Investing $ 1 million can seem daunting – because it is! Still, I have good news for anyone worried about how to grow seven digits of wealth. Investing well for retirement requires certain knowledge and a clear mindset that you can rely on to successfully allocate $ 1 million and see it grow over the long term.
Rather than putting all your eggs in one basket, you should diversify your investments across a large handful of stocks or a few exchange traded funds (ETFs). But that doesn’t mean your choices have to be too conservative. For best results, spread your money across a wide range of securities for a mix of safer and more aggressive investments. If you don’t know where to start, the healthcare industry is a good place to look because it is so diverse in terms of growth potential and risk. Some companies in the healthcare industry are great for high-risk speculation, while others are strong and income-generating. Let’s take a look at some great healthcare stocks for high net worth investors, starting with the less risky ones.
Build stability first
No matter the size of your portfolio, it helps anchor its value around highly reliable companies that have stood the test of time.
Johnson & johnson (NYSE: JNJ) is an exemplary stock that fits this bill. It’s been around forever, operates profitably and pays a dividend that has grown for 58 consecutive years. By adding a proven stock like J&J to your portfolio, you’ll enjoy slow growth growth while protecting yourself against short-term market fluctuations.
While it does not increase its revenue very quickly over time, Johnson & Johnson is unlikely to experience a major decline unless there is a major market crash. Even after a recession, few businesses are in such a good position to rebound. Thanks to its consumer health products that people buy regularly, J&J’s revenue is both recurring and sustainable.
Its pharmaceutical division is constantly developing new drugs, including its potential coronavirus vaccine at a dose that may soon receive regulatory approval. Although the company has vowed not to take advantage of its vaccine during the pandemic, its stock could still see an increase if clinical trials prove positive.
Include a hearty aid of steady growth
With $ 1 million to invest, that’s not enough to preserve your funds; you need it to grow steadily to beat inflation and beyond. So, I think it’s safe to go with a company that has a significant competitive gap to get the best of both worlds: growth and security.
In this vein, Vertex Pharmaceuticals (NASDAQ: VRTX) is a good option. In terms of its fluke, Vertex specializes in the development of drugs to treat cystic fibrosis (CF), and it is the only company of its kind. Cystic fibrosis is a rare disease and there is no cure – but there are several different Vertex products that can make a difference for patients. Specialization in this niche allows it to fully penetrate its market while building an increasingly large body of experience to develop the next drug.
This strategy has paid off for Vertex shareholders over time, and there is no indication that it will stop anytime soon. Its quarterly revenue grew 62% year-over-year according to its latest earnings report, and its stock is expected to continue to grow well into 2021 and beyond.
Dive into more speculative stocks with one or two biotechnologies
Once you’ve established the meat and potatoes in your million dollar wallet, it’s time to expose yourself to the dizzying benefits. This could take the form of a biotech action from a company that does not yet have a product or recurring revenue, such as Medicine delivered (NASDAQ: EDIT).
Editas is trying to develop gene therapies capable of treating or curing hereditary diseases such as sickle cell anemia. The key word here is “try”. He has no plans in advanced clinical trials, and his success is anything but assured. Investing in Editas means betting that its products have a medical merit that will be confirmed in due course. If you’re right, you could double or triple your money, but a clinic setback could be quite expensive, so you’ll only want to put a portion of your funds into it that you could afford to lose.
Considering the stakes, it makes sense to hedge your bets on multiple speculative stocks. Consider one of Editas’ main competitors: CRISPR Therapeutics (NASDAQ: CRSP). Like Editas, CRISPR does gene therapies, and it is still in its early days as a company. But, in between, you will increase your chances of making a big win if either of them breaks through in the clinic in the next few years.
A diversified portfolio is better
To ensure the security of your wealth, you will need to diversify your investments beyond the health sector alone. That way, if the entire healthcare industry is affected, your wallet won’t suffer terribly. A simple way to add broad diversification is to buy shares of a diversified ETF with a low expense ratio, such as SPDR S&P 500 ETF Trust (NYSEMKT: SPY) or Vanguard Total Stock Market Index Fund ETF (NYSEMKT: VTI). These ETFs will give you greater market exposure while minimizing the risks associated with a single sector.
In addition to keeping a large portion of your funds in a diversified ETF, how you should diversify depends on your investment goals. If you are looking for investments that will bring you even more stability as well as income in the form of dividends, the energy sector is a timeless option. On the flip side, if you are further away from retirement and prefer more aggressive growth investments, buy cutting edge technology stocks.
Proper diversification and allocation is crucial for investors, but ultimately it is worthless without developing a strong mindset for your money. Critically, the only A diversified strategy will pay off if you stick to it over time while consistently using good investing practices. Be patient, make calculated and informed decisions, and be confident in your judgment. Resist the urge to sell during short-term disruptions and make sure you believe in the long-term story of every investment. Live this mindset and you’ll be on your way to earning another million.