Where to Invest $1 Million Right Now Six experts offer timely ideas on where to

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Where to invest
Where to Invest $1 Million Right Now
Six experts offer timely ideas on where to deploy a big chunk of cash.

Illustration: Isabel Seliger
By Kristine Owram
November 27, 2018 | Updated on November 16, 2022
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Uncertainty has been the name of the investing game for most of 2022.

Consider the reaction to cooler-than-expected US inflation data for October: Investors were euphoric, with the S&P 500 posting its best reaction to a CPI report on record. However, a key part of the yield curve also inverted, indicating the risk of a recession is growing.

Meanwhile, central banks around the world are expected to keep hiking interest rates until inflation is firmly under control, and the northern hemisphere is heading into what could be a long, cold winter of high energy prices resulting from Russia’s war on Ukraine.

The lack of clarity on the future makes it difficult to know where to put your money, especially if you’re a high-net-worth investor. We spoke to six experts about where they’d invest $1 million right now. Ideas include municipal bonds, European and Japanese equities, and dividend-paying US stocks like Exxon Mobil and PepsiCo.

We also asked our experts how they would deploy $1 million toward a personal passion project. Suggestions range from investing in farmland to opening a language school to splurging on a VIP trip to Qatar for the World Cup.

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Kent Insley

Chief investment officer, Tiedemann Advisors

At Tiedemann, one area in the public markets that we find super interesting is energy infrastructure and assets that are poised to benefit from the transition away from higher-carbon sources of energy, like coal. These include publicly traded infrastructure companies in the midstream energy sector, such as natural gas pipelines, storage facilities and LNG exporters. That also includes renewable energy developers in the form of regulated utilities and publicly traded infrastructure partnerships.

You can create a portfolio of 20 to 30 companies that trades at a valuation discount to the S&P 500, has a dividend yield near 5% and a growth rate that is more stable but equal to the market. You can position yourself to benefit from this structural growth opportunity. These are also real assets that provide inflation protection, given their replacement cost rises over time, and their customer contracts include inflation escalators, which provide a natural hedge.

Another way to play it from Insley: A personal passion of mine and priority investment area for us at Tiedemann is venture capital focused on climate solutions and inclusive innovation. We think we partner with some of the best venture firms that are focused on this area. They have already demonstrated a successful track record and process of investing in clean tech, battery storage, carbon capture, and the electrification of everything.

The reason deals are still getting done today in this area — whereas other parts of venture capital have slowed significantly — is people recognize the sheer size and scale of the addressable market. There are studies that suggest we’re gong to need to spend $32 trillion over the next decade just to meet the carbon-reduction targets that the world’s largest economies have set. We think we have found some of the best in the industry to execute on that opportunity. And the companies that they have in their portfolio, they never really experienced the valuation bump that other segments of the tech industry did. Therefore, we’re being offered what we think are very attractive valuations and tackling some of the world's biggest problems. — Amanda Albright

Maria Elena Lagomasino

Chief executive officer, WE Family Offices

I’d put it into investment-grade muni bonds. In this kind of environment, you don’t really want excitement, you want security. I think you want a decent return and you want to basically be in a low-risk situation. You can get a return between 6% and 8% on a tax-adjusted basis.

State and local governments are in great shape financially. They got a lot of money transfers from the federal government during Covid. Then the economy came back from Covid and their sales taxes increased as people went out and spent more money. And their property taxes are increasing because property prices went up over the last two years.

Another way to play it from Lagomasino: My passion is to support fellow entrepreneurs. Having been born in Cuba, I would love to be able to make a larger impact on Cuban micro-entrepreneurs. I currently work with a foundation, Proyecto Cuba Emprende, that supports business training to help Cuban micro-entrepreneurs acquire skills to grow their businesses. An extra million dollars to this project would go a long way. Since 1960, there has been no private sector in Cuba, so these business skills were lost. Now that the government allows for some forms of private enterprise, there is an opportunity to train these entrepreneurs. This way, they can support themselves and their families, create jobs, and become part of a “private” sector. — Amanda Albright

Marko Papic

Partner and chief strategist, Clocktower Group

Doom and gloom is all the rage right now, with bull-bear spreads plumbing decade lows, an indicator that everyone and their chocolate Labrador is bearish. However, investors may be missing the macro setup, which is increasingly looking like early 2016.

