How to Invest $1 Million Dollars (NO stock market)

– We all dream of becoming a millionaire, to be worth a million dollars. It’s something that many of
us can’t even comprehend. Well what about investing
one million dollars? What if you had a million
dollars in the bank and you had to invest it
or you could invest it, what would you do with that money? Recently I was contacted by a
subscriber and this subscriber wanted to know how to
invest a million dollars. Well there was one little
small twist to that and we’re gonna find out
what that twist is right now. (funky, upbeat music) What’s going, y’all? Welcome to Wealth Hacker Labs. This is the channel dedicated
to teaching you new ways to grow wealth that is not
taught to you in schools or by your parents. I am your host, Jeff Rose,
and today we’re talking about investing one million dollars. Now for many of you,
investing one million dollars isn’t on your radar yet. It might seem like you’ll
never get there but if you’re watching this channel and
you subscribe, guess what? Eventually you will become a millionaire. You just gotta practice the
Wealth Hacker Principles ’cause that’s what this
channel is all about. But in this case, this subscriber
didn’t wanna just invest one million dollars, they
gave me a bit of a curve ball. For whatever reason, this person
wanted to invest a million dollars but they didn’t want
to involve the stock market. Now I’m not really sure why
this person wanted to avoid the stock market with
their one million dollars they wanted to invest but I
really like that question, especially for this channel
because that is what wealth hacking is all about. Yes, you can make a solid return investing in the stock market but
it’s not the only way to build your wealth or hack your wealth. In fact, many of the
successful entrepreneurs and business owners that you
look up to, that you admire, they have achieved their wealth status by not just investing in the stock market. So you think of like the Warren Buffetts and the Gary Vaynerchuks
and the Tony Robbins and the Bill Gates and the
Jeff Bezos, all these types became successful and
wealthy not just from stocks. In fact, many of them
built their wealth from the seven different ways that I’m
gonna share with you today that you can invest that does
not involve the stock market. So let’s go ahead and
break down what those seven different ways are right now. The first way that you
can invest your money that does not involve the
stock market is by far the most boring one but it
is a way that you can invest and make a little bit of money. And that is investing your
money into an online bank. Now with online banks,
that means you could do a savings account; you could
do a money market account; you could do a CD, a
certificate of deposit. With online banks, traditionally,
you’re going to make more money than you would get
with a brick and mortar bank. Mostly because they don’t have
all their different branches, all their different locations
that all that overhead that goes along with running that bank. Yes, they have their headquarters. Yes, they have their corporate offices. So there are expenses with
an online bank but still you can make more than what
you can get, typically, with a brick and mortar bank. For example, you can open an
account with Capital One 360 and they’re going to pay
you 2% on your money. Now I know 2% is not
going to make you wealthy but if you look at the
bank wherever you have your money right now, chances
are, you’re probably not even making a quarter of a percent. So if you’re making 2%, we’re
talking eight times as much as what you’re getting
from your current bank. Another example is
Marcus by Goldman Sachs. You can take out a 12 month
CD that’s going to pay you 2.75% on your money. With other banks you’ll
be lucky to get 2%, especially for that short-term of a CD. Now just do your research,
make sure that you understand, you know everything about that bank. Make sure they’re FDIC insured
and all that good stuff. If you wanna check out another
video where I talk about seven different ways
that you can avoid a bank and still make money with your cash, be sure to check out that video too. Option number two that allows
you to invest your money while avoiding the stock
market is investing into TIPS or short term bonds, especially bond ETFs. So TIPS are treasury inflated
protected securities. Just another way of
saying, short term bonds. Now you can go out and buy ETFs. You can buy the TIPS ETFs or you can buy a Vanguard ETF on the short term bonds. Now the cool thing is that
a lot of robo-advisors are coming out what they’re calling
their Smart Saver accounts. That’s what Betterment calls theirs. So you could open up a Smart Saver account which basically is a
blended portfolio of TIPS and short term bond ETFs. Now with these you’re going
to make more money than you would in your standard savings
account that your online bank offers but there is going
