Investing $ 1 million might sound intimidating – because it is! Still, I have good news for anyone who is worried about how to grow seven figures wealth. Being able to invest well for retirement requires some knowledge and a clear mindset that you can rely on to successfully allocate $ 1 million and see it grow in the long run.
Instead of putting all your eggs in one basket, diversify your investments into a large handful of stocks or a few exchange traded funds (ETFs). But that does not mean that your choices should be too conservative. For best results, spread your money over a wide range of investments to get a mix of safer and more aggressive investments. If you are not sure where to start, healthcare is a good place to check because it is so diverse in terms of potential for growth and risk. Some companies in the healthcare industry are ideal for high-risk speculation, while others are rock solid and revenue-generating. Let’s take a look at some excellent healthcare stocks for investors with high net worth, starting with the least risky.
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Build stability first
No matter the size of your portfolio, it helps to add value to highly trusted companies that have stood the test of time.
Johnson & Johnson (NYSE: JNJ) is an exemplary stock that fits this bill. It has existed forever, working profitably and paying a dividend that has increased for 58 consecutive years. By adding a proven stock like J&J to your portfolio, you enjoy a slow growth in growth, while guarding against short-term market fluctuations.
Although it will not expand its revenue rapidly over time, Johnson & Johnson is unlikely to experience a major decline unless there is a major market crash. Even in the wake of a downturn, few companies are so well positioned to bounce back. Thanks to its healthcare products that people buy regularly, J & J’s revenue is recurring and sustainable.
Its pharmaceutical division is constantly developing new drugs, including the potential single-dose coronavirus vaccine that may soon be authorized. Although the company has promised not to take advantage of its vaccine during the pandemic, its inventory could still increase if clinical trials are positive.
Includes solid support for steady growth
With $ 1 million to invest, saving your funds is not enough; you need it to grow gradually to surpass inflation and beyond. So I think it makes sense to opt for a company that has a significant competitive edge to get the best of both worlds: growth and security.
In this vein, Vertex Pharmaceutical Products (NASDAQ: VRTX) is a good option. In terms of its capacity, Vertex specializes in the development of cystic fibrosis (CF) drugs, and is the only company of its kind. CF is a rare disease and there is no cure – but there are different Vertex products that can make a difference for patients. Specialization in this niche ensures that it can enter its market comprehensively and build up a greater and greater experience to develop the next medicine.
This strategy has borne fruit for Vertex’s shareholders over time, and there is no sign that it will stop any time soon. According to the most recent earnings report, its quarterly earnings grew by 62% year-on-year, and its share is likely to continue to rise until 2021 and beyond.
Immerse yourself in more speculative stocks with a biotechnology or two
After determining the meat and potatoes of your million-dollar portfolio, it’s time to get exposure to the heights. It can take the form of a biotechnological share of a company that does not yet have a product or a recurring income. Editas Medisyne (NASDAQ: EDIT).
Editas is trying to develop gene therapies that can treat or cure hereditary diseases such as sickle cell diseases. The key word here is ‘try’. There are no projects in clinical trials in the late stages, and their success is anything but assured. Investing in Editas is a bet that its products have medical merit that will be confirmed over time. If you were right, you could double or triple your money, but a setback in the clinic can be very expensive, so you will only want to allocate a portion of your money there that you can afford to lose.
Given the interests, it makes sense to hedge your bet into more than one speculative stock. Consider one of the most important competitors of Editas: CRISPR Therapeutics (NASDAQ: CRSP). As with Editas, CRISPR makes gene therapies, and it’s still at an early stage as a business. But between the two, you increase your chances of making a big profit if one of the following years makes a breakthrough in the clinic.
The best is a diversified portfolio
To keep your wealth safe, you need to diversify your investments beyond the healthcare sector. If the entire healthcare sector gets a hit, your portfolio will not suffer terribly. An easy 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 Equity Index Fund ETF (NYSEMKT: VTI). These ETFs will give you exposure to the broader market and minimize the risks associated with any sector.
Aside from keeping a large portion of your funds in a diversified ETF, the way you need to diversify depends on your investment objectives. If you are looking for investments that will provide you with even more stability and income in the form of dividends, the energy sector is a timeless option. On the other hand, if you are further from retirement and prefer more aggressive growth investments, you need to buy some strong tech stocks.
Proper diversification and allocation are crucial for investors, but are ultimately worthless without developing a strong mindset for your money. Criticism is the only a diversified strategy will pay off if you stick to it over time while consistently using good investment practices. Be patient, make calculated and informed decisions and trust in your judgment. Resist the urge to sell during short-term disruptions, and make sure you believe in the long-term story of each investment. Live this mindset, and you’re well on your way to earning another million.