First, nearly every developed-market central bank has already committed to some sort of a pause (dare we say, “pivot?”). Even the FOMC took the hint. The world is just waiting on Jay Powell to come to the consensus view of the median central banker, which is far more dovish than Powell’s latest press conference performance. Second, China has begun to stimulate the real estate sector, with the PBOC also reviving the all-important pledged supplementary lending facility, which in 2016 funded the shanty town renovation program. With rumors swirling that Beijing is also at the end of its patience with its Covid Zero policy, all signs are pointing to a paradigm shift in China.

If the Fed pivots and China puts a floor in growth, 2023 will be a year to deploy assets outside the US, particularly in European and Japanese equities (our favorites are the unloved industrials, commodities, copper and oil), and emerging markets (Latin America specifically, but also Indonesia and South Africa).

What about China itself? It is an absolute fact that the end of Beijing’s “collective leadership” makes the country more brittle and difficult to invest in over the long term. However, as a short-term trade, investors should take Chinese stocks seriously in 2023. Commodity stocks, consumer-oriented ADRs, and health-care companies should all benefit from Beijing’s pivot.

Another way to play it from Papic: I suggest investors get a taste of global multipolarity by blowing $100,000 on a VIP trip to Qatar to watch the World Cup. The field of competitive soccer nations is as wide open this year as ever, which makes the tournament a great comparison to the geopolitical era that we are in. It seems both the World Cup and global power are up for grabs. A front row seat to the 2022 World Cup would be a great way to see a different sort global volatility up close and personal! — Suzanne Woolley

Rob Burgeman

Senior investment manager, RBC Brewin Dolphin

The outlook for 2023 is pretty cloudy, with a global economy already hammered by inflation succumbing to the effects of rising interest rates. Whether we enter a technical recession or not is still under question, but it seems certain that we are not going to return to the kind of economic conditions we operated under between the great financial crisis and 2021. It turns out that money isn’t free, and that the old adage “turnover is vanity, profit is sanity,” might just have some validity after all.

Against this background, we favor US markets. US interest rates have been the first to move upwards dramatically, propelling the dollar to multi-year highs. This has, in turn, created an enormous headwind for the earnings of large US multinationals to sail into. However, US interest rates are also likely to be the first to peak — probably in the first quarter of 2023 — and from there markets will start to look forward toward lower, not higher, rates. It should also mark a peak to the US dollar. As gravity reasserts itself and the dollar falls to a more normal relative range, this is also likely to act as a tailwind rather than a headwind to US earnings.

We like a combination of US quality growth and US quality income over the months ahead. As economic conditions worsen, growth — real growth, that is, rather than the mirage of growth created by cheap money — is likely to attract a premium to reflect its relative scarcity, which should help to underpin valuations. At the same time, moderating inflation and static, if not falling, interest rates will make the relative attractiveness of decent dividend yields more attractive.

Quality is, of course, a very subjective measure, but it really relates to the financial solvency of a company and how well it can weather an economic downturn and higher interest rates.  Examples of US quality growth would include companies like UnitedHealth, Visa, Microsoft and Charles Schwab. In the quality income bucket, I would include companies like Exxon Mobil, Home Depot, Procter & Gamble, JPMorgan and PepsiCo.