to be some fluctuation. Like, this is not a
FDIC insured investment so don’t think that
you’re puttin’ your money and you’re principle is guaranteed. You can see some fluctuation. But the way they’re trying to
manage these is to give you more return then you’re
gonna get in your checking or your savings, get you
a little bit more return. A little bit more risk but
if you’re okay with that then it might be worth looking at. Betterment has an option,
Wealthfront recently launched an option. A lot pf these robo-advisors
are offering these Smart Saver type of accounts. Once again, make sure that
you read the fine print, understand what you’re
getting yourself into, but it is another way to
invest outside the stock market and with little risk. The third option that
you can invest without the stock market is buying an annuity. Now if you’re watching this
and you are in your 20s, 30s, and even your early 40s,
chances are an annuity makes absolutely no sense for you. I see a lot of advisors that
want to sell you annuity and they’ll make you think
that this is a great investment even if you’re only 25 years old but many of these products
either have surrender charges, long contract periods or hidden expenses that they’re just not as good
as they are made out to be. That being said though,
if you’re trying to invest your money and avoid the stock market, then an annuity could make sense. Now there are many different
types of annuities. You could do a fixed annuity. Now with a fixed annuity,
it’s very similar to a CD in the sense that you’re
getting a fixed interest rate. But it’s different, very,
very different than a CD in that if you want to cancel your CD or if you wanna get your money back, the only thing that you
lose is your interest. You don’t lose your
principle, you just lose the interest that you would have earned. With an annuity you don’t
lose your interest, well, you do lose your interest
but you also potentially lose your principle because they
have a surrender charge. So you might have to pay a 5%,
a 6%, a 7% surrender charge just to get your money back. Now don’t buy an annuity
if you don’t think you want this for the long term. Make sure that once again, you understand what you’re getting yourself into. With an annuity you’re gonna have to sign all this paperwork, all this documentation and it’s going to be paperwork overload. So once again, make sure
that you know what you’re getting yourself into before
you sign the dotted line. Other types of annuities
that will probably be pitched to you are variable annuities,
which are absolutely horrid. Avoid variable annuities,
they are like the life sucker of hidden expenses. If you don’t believe me,
watch the other video where I talk about variable annuities
and why I hate them so much. Another annuity that you’ll be pitched is a fixed index annuity. These are a little bit
better, but once again, you’re being locked in for
a very long contract period and if you don’t need guaranteed income, which if you’re watchin’ this
channel chances are you’re younger so retirement and fixed
income retirement is nothing that you care about, so these
are types of annuities for you you just want to avoid. But once again, this person
is askin’ me how to invest while avoiding the stock
market so just because of that that’s why I have to talk about annuities. So you get where I’m comin’ from. Alright, the next option
investing outside the stock market is life insurance. (sighing) I know. Investing, life insurance, it’s like, does that even make sense? It just seems like an oxymoron, right? So yes, life insurance could
be an investment, you know, if you’ve talked to an
insurance agent, chances are they’ve tried to pitch
you whole life insurance. Maybe they tried to index
universal life insurance. If you want to invest your
money, invest with quotations, and put it into something
that’s safe, just remember that the first several years
of owning this product, all your money that you’re
putting in is going towards the cost of insurance. By the time you actually make any return and we’re talking several
years down the road, could be five years, could be 10 years, before you’re actually
making any money on the money that you put in on your principle. Also, you have the cost of insurance. So the cost of insurance
is going to eat away at any potential return. Also be careful how the product,
how the insurance product is being pitched to you because
I’ve heard several cases where they’ll come to you
and say, hey, we’ve got this insurance product that’s
paying you a 6% dividend. Well that sounds pretty good, doesn’t it? But the one thing they
failed to mention is that the 6% dividend is a gross return, you still have to pay for the insurance, so the cost of insurance. So that 6% gross might end
up becoming like 2.42% net. That’s a big difference
especially when you start running your calculations on
compounding interest, you know, 6% versus 2.42, that’s
a big amount of money you’re giving up. So once again, know what
