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If I win Powerball I will take the cash, remove 10% for pure grins, and invest the rest as advised by my current investment company as well as a couple others. After that it is FTA (Fun Travel Adventure as the Army add once claimed.)
Putting your money into banks is quite possibly the worst thing you can do with it other than spending it like an NFL draft pick.
You could easily just open a Fidelity account, and using low-cost ETFs buy a portfolio of
40% Long-term Bonds
30% S&P 500
15% Intermediate-Term Bonds
7.5% Gold
7.5% Commodities
That portfolio has survived a lot of tough markets, even in 2008 it was barely down.
If I came into $5,000,000 I would pay off my home and any other debt I had, and then put the rest in a diversified portfolio of income-generating investments or even that asset mix above. Even at just 3% and spending $1,000,000 of it on debts and just buying fun stuff and taking a vacation, I'd still earn $120,000/yr from my money just sitting in my Fidelity account.
That's a guaranteed way to lose a lot of money. Long term bonds will take a bath as soon as the Fed starts raising interest rates. Short term high yield bonds or international bonds are the only bonds you should own right now. Stocks are less certain but still shaky. Some of the stock holdings should be international and emerging markets. Gold is a commodity, so you are advising putting 15% into commodities. If you are a gambler, you have a chance of making big returns or getting cleaned out. You may as well take your money to the casino. They take about the same cut.
I would pass on the commodities and put 10 percent in a REIT.
Your point is obvious but bear in mind that due to inflation in 100 years 50k will be NOTHING.
That is an extreme example - one, few people live to be 100, and two, most people aren't going to come into 5 million dollars the day they are born. They could be 30, or 50, or whatever. And most people will probably work anyway and have other savings and qualify for social security and all of that other fun stuff.
Assuming you got a windfall and continued functioning like a normal person, and lived the life of a normal person, that $5 million could easily last the rest of your lifetime, even at 0%.
This is why poor people who win the lottery go broke. They always think they know how to manage millions of dollars (even though they never have) and make enemies in their minds of the very people whose jobs it is to help you manage and make even more money.
Why is it that such advice from professionals would be different in each case that everyone would need their own financial advisor? Why can't someone experienced, even if on the internet, just give strong advice on what they can do with $5mil? It's $5mil in the same market we are all dealing with. If there's good advice out there, why is it so elusive that it can't simply be stated here?
I don't think FDIC insurance is a major concern for most people.
1) Assets are never 100% safe from losing their value, even if they are insured by the FDIC
2) Nobody with lots of money tosses it in a savings account
you should look into money markets, treasuries or other similar types of securities.
Money markets, why? All of the great returns of a savings account but with the upside that it is possible to have a negative annual rate of return?
And FDIC, while not a 100% guarantee, is as close as it gets. The first time the FDIC defaults on anything it is almost a given the resulting panic would guarantee a collapse of our banking system. Of all financial systems that is probably the absolute last one the federal government would let fail.
Why is it that such advice from professionals would be different in each case that everyone would need their own financial advisor? Why can't someone experienced, even if on the internet, just give strong advice on what they can do with $5mil? It's $5mil in the same market we are all dealing with. If there's good advice out there, why is it so elusive that it can't simply be stated here?
Because it requires an educated guess on what will happen in 5 years, 10 years, 20 years, or more. Nobody has a crystal ball. If you think the stock market will continue to function more or less as it has historically, then diversified investments seem to make the best long term sense for stable growth. If you think the financial markets may collapse sometime in the future and tangible financial vehicles will be the only thing still of value, then putting money in gold and silver is the way to go. And on and on.
Nobody really knows, so that is why there isn't one base answer. However, you can use traditional models to come up with a few standard paths of investment that will likely at least keep up with inflation (assuming nothing major changes).
Why is it that such advice from professionals would be different in each case that everyone would need their own financial advisor? Why can't someone experienced, even if on the internet, just give strong advice on what they can do with $5mil? It's $5mil in the same market we are all dealing with. If there's good advice out there, why is it so elusive that it can't simply be stated here?
Because all the so-called "experts" have different ideas and theories on what you should do with your money! None of them really "know" anything ---- they all just use the same old tired advice they've been spewing for years. If the stock market or anything else was a guarantee, everyone would be rich, wouldn't they?
Because all the so-called "experts" have different ideas and theories on what you should do with your money! None of them really "know" anything ---- they all just use the same old tired advice they've been spewing for years. If the stock market or anything else was a guarantee, everyone would be rich, wouldn't they?
You're assuming that most people are wise enough to invest their money. Most Americans don't, and many of them can't afford to do so (or more believe they can't).
Look at the richest Americans to day, and see how of them hold their wealth in stock. That should speak for itself. The people who invest DO get rich, and the people who don't stay poor.
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