What Would You Do With $10 Million?

What would you do with $10 million?

For the record, I believe having at least 10 million dollars is the ideal amount of money to retire early today. Given interest rates have come down over the past 40+ years, the value of cash flow has gone up. Inflation is also pick up.

Retirees and investors need a lot more capital to generate the same amount of risk-adjusted returns.

$10 million can currently generate about $350,000 a year in risk-free income and up to $470,000 in low-risk income based on today’s interest rates and yields. With $350,000+ in income, you should be able to live a wonderful life, especially if you don’t have debt.

Today, in a big city you need about $300,000 to live a middle-class lifestyle with a mortgage and two kids.The question becomes, if you had 10 million dollars, what would you do with it?

What Would You Do With 10 Million Dollars?

In “The Samurai Method To Maximizing Investment Returns,” I mentioned a long-term goal of accumulating 10 million dollars in stocks and bonds in order to generate at least $200,000 a year in dividend income. $10 million sounds like a lot, but dreaming is free, and I dream all the time because I'm frugal.

Using the slice and dice methodology, I've got specific value and income target goals for real estate, risk-free income, book sales, and online income in addition to stocks and bonds. Everything is neatly partitioned so I can have a clearer focus on how to maximize effort and income.

But what if 10 million dollars after-taxes just fell into your lap? Would your life really change if you didn't have a day job, or loved your day job, and had enough food, clothing, and shelter? I'm not so sure anything would change at all! 

How To Spend 10 Million Dollars

Here's how I think I'd spend $10 million dollars if it suddenly appeared in my bank account. I'd like you to go through the same exercise.

1) Do nothing. I'd first sit on the $10 million for three months to let the initial excitement wear off. Money is most easily blown when it first comes in. This is when we get in the most trouble, especially if we didn't spend years earning our money. Besides, I think it would be fun to look at a savings account with eight digits. Spend: $0. What's left: $10 million.

2) Bolster up weaknesses. I'd do a net worth analysis to see where I'm light on assets. Given I bought another property last year, I'm a little too heavy in real estate than I would like (~40% of net worth vs. 30% desired). Hence, I'd allocate money towards public equities, risk free assets, and private equity investments. By keeping 40% of the $10 million windfall, I know I'll be safe no matter what I do with the other 60%. Spend/Invest: $4 million. What's left: $6 million.

3) Pay down some debt. I've got two remaining rental property mortgages I'd like to pay off: my Lake Tahoe vacation property, and my single family home rental. Both are cash flow positive, but I like the idea of having a 1:1 debt to cash ratio for financial security. Spend: $1 million. What's left: $5 million.

4) Help family and friends. I'd ask my parents, sister, in-laws, close friends, and other loved ones if they are in need of any financial assistance. I'd then take care of all their needs without telling them how much I actually have. It's important to have the optionality to help others without others always expecting you to help them. Spend $1.5 million. What's left: $3.5 million

5) Create a perpetual giving machine. I'd set up a $3 million trust to perpetually donate to a particular charity based off the returns generated from the principal. With a 2% – 5% rate of return, I could donate $60,000 – $150,000 a year forever. I have a new book with Penguin Random House entitled, Buy This, Not That: How To Spend Your Way To Wealth And Freedom. I will be donating 100% of the royalties to The Pomeroy Center, a place that helps disabled adults and children. Spend: $3 million. What's left: $500,000

6) Live a little. With the remaining 5% left, I'd finally let loose by spending it on various things: 1) build new products onto the Financial Samurai platform such as a mobile app for $30,000, 2) perhaps buy a Range Rover Sport HSE in two years when my Honda Fit lease is up for $70,000, 4) buy a first class around the world luxury cruise for my parents for $60,000, 5) build a ~750 sqft extension on my house with a couple decks that will cost $200,000, 6) remodel my parents' kitchen and bathrooms in Honolulu while they are on their world cruise for $130,000, 7) buy some new tennis racquets for $400, 8) buy some new clothes since I haven't been shopping in five years for $2,000, 9) replace a couple sofas for $7,000, 10) try some new fancy restaurants with friends for $2,000, and that's about it!

7) Build more passive income with real estate. Real estate is my favorite asset class to generate passive income and wealth. Unlike stocks, real estate tends to hold its value much more. Personally, I like investing with Fundrise and CrowdStreet, the two premier real estate investing platforms today.