you’re getting yourself into. Now I had a former client that
was in a unique situation. They came across a large sum of money, we’re talking seven figures plus, and the way that they
inherited this money was part of an estate sale
and they didn’t know if they had to give some of the
money back because of taxes. Now because of that they wanted to invest that money short term. They didn’t want to pay
any surrender charges on their principle and
they wanted to make more than what they could
get at their local bank. So with that we started looking at options and with them we discovered
an index universal life policy that just fit their needs to a T. Now the one thing you gotta
know with index universal life policies and even whole life
policies is that you can look at the same policy
with two different agents and they may look like two
totally different things. The reason behind that is
because you can structure these policies so much
different behind the scenes. You could add additional
riders, you can take off riders, you can reduce your commissions,
you can structure these depending on what the client
is trying to accomplish and what their needs are. So in my client’s case, they
were looking for a safe place to park their money, that
their principle was guaranteed, they didn’t have to
pay a surrender charge, they wanted to make more interest than what their local bank was paying. In this case, this policy,
there was no surrender charge. They actually had the potential
to make more with the market ’cause we could tie it to a S&P index. The principle was protected. It had a dividend that was
paying just under 3% gross on that dividend. Now once again, that’s
gross, that’s not net. Remember we were talkin’ about
6% gross versus 2.42% net. So in this case, a 3%
dividend, I think that the net was like 1.8, 1.9. Now this was a few years ago
so the fact that you could make almost 2% as opposed to
like 0.05% that their bank was offering, it just made a
lot of sense for their money. And in fact, the three
years that they had it they ended up averaging,
I think it was anywhere between 5 to 6% because
the market had done well. So that’s just an example
that yes, there are options that you can invest your
money in life insurance. You have to know what you’re
getting yourself into. You gotta make sure that
you trust that agent, make sure that they’ve
explained everything, that you understand it to a T. Now the fifth option of
investing your money outside the stock market is in investing
into a private business. Now let’s just be straight
up, this is a lot more risky then puttin’ your money in a S&P 500 ETF. So if you’re investing into a
private business, I mean yes, the returns could be phenomenal. You could also lose your shirt. You could lose every single
penny that you put into it. But if you look at
successful entrepreneurs, you look at Gary Vaynerchuck, for example, you know, he’s talked about
all the tech companies that he’s invested into
as an angel investor and has made hundreds of
thousands, if not millions, of dollars by putting
a small investment in. Now you could become an angel investor but you can also invest
into smaller businesses. Let’s say that you have a
family member or a friend that’s opening a retail
business in your area. Well you could invest
money into their business, become a minority equity owner, and then take a percentage of the profits. So that’s a way that you can invest. A friend of mine straight outa college, he and his brother
invested into franchises. The first franchises that they opened were Little Caesar restaurants. They opened up five or six
Little Caesar locations. From there they expanded
to another franchise and started opening Sport
Clips franchises all over the Midwest and last time I
counted, they had like 25 to 30 different franchises,
all of these combined. I mean, they’re doing very, very well. But that’s just another
example that you can invest your money, not into the stock market, but into a private business. So there are tons of different options that you can invest into. Once again, you better
know what you’re getting yourself into and you better
not be putting all that million dollars into one
business, I don’t care how smart you are, trust
me, trust me on that one. Trust me. The sixth option that you
can invest your money into outside of the market is into real estate. Now just like everything
else we talked about, you better know what you’re
getting yourself into. Do you want to invest into
whole sale properties? Do you wanna try to flip properties? Maybe you want to become a landlord and do rental properties. There are tons of different
options that you can do there. But if you don’t wanna become a landlord, you can find somebody, a property manager, that will take care of
those properties for you. A good friend of mine just
bought his first rental property. He bought a condo through
the help of a local real estate agent that
