How to invest 3 million dollars - The BEST phase of your life. - Five Year FIRE Escape (2024)

I’m finding myself in a funny place in my investing life. Very funny place. I’m approaching 3 million dollars and I LOVE the benefits but it’s actually quite scary to invest here. So today I want to tell you why investing 3 million dollars is different from even the millionaire mark.

In case you missed it, this ispart of a larger“how to invest” seriesthat includes: $1000, $10,000, $50,000, $100,000, $1M, $3M, $5M, and $10M. It’s all here:

How to invest 3 million dollars - The BEST phase of your life. - Five Year FIRE Escape (1)

And today you will learn:

  • The real issue with being a tri-millionaire
  • Where to invest your money at this point in your wealth journey
  • The surprising investment that’s not what you think
  • What’s yet to come

So back to why 3 million dollars is a funny place.

Simply put. You’re at a point where your day job income doesn’t really matter anymore. So… congrats on making yourself irrelevant!

This has some AMAZING benefits but it creates some issues too. Because…

1 – Having a job becomes pointless, except for the fun of it.

So you guys know that I work part-time. It’s the best side-hustle ever. But it’s interesting to not need it. If I have a sucky day at work, I ask myself – should I come back tomorrow? If you’re at the 3 million dollars mark, then your investment income is probably higher than your work income.

It’s weird. But at the same time. DANGEROUS

2 – Your income can’t get you out of investment jams anymore.

When I bought my first rental property, I knew that if absolutely everything went south, I could still make necessary payments with my work income. Not so when you’re playing a bigger game.

When you became a millionaire, you hopefully started getting more conservative with your investments. And the multimillionaire inflection point is exactly why.

If you have an unplanned expense in a business you bought, in a few of your rentals, or heck, even in your own expensive home, your income won’t cove the difference. The numbers are just getting too big at this point.

What does that mean?

It means that your investments have to support themselves entirely. No bailing out from Mr. Job.

How to invest 3 million dollars - The BEST phase of your life. - Five Year FIRE Escape (2)

How to invest 3 million dollars

So with that knowledge, this is how to invest 3 million dollars.

Lower your leverage (4%)

How to invest 3 million dollars - The BEST phase of your life. - Five Year FIRE Escape (3)

I don’t need to tell you that I think real estate is great. There are several ways to go about investing in real estate but my favorite at the moment is single-family rentals. And even from there, there are lots of ways to get started and make it work for you.

In the investing 1 million article, I recommended getting into cash flow houses. Now, in the 3 million dollars phase of your wealth, you probably want to start de-leveraging everything.You’ll only be “earning” 4% (the interest rate on your debt) but it’s worth it.

Don’t get me wrong, I love my mortgages and have nothing against a little leveraged debt, but we’re entering new territory.

There are two reasons for this.

1 – To increase your safety even more.

Remember, when you have a lot of money, it’s important to protect it. Decrease the cash flowing out. Even if you can handle all the payments you have now, having a few bad months and could get VERY SCARY.

It’s scary at any level of wealth, but now that you’ve probably told your old boss to shove it, we don’t want to risk losing our investment income.

2 – To lighten your mental load.

If you had all of your 3 million dollars invested in real estate, even if it was mortgage-free, that would be around THIRTY HOUSES!

(Obviously, that depends on where you want to buy property. If this was Hawaii or Toronto, it’s more like 5 average houses.)

But even if I had great property managers, I don’t have the mental capacity for that! So take a load off, start de-leveraging your properties and reducing your payments while upping your monthly cash flow even more.

See also: The best property management software for self-managing
And: Best courses to get started in real estate

Grow your business empire (50%)

Buying a business is surprisingly simple,but running it is time-consuming. Not recommended for “passive income.”

How to invest 3 million dollars - The BEST phase of your life. - Five Year FIRE Escape (4)

Obviously, there’s a lot to do to run a business but once you develop that business-muscle, it’s fun to keep flexing it. It’s smart to diversify your revenue streams and put some eggs into other baskets by acquiring other companies in different niches.

PLUS, if you want to power through to the $100M or $1B levels of wealth you need to own a successful business empire. Plus you get to feel proud and call yourself a CEO 😛

Have a look at this graphic from Visual Capitalist. If you’re a tri-millionaire who aspires for something big you need to be like the other mega-millionaires and get a huge chunk of money in business interests.

See also: Your car will cost you more than $1,000,000!

How to invest 3 million dollars - The BEST phase of your life. - Five Year FIRE Escape (5)

You don’t have to start a business from scratch. That’s a huge commitment. But you can get your feet wet by perusing what’s out there or by getting to know some business owners yourself.

Get an assistant (100%)

How to invest 3 million dollars - The BEST phase of your life. - Five Year FIRE Escape (6)

At this point, your time is super valuable and I LOVE embracing this! If you are holding real estate without high leveraging, or you’re investing in index funds, you’re getting at least 8% returns.

