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  • Writer's pictureMichael DiBartolomeo

How To Invest 10 Million Dollars

Updated: Feb 24, 2022

Maybe you won the lottery, maybe a rich uncle or aunt died and made you the sole beneficiary, or maybe you worked hard and ground for every single cent. Regardless of how you did it, you now have 10 million dollars as your net worth. Before you start buying fancy cars and expensive trips, you may want to consider investing some or all of that money. After all 10 million dollars is a lot more than the 1 million that most people strive for to be financially free! Investing 10 million is completely different than how to invest 500k.

Making an investment with such a large sum can give you quite the nest egg to build upon, and you should try to invest your funds rather than simply letting it languish in a savings account for the next several years. Instead, with the proper investments you can start to see that cash grow over the next several years. You just need to make the right ones with the help of a financial advisor, and maybe a few investors.

Can you live off of 10 million dollars

Can You Live Off Of It?

That’s the first question that 99% of people ask, can we live off of a $10 million cash flow? Well, 10 million provides enough of a buffer zone against potential problems with the stock market or other investment pitfalls that you can reasonably live off the money and not have to work. With 1 million invested, you might still have to work.

However, there are a few pitfalls you need to keep in mind, that any financial advisor can tell you. Mainly, diversification, liquidity, cash management, and debt management should be of top priority. Of course, you should be sure to maintain access to adequate liquid assets, in a checking or savings account, for example, since investing is typically intended for those with medium to long term time horizons. Also, stock investing includes risks, including fluctuating prices and loss of principal.

How You Are Taxed

The income from the $10 million would not be immune to a tax on your wealth. Most of that income is possibly going to be paid out to you personally or through some form of corporation meaning that taxes are going to be involved. There is one main way you can get taxed on your cash flow income, and that is interest income.

Interest income taxes you based on the amount of disposable income you have, so you’ll be losing quite a bit of tax with that much investing bread in the bank.

What To Focus On

There are a wide variety of investments that can be done, and a lot of things you can invest 10 million dollars in. What used to be the case was having a balanced portfolio of stocks, fixed income bonds, and shares of a company or service, along with some real estate. However, that isn’t what most people invest in anymore due to the risk. Some people may consider investing in the painting market - if that is what they are interested in.

Most people aren’t content with letting the risk of stock market investment and dividends do all the work. Instead, they want to manage their dollars. After all, the huge amounts aren’t just for themselves, but also for the people they are leaving the cash too. They want to build a legacy, because even the most dedicated spender can’t spend that much cash in one lifetime. Although some investors might try to convince you that you can!

*Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability.

Look At A Family Trust

This type of trust investment adds an extra layer of protection to your cash, helping to keep it safe from the problems of the outside world. The family trust and holding company is the beneficiary of the trust, and most forms of passive income get funneled into the trust so the income continues to grow with every single investing opportunity.

These trusts can also use ‘lifetime capital gains exemption’ as well, which protects your loved ones from the taxes that occur when they sell the small business as a dividend that is connected to the larger trust.

For example, if you manage a farm and have that as the small business that is putting dollars into the family trust and holding company, then that farm might get sold to investors as a dividend one day. All of the cash benefits would flow into that trust, but the Lifetime Capital Gains Exemption should protect that high yield dollar portfolio from being taxed.

Without the Exemption, you would need to pay taxes on half of the amount. With it, only half of the gains are taxable and the rest becomes part of your deduction limit. It’s a little confusing, but the gist of it is that your loved ones get more funds while paying less in tax. Plus, the effect is cumulative until you reach the investing cap.

How much should you invest

How Much Of Your Money Should You Invest?

If you get that much cash dropped in your lap, then you need to invest 10 million wisely. However, it’s not all stocks, and real estate, and savings and planning for the future, why not have some fun with it? Once you’ve invested your cash, then you should take a look at the total portfolio and withdraw 2.5 percent of the net total.

That is a $250,000 fund, and that pay should be enough to last you a year, if it isn’t then you might need to rethink what you are spending your dollars on. This is enough of a withdrawal to give you some great opportunities, while also keeping your financial freedom growing.

Tips For Handling Your Newfound Wealth

One of the key things you shouldn’t do when getting a huge sum of money is to immediately change your life and standard of living. While it can be tempting to trade your apartment for a nice house or your old clunker car for a Ferrari, remember that these short term purchases carry long term fund payments. You’ll need to pay rent on the new real estate and insurance on the expensive car.

These payments can drain your money fast and you need to keep that in mind. You aren’t just paying once for the fancy new thing, but also for all the subsequent payments. This adds up quickly, especially if you are young and have your life ahead of you. No one wants to pay more than they have to when they are rich!

Instead, stay with your current lifestyle and keep an eye out for smaller purchases that can improve your standard of living. Spend your life and your money wisely!

Additionally, don’t quit your job for investing unless you have too. Heck, you might love your job and want to stay at it on principle, but you should still have some stream of income coming into your bank that isn’t related to your money.

The income stream could be hands-off and passive too, but don’t think that the $10 million is going to be your end all be all in terms of income. Things can still go wrong, and you need to make sure that you have more income streams just in case the $10 million falls victim to the stock market or economy.

Start to Invest 10 Million Dollars

Getting 10 million big ones is not an easy feat, but having to invest 10 million dollars can be even harder. You want to make sure that you are being as forward thinking and as safe as possible while investing money. No one wants to have it all and then suddenly be worse off than before after a bad day with the stocks at the stock market.

Keep common sense and rationality in mind. Whether you got the money through hard work or a stroke of luck, you still need to guard it furiously and make your investments wisely.

Talk to a personal financial advisor for information on investing or tax questions such as 'is tithing tax deductible?'


Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Stratos Wealth Partners, LTD., a registered investment advisor. Stratos Wealth Partners, LRD. The Kelley Financial Group, LLC are separate entities from LPL Financial.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. The content is developed from sources believed to be providing accurate information.

No investment strategy assures a profit or protects against loss.

Investing in mutual funds involves risk, including possible loss of principle. Fund Value will fluctuate with market conditions and it may not achieve its investment objective.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawal prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% penalty tax. Limitations and restrictions may apply.

The prices of small and mid-cap stocks are generally more volatile than large cap stocks.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The market value of corporate bonds will fluctuate, and if the bond is sold prior to maturity, the investors yield may differ from the advertised yield.

Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate or return and fixed principal value.

Municipal bonds are subject to availability and change in price. They are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax free but other state and local taxes may apply. If sold prior to maturity, capital gains tax could apply.

ETFs trade like stocks, are subject to investment risk, fluctuate in market value, and may trade at prices above or below the ETF’s net asset value (NAV). Upon redemption, the value of fund shares may be worth more or less than their original cost. ETFs carry additional risks such as not being diversified, possible trading halts, and index tracking errors.



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