just knows the area well. They looked at several
properties before they finally found one that fit the price
that they were looking for. So now they’ve got this rental
property and they’ve hired a property manager that takes
care of everything for them. So it takes care of finding the rentals, takes care of managing the property and hiring the cleaning services, everything that goes along with that. So the only thing he had
to do was come up with the money to buy the property. So this is the first
one and he’s gonna add several to his portfolio. But once again, it’s just
another way that you can invest your money outside the
market through real estate. Now I’ve talked about Fundrise and a lot of these
crowd-funding platforms. That’s another option
that you can consider if you want to invest
into real estate without having to become a landlord and plus you don’t even have to leave your house. You can just open an
account online, fund it, start investing through Fundrise. Now another way that you can invest, but you got to know some real
estate investors to do this, is that you can become
a hard money lender. So basically what that means
is that real estate investors, they’re always looking out for good deals and if they don’t have money in the bank they’ll have to go to the
bank, apply for a loan, you know, have some sort of line of credit and sometimes that could take
several days to get approved. So with a hard money lender,
if you’ve got cash sitting on the sidelines and you want
to make a good rate of return and you trust this person
to find some good property, they can come to you and say,
hey, I’ve got this property. I need $100,000, I need $200,000. I’ll pay you 7% interest
for 24 months if you loan me the money so I
can go buy that property. So it’s a way to make good
return on a short term loan. And that’s just one example
that you can invest your money into real estate and we’re
not even talkin’ about buyin’ property, we’re just loaning money to a real estate investor. The final option, option number seven, is investing into peer to peer lending. So yeah, you could loan your money to friends and family members. They could pay you an interest
rate and you could make a little bit of money but
then you have that awkward situation where that family
member has to pay you back and you see ’em at the
birthday party and you just avoid them and you try to make
small talk and you’re fuming, you’re boiling because,
you owe me that money, you better pay me back. Well okay, so don’t loan your
money to family and friends but you could loan ’em to different peers that you don’t know and you
can give ’em micro loans and that’s exactly what peer
to peer lending is all about. You can check out several
of my other videos where I talk about Lending Club and the other peer to
peer lending options. With peer to peer lending and Lending Club you can expect to make anywhere
from 3% return on up to 8%. It really depends on how
aggressive you wanna be and how much you wanna
manage the portfolio. For me, my account have
averaged anywhere from 4% to, I think, a high 6%, I gotta double check my numbers on that one. But with me, like, I don’t do anything so I just open the account,
I’ve got an automatic invest where, once again, call
me the lazy investor, but it’s just a way where
I can make decent return without having to manage a portfolio, having to log in every
single day to make trades. Once again, just another
option that you can invest your money
outside the stock market. At the end of the day you have so many different options to invest your money, especially if you’ve
got a million dollars. If you’ve got a million
dollars to invest, I mean, there are more than the seven
options I’ve just outlined. But you’ve got options. The one thing you don’t wanna do is you don’t wanna get to greedy. Something sounds good,
like oh, you could make so much return, that you could
triple your money overnight. Like, it would be nice
to take that one million to three million but
if that doesn’t happen and your one million becomes 500,000 that’s not going to be a good day. And that’s why we talk
about diversification. That’s why we talk about knowing what your getting yourself into. Make sure that ya understand. If you just have this
little bit of hesitation on this investment and if you
should put your money into it then go seek some help, find
a mentor, find a counselor, find somebody that’s
walked this path before you that can give you help
before you put your money into somethin’ that you
may end up regretting. Because I tell you what,
buyer’s remorse when it comes to investing is something
you don’t want to experience. It’s not a good feeling, I promise you. Alright y’all, I hope
you enjoyed this video. Until next time, this is
Jeff Rose reminding you that it’s your money, it’s your life and only you can make it
awesome as long as you invest and you know what you’re doin’. Peace.

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