Imagine a check for $1 million dollars just falls into your lap one day. While it may be tempting to spend it, you know you should invest it. As a long time investor, hopefully I can provide some sound recommendations on how to invest $1 million dollars. The problem with having this much money is protecting it because a significant sum such as this needs to be invested carefully and inflation can erode this capital quickly in a few years. Finding an adequate return can really be a challenge.

You might be considering CD’s, government bonds, mutual funds, the stock market and even various business projects. Since every investor’s level of risk is different I am going to break down these options by levels of increasing risk.

1) Government bonds. Very little return, but virtually no risk.

2) CD’s – This is relatively safe option with rate of return depending on the institution. There are two major risks associated with this type of investment. First, you can tie your money for a long time without access to it. Second, interest earned can be negated by inflation.

3)Mutual Funds – This investment can be very risky and very profitable, or relatively safe with an average return. There are also different yield funds which buy stocks of different companies according to their risk/return objectives.

4) Stock Market – Diversification is key, not only in an overall portfolio, but also in the stocks you choose. It never hurts to revisit your risk/return preferences

5) Business Projects – These can be very lucrative investments, but they also carry high risk. Know what the expected ROI (Return On Investment) is before investing.

There are many options on how to invest $1 million dollars. Whether investing $1,000,000 or $10,000 keeping your portfolio well diversified is the key to success.