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How To Invest 1 Million Dollars for Retirement

By Doug Famigletti, CFA, Managing Partner & Portfolio Manager

Congrats in Order

If you’ve just come into your first million, congratulations! It’s a huge accomplishment — one less than 10% of the US population can claim.

$1 million can set you up nicely for retirement, especially if you are smart about how you invest your money. There is no shortage of options available for today’s millionaires.

At the same time, the investment world can be difficult to navigate for even the most experienced investor. Fortunately, experienced professionals like us are here to help.

Where to Start?

As you begin to consider how to allocate your hard-earned money, it is important to take several criteria into consideration.

  1. Time Horizon: How old are you? How you invest 1 million dollars at 30 years old might be very different from how you invest 1 million dollars at 70 years old.
  1. Risk Tolerance: Returns are not risk-free. Investors willing to take on more risk have the potential to grow their assets more aggressively. However, it is very important to be mindful of risk. The longer your time horizon, the more risk you can afford to take as your portfolio has more time to recover from large fluctuations in the market.
  1. Investment Objectives: How much money will you need in retirement? When do you want to retire? What will inflation look like at the time of retirement? What type of costs will you have? How involved do you want to be in the investment process? What investments would you prefer exposure to? Are you going to lose sleep every time the market takes a downturn or are you comfortable taking short-term losses for long-term gains?

Only you can answer these questions — and only a professional can help you build a plan tailored to meet your objectives.

5 Characteristics and 5 Strategies

There are hundreds of investment strategies that can help you retire comfortably. Unfortunately, there are just as many strategies that will underperform, overcharge, and put your hard-earned money at unnecessary risk.

A successful long-term investment strategy is typically:

  1. Tax efficient.
  2. Heavily weighted towards equities.
  3. Diversified across sectors.
  4. Free of hidden fees.
  5. Designed by a manager with a 10+ year track record of competitive, risk-adjusted returns.

With that in mind, here are 5 strategies we recommend you explore to maximize returns and minimize risk of your retirement investment.

  1. Dividend Growth strategies tend to invest in large and mid-cap stocks that are conservatively financed and trading at a discount to current valuations, with a long history of growing dividends. Evaluation metrics include high free cash flow yield and low price-to-earnings.
  1. Growth At A Reasonable Price (GARP) strategies seek to identify and purchase undervalued companies on an individual basis with a consistent and sustainable opportunity to grow corporate profits.
  1. The Large Cap Value strategy is a classic approach focused on buying substantially undervalued companies with good free cash flow, competitive advantages or “moats” in their lines of business, and management teams with a track record of allocating intelligently. Evaluation metrics include price-to-earnings, price-to-book, and price-to-cash flow.
  1. Low Volatility/High Dividend strategies seek to establish more stable income through investments in profitable US companies with high dividend yields and lower price and earnings volatility. They tend to maximize total returns and maintain lower volatility relative to the overall market.
  1. Quality Investing strategies seek to identify companies with a reputable leadership team, consistent track record of strong earnings, and stable balance sheets. These strategies tend to have a long-term outlook. Evaluation metrics include return on equity and low debt-to-income ratio.

Don’t leave building wealth to chance. Our relationship managers at Griffin Asset Management are standing by and ready to discuss your unique investment needs. Get in touch with us today.