How would you manage a windfall?

[alexie]

Just wanted to know how would you guys manage a large windfall , lets say $1 000000 and up. Would you quit your job temporarly? Obviously the first things we would do is to pay off all outstanding debt and such. But what would your monthly budget look like? If you were to set $300 000 for monthy budget, how many years would you cover before the amount disappear? Thanks

[Shamou]

Personal finance 101...

First I agree with you that you should pay your debts... but if you are just a little bit wise... you will invest whatever remains and make it grow... that is how you get into "real" money...

I say "real" money because, if we want to be realistic, a million smackarous is not that big a deal anymore...

Also, a wise person does not use money out of his capital if he can avoid it... you invest and out of the return on your investment you take whatever you deem reasonable to enjoy the good things in life...

You get $1,000,000 and you blow it on fast cars and fast women and in less that a few years you'll wish you had never seen that money... because you'll then be broke and your credit line probably shattered...

And the guy who said, "It's better to have had and loss than to never have had at all" simply did not know what the heck he was talking about... trust me...

.

[Lynn 007]

I always told myself I would split whatever I won into 25% portions.

25% went to long term investments (retirement property, blue chips stocks)
25% went to family/friends and charity (mortages, education funds for kids, donations)
25% went to here and now - let's celebrate (travel, new home, boat, cottage, furnishings, shopping sprees in NYC, etc - material things)
25% went to short term investment (medium risk stocks, start up business, etc)

I would use the return on investments from my short term investmetns as my monthly budget so the better I am at investing my money the nicer monthly cushion I will have.

[Brad Isaac]

One advantage about having a small business is that you learn to pinch pennies when needed and spend when needed. I think a windfall for an entrepreneur would not change their life much. It probably won't change mine much either.

[Cassie]

I would take a tiny chunk for a little personal splurge, like a relaxing vacation. Then I'd invest the bulk of it.

[hotwired]

Ok, $1,000,000 and I'm 40. So here's what I'd do

1. pay off any existing debt, EVEN low interest deductible mortgage interest, not because it's the wisest thing money wise, but because it gives peace of mind and it'/s really cool to claim "debt free".

2. put all except $50,000 in long term growth/income mix with professional manager managing (fee only financial planner)

3. continue to work, both my wife and I would put the first $10,000 of our wages into our SIMPLE retirement plans and take $20,000 from the interest generated by our investments to replace it, so the net effect is that we're movig as much "taxable" funds into tax sheltered funds immediately. I'd consider switching to 401 K so I could put around 15k instead of 10k each, but we'd be retiring in 4-7 years anyway. Also put our ROTH investments from our earnings.

4. put $40,000 into my child's college fund. she's 6, and this 40k, if forecasts are correct will be 50% of what she'll need to do 4 years at harvard with all expenses. the other half will come from our funds. Only putting half in is a way of offsetting the risk of her NOT going, or not needing that much. Once it's in there, it's in there and you'll get taxed taking it out. (or at least the earnings)

5. help our parents - take on a few of their bills to ease their lives. Take the entire family to disney at least once so the grandparents (who've never been!!) can enjoy it and also enjoyu the magic of seeing their granddaughter enjoying it.

6. yes, do some fun stuff, NYC, vacays and cruises. Nothing extravagant, but just instead of saying "let's do that someday", we do it on our terms

7. prepare to sell my businesses and completely stop THAT work by age 50 or 2 million dollars, whichever comes first (net worth of 2 million)

[maclinda]

I would have an extended consultation with my financial planner before I touched a penny of it.

However.....I would have some great daydreams in the meantime!

[silicon toad2000]

invest in my current investment plans. I already have investments in blue chip, emerging companies, selected leading funds and property funds. I might expand into some global funds also. Invest in a few houses, bricks and mortar and maybe a commercial property.
definately quit work, I don't want to be taking up a paying job when I don't need to. Then I can donate my time to a charitable organisation.
As far as gifts, I would offer to do something for my parents and buy my father in law a hot rod, that way my wife's step mum can't benefit from it and it would make my father in law as happy as (insert meaningful anecdote here).

[Freelancer]

lol this is an easy one;
Travel the world for a few years while keeping my expenses as low as possible (while remaining relatively comfortable) and earning enough money with my business to pay for all those expenses (shouldn't be hard and loads of free time) while investing the entire million. I'd probably keep it there for 5 years or so not touching any of it and reinvesting the interest.

After 5 years I'd then decide what to do with it...

[JMan]

Start that full-time freelance illustration business I've been wanting to spend my time doing.

On the side, buy properties at auctions. Fix them. Sell them. Repeat.

Take Bettertrades.com courses. Invest wisely. Manage my money.

Give to my church (or rather generate money for my church).

[1000feet]

Originally Posted by alexie

Just wanted to know how would you guys manage a large windfall , lets say $1 000000 and up. Would you quit your job temporarly? Obviously the first things we would do is to pay off all outstanding debt and such. But what would your monthly budget look like? If you were to set $300 000 for monthy budget, how many years would you cover before the amount disappear? Thanks

With a $300000 monthly budget, you would last about 1 quarter (plus a day or two on the interest).

Seriously though, the question is too broad. A lot of the people here seem to like having big bank accounts (or other assets) and see this as an opportunity to get ahead, using luck to go where hard work would eventually take them.

There's other good options though; if you're always thinking about your contribution to society you could give it all to charity (yes, you could invest it and give the gains to charity, but you could also find a charity that does that themselves - bigger pools mean less management costs, unless you have a really special investment option).

If you truly enjoy having the most fun possible with the money available to you, you can get a lot of good memories from spending it wisely, as long as you don't buy something with maintenance costs higher than you can afford later.

I would say the perfect scenario is if you're already doing everything you can to live your ideal life, and you apply the money to those ends in the most effective way possible. This is a bit unrealistic though, and people who are confused about what they want might not get a lot out of it.