&q;&g; &l;span style=&q;font-weight: 400;&q;&g;type of annuity you should never buy&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400;&q;&g;.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;The important thing to remember with annuities is that you&a;rsquo;re making a contract with an insurance company. In exchange for a lump sum of cash, they usually promise you a payment every month.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;With a fixed-rate annuity, you&a;rsquo;re promised a payment in a specific amount each month. A variable annuity, on the other hand, promises a payment that depends on how an underlying investment performs. A fixed-indexed annuity works as a hybrid of the two, offering greater potential for returns with less risk overall.&l;/span&g;

&l;b&g;Life Insurance&l;/b&g;

&l;span style=&q;font-weight: 400;&q;&g;While I am adamant about the fact that whole life insurance is an awful deal for the average American family (and &l;/span&g;&l;a href=&q;https://www.forbes.com/sites/jrose/2018/07/10/here-are-the-5-biggest-financial-rip-offs-to-avoid/#58d3a339137b&q;&g;&l;span style=&q;font-weight: 400;&q;&g;maybe even a financial rip-off&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400;&q;&g;), I&a;rsquo;ll admit there are situations where whole life makes sense. For example, a high net worth individual could use a whole life insurance policy to protect some of their assets and provide their family with a tax-free lump sum when they pass away. To reiterate my position though, this strategy only makes sense in certain situations &a;mdash; usually when a lot of money is involved.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;But, what about &l;a href=&q;https://www.goodfinancialcents.com/indexed-universal-life-insurance/&q; target=&q;_blank&q;&g;indexed universal life insurance&l;/a&g;? Typically, these are policies that won&s;t make you a lot of money over the long-term. However, they&s;re marketed similarly to fixed-index annuities in that you get unlimited upside potential with none of the downside risk. &l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;While there are plenty of pitfalls to be aware of, a properly structured indexed universal life insurance policy could provide a decent return with little risk. The key phrase here is &a;ldquo;properly structured&a;rdquo; because not all policies fit the bill.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;Here&a;rsquo;s an example of how this might work in real life:&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;I once had a client who was looking for principal protection and more interest than he could get with a high interest savings account. At the same time, he wanted an investment with some liquidity. Normally, this type of high-rate, liquid investment doesn&a;rsquo;t exist. However, I was able to work with an insurance carrier to structure a policy that met his needs. &a;nbsp;&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;The indexed universal life insurance policy he wound up with paid a dividend of just over 3% before fees were factored in. The policy also had an index option that was tied to the S&a;amp;P 500, and there were no surrender charges as long as the policy was held for three years.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;There were a couple of other details to take into consideration, but this option still helped us accomplish the goal at hand. &l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;If this is an investment you are considering, just make sure you have an advisor that is a fiduciary and working on your behalf. If you approach a life insurance salesman who isn&a;rsquo;t a fiduciary, it&a;rsquo;s pretty likely they&a;rsquo;ll try to score a huge commission instead of helping you choose a plan that suits your needs. &l;/span&g;

&l;b&g;Private Business&l;/b&g;

&l;img class=&q;dam-image bloomberg size-large wp-image-43345506&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/43345506/960×0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g;

&l;span style=&q;font-weight: 400;&q;&g;Bloom says that, if you&a;rsquo;re an accredited investor who doesn&a;rsquo;t mind some risk, you can consider investing in private business as an angel investor.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;Angel investors are high net worth individuals that are interested in funding early-stage startup companies and may invest anywhere from $10,000-$100,000 per project they take on. While throwing money into the next Google or Uber sounds like a smart idea, the downside is that, if the business fails, you could lose every dollar you invest. Ask angel investors who bet on Theranos &l;/span&g;&l;a href=&q;https://www.forbes.com/sites/hershshefrin/2018/04/14/the-theranos-con/#56b89cbf2314&q;&g;&l;span style=&q;font-weight: 400;&q;&g;how that worked out&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400;&q;&g;. &l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;If this is something you&a;rsquo;re considering, it&a;rsquo;s important to have several million set aside before even looking at investing in startups. &a;ldquo;The failure rate is very high,&a;rdquo; said Bloom.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;Bloom also suggests taking the time to conduct due diligence instead of investing in a frenzy out of excitement or FOMO. You can also search for a consultant you can trust. &l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;&a;ldquo;There are Angel investor groups all over the country and the largest is called the Keiretsu Forum, based out of California,&a;rdquo; he says. &a;ldquo;If approved for membership, you can gain access to a wide array of opportunities.&a;rdquo;&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;Projects on this platform have been strictly vetted through a committee and formal due diligence process.&l;/span&g;

&l;b&g;Real Estate&l;/b&g;

&l;span style=&q;font-weight: 400;&q;&g;Another popular investing option for high net worth individuals is real estate. Fortunately, new technology and startups have made it possible for more and &l;a href=&q;https://www.goodfinancialcents.com/how-to-invest-in-real-estate/&q; target=&q;_blank&q;&g;more investors to get into the real estate game&l;/a&g; without dealing with the headaches of being a landlord.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;One real estate investment that is entirely hands-off is the REIT, or real estate investment trust. This type of investment, which you can buy through any major online brokerage account, lets you invest your money into a company that owns and operates income-producing real estate. There are also real estate ETFs (exchange-traded funds), which invest in underlying REITs.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;Some online real estate platforms also make it easy to crowdfund real estate with the potential for high returns (and no landlord hassle).&l;/span&g;&l;a href=&q;https://www.forbes.com/sites/samanthasharf/2017/06/15/home-sweet-investment-fundrise-introduces-new-way-for-millennials-to-endow-their-future-houses/#21a7d584779b&q;&g; &l;span style=&q;font-weight: 400;&q;&g;Fundrise&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400;&q;&g; is an especially popular option for investors since it has boasted returns between 9.11% and 12.42% since 2014. You can invest into a Starter Portfolio for just $500, although the platform also offers portfolios for long-term growth, supplemental income, and balanced investing.&l;/span&g;

&l;b&g;Peer-to-Peer Lending&l;/b&g;

&l;span style=&q;font-weight: 400;&q;&g;Finally, don&a;rsquo;t forget about the prospect of peer-to-peer lending with platforms like LendingClub and Prosper. Both let you loan money to individuals as if you were a bank, helping you score higher returns than you may get with other investments.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;With&l;/span&g; &l;a href=&q;https://www.forbes.com/companies/lending-club/#11f76a0ce4c3&q;&g;&l;span style=&q;font-weight: 400;&q;&g;LendingClub&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400;&q;&g;, you can invest a lump sum of money over hundreds or even thousands of $25 notes. The platform reports a historical return of 3% to 8% per year, although your returns will depend on the risk involved in the underlying investments you choose.&l;/span&g;

&l;span style=&q;font-weight: 400;&q;&g;Fortunately, the level of risk you take on is mostly in your hands. LendingClub lets you earn higher rates on high-risk consumers with shaky credit, but you can also choose safer notes with less potential for volatility.&l;/span&g;

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