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This is a great forum to post this question due to its activity, sage wisdom among posters and the fact that some here who are retired may be on a fixed income.
What would you do if you came upon $1 million in a lump-sum either from an unexpected inheritance or winning the lottery?
I'd pay off my mortgage, fund an education account for my son and invest the rest.
Then I'd negotiate a reduced hour schedule at work - not stop working completely but without a mortgage to pay, I could afford to cut back some, so I have plenty of time to work around my son's schedule and activities while still funding my retirement savings (which would already be nicely bumped up from the balance of the $1M).
We might travel a little more, have a few more small indulgences but I would not be making large scale life changes.
Pay off the car we have put the rest in a 6 month CD until I find a nice retirement property in a mild climate +-$225k. Then I would get my three grand kids and annuity payable @25 years old. I'd invest $50K for the newborn baby, $75k for the 10 y/o and $100k for the 13 y/o. One time gift to my three kids of $14.5k a piece for three years to avoid taxes. Another $100k in a 529 for college for anyone of the grands, but if you don't go I keep my money
I always want to get a really nice ring for my wife, and maybe Europe, Asia and Africa for a month say $30k all in. The rest would be in some investment plan to give us another $2k a month for at least twenty years once we're both retired.
Pay off the car we have put the rest in a 6 month CD until I find a nice retirement property in a mild climate +-$225k. Then I would get my three grand kids and annuity payable @25 years old. I'd invest $50K for the newborn baby, $75k for the 10 y/o and $100k for the 13 y/o. One time gift to my three kids of $14.5k a piece for three years to avoid taxes. Another $100k in a 529 for college for anyone of the grands, but if you don't go I keep my money
I always want to get a really nice ring for my wife, and maybe Europe, Asia and Africa for a month say $30k all in. The rest would be in some investment plan to give us another $2k a month for at least twenty years once we're both retired.
I would invest all of the money in a few large cap dividend stocks that pay roughly 5% per year(ATT, Verizon come to mind). This investment would throw $50k per year in income forever as long as the companies stay in business and continue to pay the same or higher dividend going forward. If you are young and like your work, allow the income to be automatically reinvested so the million can grow through compounding (as well as regular stock value growth).
Take some finance/money management classes before you spend any of the money.
Don't bother investing in 529 accounts, keep the money in your name.
don't pay off your mortgage, you will need a tax deduction.
draw up a will and trusts for your children
Start a charitable trust.
Thinking about stuff to buy is one of the biggest mistakes anybody that comes into money can do.. Boxers and athletes driving around in expensive cars are the dumbest thing to ever do because those people will likely not continue making that kind of income.
Last edited by gunslinger256; 08-12-2015 at 07:10 PM..
20% -----> tithe = $ 200,000
50% -----> buy a place to live in Israel = $ 500,000
30% -----> living expenses for the next 15 years in Israel = $ 300,000
my grown children are all financially very well taken care of already. A portion of the "living expenses" funds travel for me to see the kids on a regular basis, wherever they happen to be living in the world.
The $1 million is big amount for most people in all countries.
If you get the $ 1 million, I highly suggest you invest that money:
1. Build a new business. There are a lot of ways for building a new business. And also business kinds to pick.
You pay attention stuff what become high demand in society and you get this opportunity to make money. You need build awareness of brand of your business and also build your own list. Budget: $500K. Target: profit at least $100K annually.
2. Buy 2 - 3 properties mainly land houses - budget $500K. Then you search people to rent your properties while you wait the prices rises to sell later.
After you invest the total $1M, hope you get ROI (return on investment) in next years and make profit annually.
I think that owning a business and buying rental houses is a good idea. I don't think I'd put $500k in just one business though. Businesses are more risky than real estate.
I recently read about the couple that started the very successful Forever 21 chain. Their first store was 900 sq ft in a part of L.A that is still not glamorous. This was in 1984. They began expanding by opening a new store every 6 months. Their average store size is now a lot bigger at 38,000 sq ft.
Their sales are over $3billion a year and they are multi-billionaires. They probably opened their first store with less than $100k I wouldn't be surprised. Prior to being in the clothing business , the husband did janitorial work, worked in a coffeeshop and some other lower paying jobs.
Pretty amazing story.
For real estate I would also recommend using leverage instead of cash,especially since interest rates are so low now. This would allow one to buy a lot more properties. If they are in areas where growth is likely and demand for rental property is strong then there isn't much risk.
I would invest $200k of it in a couple different semi absentee franchises. I'd tithe, pay off our debt, buy a house and two new cars. Take a vacation and buy new furniture and wardrobe for all 4 of us. Cut back to part time work until the franchises started paying off and made enough income to expand themselves, then I'd quit my job.
The remainder of the money (about $300k) I would invest in various stocks and bonds with the advice of a financial planner, but also set some of the funds aside for the kid's college.
Are there any franchises in particular you are interested in?
What would you do if you came upon $1 million in a lump-sum either from an unexpected inheritance or winning the lottery?
Be specific; thanks.
I would retire six months from now instead of a year from now. Reason being is that my boss wants me to train my replacement over a six-month period. Then, the first 10% goes to church, next pot pays off the mortgage, third pot pays for a new car, (my current three cars are a 1984 diesel with 140,000 miles, a 1989 coupe with 220,000 miles and a 2006 SUV hybrid with 190,000 miles - I'll need something else eventually). The rest I'd put into my TIAA-CREF account. Oh, I just might splurge on a rowing shell. That's the only toy I'd like to get that I don't already have.
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