Investing $1 million may sound intimidating -- because it is! Still, I have good news for anyone fretting 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 watch it increase 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's not to say that your choices should be overly conservative. For the best results, distribute your money across a wide set of holdings to get a mix of safer and more aggressive investments. If you're not sure where to start, the healthcare sector is a good place to look because it's so diverse with respect to the potential for growth and risk. Some companies in the health industry are perfect for high-risk speculation, whereas others are rock-solid and income-generating. Let's take a look at a few excellent healthcare stocks for high net worth investors, starting with the least risky.

Woman in suit looking out a window

Image source: Getty Images.

Build stability first

No matter the size of your portfolio, it helps to anchor its value around highly reliable companies that have stood the test of time. 

Johnson & Johnson (JNJ -0.85%) is one exemplary stock that fits this bill. It's been around forever, operates profitably, and pays a dividend that has increased for 58 consecutive years. By adding a tried and true stock like J&J to your portfolio, you'll enjoy a slow burn of growth while guarding against near-term market fluctuations.

Though it won't expand its revenue very quickly over time, Johnson & Johnson is unlikely to experience a major decline unless there's a major market crash. Even in the aftermath of a downturn, few companies are as well-positioned to bounce back. Thanks to its consumer healthcare products that people buy regularly, J&J's revenue is both recurring and durable. 

Its pharmaceutical division is constantly developing new medicines, including its potential one-dose coronavirus vaccine that could receive regulatory authorization soon. Though the company has promised not to profit from its vaccine during the pandemic, its stock could still see a lift if clinical trials prove positive.

Include a hearty helping of steady growth

With $1 million to invest, it's not enough to preserve your funds; you need them to steadily grow to outpace inflation and beyond. Thus, I think it's prudent to opt for a company that has a significant competitive moat to get the best of both worlds: growth and safety. 

In this vein, Vertex Pharmaceuticals (VRTX -0.92%) is a good option. In terms of its moat, Vertex is specialized in developing drugs to treat cystic fibrosis (CF), and it's the only company of its kind. CF is a rare disease and there's no cure -- but there are several different Vertex products that can make a difference for patients. Specialization in this niche ensures that it can comprehensively penetrate its market while building a larger and larger body of experience to develop the next medicine.

This strategy has paid off for Vertex's shareholders over time, and there's no sign that it will stop anytime soon. Its quarterly revenue grew at 62% year over year according to its most recent earnings report, and its stock is likely to keep gaining well into 2021 and beyond.

Dip into more speculative stocks with a biotech or two

Once you've established the meat and potatoes of your million-dollar portfolio, it's time to gain exposure to the skyward upsides. This could take the form of a biotech stock from a company that doesn't have a product or recurring revenue yet, like Editas Medicine (EDIT -5.62%)

Editas is trying to develop gene therapies that can treat or cure hereditary diseases like sickle cell disease. The keyword here is "trying." It doesn't have any projects in late-stage clinical trials, and its success is anything but assured. Investing in Editas is a bet that its products have medical merit that will be confirmed in due time. If you're right, you could double or triple your money, but a setback in the clinic could be quite costly, so you'll only want to allocate a portion of your funds there that you could afford to lose. 

Given the stakes, it makes sense to hedge your bets across more than one speculative stock. Consider one of Editas's primary competitors: CRISPR Therapeutics (CRSP -3.56%). Like Editas, CRISPR makes gene therapies, and it's still in its early stages as a company. But, between the two, you'll increase your chances of experiencing a large gain if one of them makes a breakthrough in the clinic over the next few years.

A diversified portfolio is best

To keep your wealth secure, you'll need to diversify your investments beyond the healthcare sector alone. That way, if the entire healthcare sector takes a hit, your portfolio won't suffer terribly. An easy way to add broad diversification is to purchase shares of a diversified ETF with a low expense ratio, like SPDR S&P 500 ETF Trust (SPY -1.38%) or Vanguard Total Stock Market Index Fund ETF (VTI -1.44%). These ETFs will give you exposure to the wider market while minimizing the risks associated with any single sector.

Aside from keeping a large chunk of your funds in a diversified ETF, the way you should diversify depends on your investing goals. If you're looking for investments that will provide you with even more stability as well as income in the form of dividends, the energy sector is a timeless option. On the other hand, if you're further from retirement and prefer more aggressive growth investments, buy some high-flying tech stocks.

Proper diversification and allocation are crucial for investors but are ultimately worthless without developing a strong mindset for your money. Critically, the only way a diversified strategy will pay off is if you stick to it over time while consistently using good investing practices. Be patient, make calculated and informed decisions, and have confidence in your judgment. Resist the urge to sell during short-term disruptions, and make sure you believe in each investment's long-term story. Live this mindset, and you'll be well on your way to making another million.