Another way to play it from Burgeman: My personal love is foreign languages, not just for the ability to communicate in a tongue other than your own, but also for the awareness it brings to cross-cultural communication and an appreciation of different and alternative viewpoints to issues. Opening a language school, preferably in a city such as London, which is already one of the most multicultural and cosmopolitan cities in the world, represents a wonderful opportunity to help to foster these skills. — John Stepek

Megan Horneman

Chief investment officer, Verdence Capital Advisors

The first thing I would do is to dollar cost average. I would put a portion of the money into the market, especially those areas that have been the most under-loved — that would be small- and mid-cap stocks. I would also start to take a look at developed international stocks, Europe specifically.

We are further into the bear market than average bear markets tend to be, so you have to start looking at ways to get into this market. I would still avoid large-cap tech, but there’s a lot of room in small- and mid-cap value, particularly financials, and room to go in the large-cap value space as well.

Small- and mid-cap names are much more domestically insulated. Even though we are expecting weaker economic growth domestically, you have to look at what the market is pricing in, and small- and mid-cap stocks have taken the brunt of the selloff. You also won’t have that currency headwind that a lot of the large-cap companies are exposed to.

For tech, the valuations are still not pricing in the expectations for some more earnings downgrades into next year, as well as the interest rate environment. We have seen a big correction in valuations but I do think there is still room to go.

Short-term rates are offering attractive yields, so you could even do some short-term Treasury bills. You could do some short-term corporate or short-term municipal bonds. You can ladder that out, so you can earn some yield for a short period of time and as that rolls off, roll that into the market.

Another way to play it from Horneman: On the real asset side of things, investing in farmland could give you consistent cash flow and a potential hedge against inflation — there’s some good opportunities in the private side of the market. Real assets are something you can hold onto for a long period of time.

I wouldn’t just buy a farm, I would do this on the private side of the market where there is a manager who is managing multiple different pockets of land for you, one that has a track record of finding land. There are private-equity-managed funds that would do this.

Right now there are food security issues that we’re having globally because of what is going on with Russia and Ukraine. It’s highlighted the importance of bringing some of this production back home. — Claire Ballentine

Katie Nixon

Chief investment officer at Northern Trust Wealth Management

We always take a goals-driven approach with our clients, emphasizing the importance of aligning your portfolio and investment strategies with your financial goals. That is always important, but today it is absolutely critical. The good news is that the higher interest rate environment of today makes goal funding a little easier: You can fund goals in the future with fewer dollars of fixed income.

For investors with additional liquidity today, we would ask: Are there goals that you would like to de-risk?  Have your financial goals changed?  If the answer there is “no,” we would recommend the following:

Buy TIPS: Make sure that you have the appropriate level of TIPS (Treasury Inflation-Protected Securities) in your fixed-income portfolio. Inflation is most pernicious around lifestyle spending, and we want to be sure that investors can fund their real level of required or desired spending — after inflation.
Diversify across global equities: Since the global financial crisis, the market has been strongly dominated by US equity performance; however, we are in a different environment today. While we are not trying to time the market, we are cognizant of the significantly lower valuations in developed markets outside of the US. These discounts reflect a good deal of bad news priced into these markets, so if you don’t have equity allocations outside the US, now is the time to look at investing in Europe, the UK and Japan.
Develop portfolio diversifiers: Do you have a thoughtful allocation to the right hedge fund strategies that can help to dampen overall portfolio volatility? Not all hedge funds provide this, so it is critical to “know what you own” and have access to the funds and strategies that provide durable diversification benefits. Most funds simply replicate exposure to market beta (equity risk) that investors already own in their portfolios. The hedge funds that provide actual diversification benefits typically have exposure to factors investor do not own: unique and idiosyncratic risks, systematic factor strategies, or even alpha/skill.
Another way to play it from Nixon: I am intrigued by the opportunities to support female founders, a group that has historically been challenged to raise funds. In 2021, women founders raised just 2% of venture capital money; the International Finance Corp. also found that women hold only 10% of all senior positions in private equity and venture capital firms. With current market conditions, it is probably even more difficult for these diverse entrepreneurs and their businesses to get funding. So now is the best time to lean in (pun intended!) and work with a VC firm to fund a female-led business. — Charlie Wells

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