The Best Way To Invest $1 Million? It All Depends on You

Question: I just came into $1 million and want to know the best way to invest it?

Answer: I get this sort of question all the time, and my answer is always the same: It depends. Many find that response disappointing, but smart investing is always a nuanced process, unique to the individual and the current market environment.

At the heart of good investing are universal principles: balancing risk and return, diversifying assets, and managing risk over time. But the way these principles apply to someone’s situation varies widely based on their circumstances.

Everyone has different circumstances, goals and attitudes toward money. Take retirees for example: One may need a growth-oriented portfolio to achieve their financial goals, while another might need to focus on risk reduction and preserving their wealth. Others may need higher returns but can’t stomach the volatility that comes with it. All these scenarios require different strategies—tailored advice that only a trusted financial advisor, who understands the client’s specific needs and the investment climate, can provide.

Let’s consider two investors as an example:

Client A and Client B both generate enough income from other sources to live comfortably and won’t need to touch their investment portfolio. They’re investing for future generations with a long-term outlook. Based on this, it might seem like both should have aggressive strategies, right?

This might be true for Client A, who understands market dips are temporary and sees them as untroubling short-term fluctuations. But Client B feels uneasy about seeing any substantial drops in his or her portfolio, even if only temporary, and feels the urge to sell during a downturn, which could lead to long-term losses.

These clients are in the same financial situation and share the same long-term goals. Yet, they have different risk tolerances, which means their investment strategies should differ. Both can succeed, but only if their portfolios are tailored to their specific needs and attitudes, and that’s where personalized advice—like what we offer at AMG—comes in. It’s not just about understanding the market; it’s about understanding the person behind the portfolio.