Life Doesn't Change Much With $10 Million

Financial Freedom is priceless
My view from my cozy little home

At first I thought maybe I'd buy a $5 million house in Pacific Heights if I inherited $10 million. But then I thought about the maintenance costs and $65,000 a year in property taxes each year. That is just an outrageous amount of waste! 

I've been to several $5 million dollar houses before, and they aren't nice enough for me to move from my cozy <2,000 sqft house overlooking the ocean. I'd feel a little silly living in a house so big (3,000 – 4,000 sqft) with just the two of us.

Then I thought about buying a sports car, like a Porsche 911 Turbo for $170,000 as any warm-blooded middle-aged man would do. But then I realized how stupid it would be to drive 40 mph at the most in the hilly, pot-holed roads of San Francisco.

I'm happy driving my 2015 Range Rover Sport until 2025. Then it will be time to get a new family car with newer safety features.

Helping my parents and in-laws live the most comfortable life possible is important. But given I know my parents are already financially secure due to a lack of debt and a healthy pension, I'm not worried. My in-laws don't need that much to live a happy life either.

Ideally, I'd like to create multi-generational financial security with part of this $10M windfall.

Buy Freedom With Your $10 Million

Going through this fun exercise makes me re-appreciate the value of freedom. If you have all the money in the world, but don't have the freedom to do what you want, is it really worth being so rich? I don't think so. Do your best to optimize your life for freedom while discovering what is the minimum amount of money you need to be happy.

Because I already have the freedom to choose how to spend all my time, $10 million doesn't do much to change my life. However, if I was stuck in a job I didn't love, then I'm sure I'd negotiate a severance package tomorrow.

It's kind of sad that 10 million dollars only earns you around $150,000 – $300,000 risk free every year in interest. But $200,000 – $250,000 a year so happens to be the ideal income for maximum happiness, so why not shoot for such a financial nut? Happy saving and investing everyone!

How would you spend $10 million? What is really the point of accumulating so much wealth beyond what you are comfortable spending? Would your way of spending $10 million differ if it took you ages to reach $10 million versus inheriting or winning $10 million? Do you think your life will change much with such a large windfall? 

The IRS allows you to pass on $11.7 million when you die tax-free, and $23.7 million per couple as of 2021. If you're able to accumulate such levels of wealth, you might as well figure out how to spend or give away every dollar above those thresholds.

Having 10 Million Dollars Today

I first wrote this post in 2015 when my net worth was below $10 million. Thanks to a bull market, my investable assets are worth north of $10 million. They also generate north of $370,000 a year in passive income.

The difference between now and 2015 is that my wife no longer works and we have two young children. Therefore, although it's great to have more money, our costs have risen as well.

I still believe that once you cross the $10 million net worth threshold, there is a greater sense of financial relief. You still worry about a bear market losing you millions out of the blue. But that's what a diversified net worth is for.

The wealthier you get, the less risk you want to take. Therefore, I've got 40% of our net worth in real estate for diversification and income.

Build Wealth Through Real Estate

Real estate is my favorite asset class to build wealth. As you get wealthier, the more you will appreciate the value of real estate. The combination of rising rents and rising capital values is a very powerful wealth-builder.

In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $810,000 with real estate crowdfunding platforms.

With interest rates down, the value of cash flow is up. Further, the pandemic has made working from home more common. Therefore, heartland real estate should continue to attract domestic and international capital.

Take a look at my two favorite real estate crowdfunding platforms. Both are free to sign up and explore. 

Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the easiest way to gain real estate exposure. 

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio. 

Stay On Top Of Your Finances

Sign up for Personal Capital, the web’s #1 free wealth management tool to get a better handle on your finances. If you are lucky enough to accumulate 10 million dollars, you'll want to track your finances diligently.

In addition to better money oversight, run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.

After you link all your accounts, use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms.

I’ve been using Personal Capital since 2012 and have seen my net worth skyrocket during this time thanks to better money management.

Personal Capital Retirement Planner Tool - Managing 10 million dollars takes focus

Updated for 2021 and beyond

104 thoughts on “What Would You Do With $10 Million?”

  1. Honestly, if I had ten million dollars, I would spend all of that money on preps. The world’s about to get a billion times worse and I would rather spend that money getting ready for that moment than waste in on anything else.

