• Large investments can help you compound wealth at faster rates.David Grossman/Pixland/Getty Images
  
  Large lump sums of cash present opportunities for you to generate additional wealth through investing. With effective money management, you may purchase assets that help you establish and preserve independent wealth. Large investment commitments, however, also introduce prospects for significant financial losses. When investing large sums of money, diversification, dollar cost averaging and management control are three possible investment strategies that can improve your bottom line and manage risks.
  
  

Diversification

• A diversified portfolio makes money amid numerous economic scenarios. On a large sum of money, you may be interested in generating capital gains as well as significant amounts of investment income. Investment income includes bond interest and stock market dividends. Over time, it is possible to structure a portfolio that generates enough income to meet your living expenses.
  
  For diversification, the Securities and Exchange Commission (SEC) says that you should buy into different asset classes, industries, and geographic regions. A diversified portfolio may include U.S. government debt, small capitalization stocks, and foreign investments. U.S. government debt, or treasuries, are risk-free investments because of Federal powers to tax and create money for making interest payments. As of 2010, small capitalization stocks feature market valuations of less than $2 billion. Small companies typically expand their profits quickly amid a strong economy. Lastly, foreign stocks and bonds can take advantage of overseas emerging markets at a profit, and stabilize your portfolio amid U.S. recession.
  
  

Dollar Cost Averaging

• Dollar cost averaging, or systematic investing, calls for you to make smaller investments in regular installments, rather than immediately purchasing assets with one lump sum of cash. This automatic system is designed to eliminate the guesswork and psychology from your portfolio. Because of psychology, you may actually be encouraged to buy investments at the top of the market, only to panic and sell these same assets amid stock market crashes.
  
  With dollar cost averaging, you could buy $10,000 worth of investments every first of the month, instead of seeking out the perfect entry point to make one $100,000 investment. During economic declines, you would still follow your dollar cost average strategy and benefit from buying cheap investments. When it is time to sell, you may then gradually liquidate smaller portions of your portfolio over time. Doing so would help you to avoid the risk of selling investments for low prices near market bottoms.
  
  

Management Control

• As a sophisticated investor, you may concentrate your efforts in establishing management control over a corporation. To do so, you would acquire more than 50 percent of a corporation's outstanding common stock, because one share of common stock equals one vote. From there, you can make decisions to replace the corporation's board of directors and hire a new management team for improved profitability. You may even make an offer to buy all of the corporation's outstanding shares and take it back private. Through private ownership, you are better able to grow profits over the long-term -- without being forced to answer to short-term shareholder demands. For example, you may prefer to reinvest profits back into the company, instead of paying dividends to shareholders.