How would you invest $10 million?
1m – Government bond “bond” – debt.
2m – High dividend blue chip – GM
PS2m commodity / macro hedge funds with a track record of strong risk management and low drawdowns
Nominal bonds lose serious purchasing power in high inflation environments. What’s your long-term view on healthcare? People are living longer, so perhaps healthcare is a good bet. I’m not saying that you need to get this granular, but this is an opportunity to show that you have some ideas more that
To be more specific, as an investor in common stocks you need to focus on total return and make a decision to invest for the long-term, which means at an absolute minimum, expecting to hold each new position for five years provided you’ve selected well-run companies with strong finances and a history of shareholder-friendly management practices.
Ultimately, Any Money You Make from Your Stocks Comes Down to a Hand of Components of Total Return, Including Capital Gains and Dividends
Now that you see this, it’s easy to understand that your wealth is built primarily from:
- An increase in share price. Over the long-term, this is the result of the market valuing the increased profits as a result of expansion in the business orshare repurchases, which make each share represent greater ownership in the business. In other words, if a business with a $10 stock price grew 20% for 10 years through a combination of expansion and share repurchases, it should be nearly $620 per share within a decade as a result of these forces assuming Wall Street maintains the same price-to-earnings ratio.
- When earnings are paid out to you in the form of dividends, you actually receive cash via a check in the mail, a direct deposit into yourbrokerage account, checking account, or savings account, or in the form of additional shares reinvested on your behalf. Alternatively, you can donate, spend, or pile these dividends up in cash.