Terry Hart asked: One would think successfully investing one million dollars would be a simple matter. Clearly getting a return on $100 dollars is easier but the return in terms of dollars is not much. Investing one million dollars on the other hand, would deliver a very usable return even if you managed just 5%
Clearly the goal of investing one million dollars is to make an income. This sort of money can give anybody a decent middle class lifestyle. Lets say you get a return of just 7% and that would equate to $70,000 dollars or $1400 approximately each week.
If your goal was to just have a passive income there would be nothing simpler than putting the whole thing in a fixed term bank deposit at 10% There is nothing safer and nothing simpler than a bank deposit and the big advantage is you can save money on your financial planner. Nothing easier.
But if you want bigger returns, you may need to park your money in real estate because historically, you can get a double return. Around 7% on the appreciation and another 7% on the rentals you may receive.
Of course some people that have amassed a million dollars have special skills and expertise. These skills can be used to invest in the form of a business that yields a passive income. An investment like this is much more lucrative and a return of 30% to 70% is not unheard of. This is also a lot more risky and to a large extent is based on your abilities and skills. Obviously you should assess your options carefully but these are a few sensible ideas.
Create a video blog…instantly.
Terry Hart asked: Let’s define what an outstanding return is before we look at ways to invest $1 million dollars. Most people, if you asked them would have no trouble investing a million dollars, but getting a decent return on a million dollars is harder than it sounds. For practical purposes, you cannot just lump it all together in one roll of the dice and a million dollars needs to be diversified.
A decent return is anything from 20% to 30% per year. It is actually quite a superior return to get such percentages and they are not always possible every year, just ask any fund manager. Ideally, the majority of the million dollars would be invested in hard assets, thereby giving you a tangible item that is able to be insured and even the value manipulated by doing repairs or improvements.
The thing about real estate, is as an investment the risk is low, not eliminated because there is always some market risk, but generally if you buy well, real estate has a component to it that other investments do not have. When your funds leave your account, unlike other investments you receive equal or better value that represents the money you spent in the form a real estate.
Parts of the million, maybe 10% could be diversified into more risky but higher return investments. Discretionary investing has become popular and returns of 100% or more are possible. This type of investing is best done by playing the odds. The risk represented is that you will not get your money back at all, but if you do, it may be a superior return. So putting say $5000 on an investment a 100% return would represent a .5% return on the million, so these types of investments could easily add up to improve the returns by adding another 10% or more.
Create a video blog…instantly.
Kender_fury asked: Imagine that someone gives you or you win more than a million dollars. You pay the inheritance/gift/prize tax and you now have an even 1 mil in your bank account.
A) How does it affect your taxes if you let it just sit there?
B) What if you invest it by buying 1 mil worth of high yeild CDs?
C) Does this send out a red flag that makes you more likely to be audited?
Caffeinated Content – Members-Only Content for WordPress
Terry Hart asked: Why would you want to try and invest $1 million dollars that you do not as yet even have? Is it even legal? If you don’t have $1 million dollars how are you going to invest it anyway? The answers to all these intriguing questions and more can be found in this article, so read on…
First of all to answer the “why”
For the return of course. If you were able to invest $1 million dollars, even a 5% return would equal $50,000 dollars. Getting a 5% return is not exactly a difficult thing, you could simply put the million in a bank for a year and receive that $50,000 profit.
When considering wealth building strategies and your financial goals, a creative approach is sometimes necessary to create the returns we seek and borrowing a million dollars is one way to increase our returns. There is however, a problem. If you did find someone willing to lend you $1 million dollars, they would without a single doubt expect a return for the time frame you have borrowed that million, usually along the lines of what a bank would charge which would be in the single digits percentage.
Clearly if that is the case, we are backed to the wall, because the profit we expected from that million just transferred to the owner of the million leaving us with a futile look on our face. But what if, instead of you borrowing a million in cash, you legally borrowed equity or value.
This would be a different twist on the same concept. Let us say, we look in the local paper and found a riverfront mansion for $1.2 million dollars. You have kept your eye on the upper market for riverfront mansions and have concluded, that this house is being offered for sale cheap. It could easily fetch $1.4 or even $1.6 million because it has a boat harbor and also 20 rooms and well maintained gardens.
This value that you see and the remaining opportunity to collect a further $200,000 to $400,000 dollars on your insight about the true value of the house can be accessed and used to control the property for a short time. By using a legal instrument like an offer to buy.
Simply put, you place a token deposit and explain you have every intention to purchase on behalf of a buyer or friend, it is not their business what the actual arrangement is, all their side needs to know is that they are getting the possible opportunity to sell. You offer them what they are asking for the property and in the contract you may escape the contract if the new buyer decides he doesn’t want the house. In this way you can walk away if you fail to find a buyer at a higher price than the contract price. If you do find a buyer you can do a double close.
This is one way to borrow a million dollars and invest it for a return without actually having a million dollars in the first place.
Kansieo.com