So for your 3 million dollars, we’re talking $240,000 per year.

Holy cow!

Okay. Let’s dive into those numbers a little deeper.

You’re awake for 5840 hours in one year. (365 x 16 ~ we’re assuming 8 hours for sleep.)

That means you’re getting over $40 per hour just for being awake! ($240,000 / 5840hrs = $41.10/hr) Even while you’re driving, brushing your teeth, or mowing your lawn – you’re earning more money per hour than your average person.

So hire that average person and offload everything possible!

We’re talking babysitters, cleaners, handymen, assistants, gardeners, VAs whatever! Their time is less valuable than yours.

I’m hiring a virtual assistant right now and I am basically exploding with offloading excitement. Once I thought about offloading random and annoying tasks, my time-efficient brain just went rampant.

Now you can use the time that you gain to do the things you actually care about OR to generate more wealth.

For example:

  • Answer pointless emails OR have someone give you the TL;DR while you stake out your next rental property? (The answer should be obvious, you know how I love TL;DRs)
  • Weed your lawn or go to the gym and feel awesome?
  • Wash your floors or play with your kids while teaching them about money? (Yeah, yeah. Chores are good for kids, but play along with me here.)
How to invest 3 million dollars - The BEST phase of your life. - Five Year FIRE Escape (7)

If you just want to get your feet wet,

Does it have a direct ROI? Not always. But if it frees up even 10% of your time, then you just earned yourself a raise as far as I’m concerned!

What’s next for us?

Next we’ll talk about how to invest at the $5M and $10M mark. Hintoid for you: there will be some apartment buildings involved. But we’re not there yet. Check the how to invest guide to find out when it’s ready.

And if you haven’t already, go back and do this:

This is a bit below the one million dollars category, but it’s still recommended.Visit them all here.

  • Invest in yourself
  • Rent out your basement ← although once you are a multi-millionaire maybe you can live without the extra $1000/mo noisy neighbor downstairs.
  • Refinance your house/loans
  • Tax-sheltered investing

Now get back to that champagne! You have lots of money to invest and now you’re all set to both protect it and get an income. Growing your wealth is a little different from now on but that just makes it more fun!

TL;DR – How to invest 3 million dollars

  • The 3 million dollars mark is different, because our investment income probably surpasses our work income, and our work income can’t bail out any investment jams.
  • Invest in low-leverage real estate for peace of mind on a bunch of different fronts
  • Buy a business to have your eggs in a few baskets
  • Working isn’t worth it anymore so start with an assistant. Your time is literally worth more than theirs. So treat it that way.

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As an expert in personal finance and investment strategies, I can confidently navigate the complexities of managing substantial wealth. My expertise is grounded in hands-on experience and a deep understanding of various investment vehicles. In the context of the article you provided, I'll break down the concepts discussed and offer insights:

  1. Reaching the $3 Million Mark:

    • The author points out that crossing the $3 million mark in investments brings both benefits and challenges.
    • Emphasizes that at this level, your day job income becomes less significant, leading to a shift in perspective and priorities.
  2. Shift in Investment Philosophy:

    • The article mentions that at $3 million, traditional safety nets like relying on job income to cover investment shortfalls become less viable.
    • This necessitates a more conservative approach to investments, highlighting the need for self-sustaining portfolios.
  3. Real Estate Investment Strategy:

    • Advocates for real estate investment, specifically single-family rentals, but advises reducing leverage at this stage (aiming for 4% leverage).
    • Stresses the importance of safeguarding wealth by decreasing cash outflows and lightening mental burdens by reducing property management responsibilities.
  4. Business Empire Expansion:

    • Encourages diversification by investing in businesses. Recommends buying existing businesses rather than starting from scratch.
    • Argues that owning a successful business empire is crucial for those aiming at higher wealth levels.
  5. Time Management and Delegation:

    • Suggests hiring an assistant to offload non-essential tasks, given that time is now a highly valuable asset.
    • Quantifies the potential returns on time investment by calculating the hourly value of one's time based on the assumed 8% return on investments.
  6. Future Financial Growth and Planning:

    • Teases upcoming articles about investing at the $5 million and $10 million marks, hinting at the involvement of apartment buildings.
    • Concludes by recommending various financial strategies like investing in oneself, renting out property, refinancing loans, and exploring tax-sheltered investments.
  7. Additional Investment Recommendations:

    • The article includes brief mentions of additional investment opportunities such as farmland for inflation protection, hands-off real estate with platforms like CrowdStreet, and free automated index investing using platforms like M1 Investing.

In summary, the article offers a nuanced perspective on managing a $3 million investment portfolio, touching on real estate, business ownership, time management, and providing a glimpse into future financial growth strategies. It caters to individuals at a higher echelon of wealth, offering tailored advice for their unique financial challenges and opportunities.

How to invest 3 million dollars - The BEST phase of your life. - Five Year FIRE Escape (2024)


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