  2. ”Lex” is totally correct. Money changes everything. And a lot of money, will change things. That is just human nature. Anyone who thinks that their family’s( siblings/relatives) attitude wouldn’t change, must have either been born into a family of saints or is deluding themselves. This has happened to so many families, who have come into sudden wealth.
    You’d face constant requests, lawsuits of every kind…amateur kidnappers…
    The first thing I’d do is hire a security team as a buffer between me and the public. Then invest the rest and move the assets to the control of an offshore trust. Then let people try to get their hands on it.

    1. All the advice and everything i have read here is amazing.
      I come from very poor family and always wanted to suddenly become a milionaire I never toght of any of this.
      If I had never came across this website I probably would ruined my life and my self.
      Now after everything I have read here I look at the things from different perspectives.
      Even tho its not possible to become milionaire out of thin air this helped me to take a look at my current not wealthy life spends needs friends and even family.
      Thank you so much I guess this was very helpful for someone who isn’t even a milionaire thank you it was really helpful.

  3. Vince F Carter

    I like alot of those ideas. I would establish a foundation, put myself on a fixed income, so im taxed off the salary, eatablish an intest base account, set up a trust fund account for my kids. Buy stock in small tech companies, invest in a wingstop or little creases pizza franshise for low cost cash flow. Build a metal frame sports facility to accommodate inside and out door sports. Use business partners to help off my start up investment. Retire has a teacher, run my businesses and spend time with my beautiful family.

    1. Brent Amerine

      I would do the things you said and retire early and make sure my family is taken care of.

  4. I agree with everything you said except the part about the family. Once people know you have the means, they will keep hitting you up, soon stuff will become toxic and then they’ll start to threaten you and trash your reputation for not helping them. It’s their financial responsibility and not yours to get themselves out of a jam. You don’t want them to be irresponsible with money, do you? That’s a surefire way to get them to do that.

    Best way to do it is to draw up legal contract that’s binding and you have a notary public witness it. You give them money with interest, however small, this gives them the money but then they realize it’s not “free” money, they have to work to earn it and trust from you. Giving money out to family and friends makes you a target, even though you think you’re doing the right thing, you’ll soon regret it.

    1. It depends on your family, I would be providing for my immediate family and I know for a fact there would be no ill feeling or way things would go toxic.

    2. I have a family member who is very wealthy and I have never asked for money. Not sure why people always think their family will do this?..

  5. binit kumar

    Wow, having $10 million is my bank account……It would not change your life if you keep counting on it. I would prefer to transfer the same in liquid funds, and would do systematic transfer to diversified mutual funds.

  6. Kee Becenti

    I want to HELP unfortunate people, homeless, children who have no parents and old people. I want to make other people happy and enjoy life.
    thank you and God bless you.

    1. No if you say it
      A win is a win
      but never say you will
      but if you do do it for nothing
      and never ask for anything in return
      Money is not everything or for everyone it is nice to have
      and Uncle Sam at your poor door
      even if you give it away Uncle Sam
      want there cut on ten million
      because you have it
      I always try to do good
      Investors growing you cash then go to poor house and build a good class life time building let the poor earn new money for them self
      This way you upgrade your investments and the poor upgrade
      The hole street block
      A street block ids more then 30 million So investors double your cash
      Your goal is 50 million now
      You just made a better world
      and uncle bill Sam will say tax cuts for you because you upgraded a street block for the poor and jobs
      And your name will be on that street block just make sure you have a church and a church for the poor as well then yes collection then help others in bad areas then open a dry drug center now you get bigger awards and it more than 20 million
      In 10 years time

      1. new outlook what would i do
        change nothing keep life simple
        pay taxes and life
        learn to be private

  7. I would cash flow it. I would turn it into buckets. Bucket 1 is cash for the next 3 years of income just incase we go into a bear market, so I didn’t have to sell any stock. Bucket 2 would be short term treasury bonds, for diversification, that I would ladder and hold to maturity so I didn’t lose principle if rates rose. Bucket 3 would be blue chip stocks or diversified Index Funds. I would probably do 500k in bucket 1, 3.5 mil in bucket 2 and 6 million in bucket 3. I would expect a gross 4.5 percent yield on the bonds and stocks which would yield $427,500 a year in dividends. The stocks would probably give a 2% yield and I would use 2% of principle, but being stocks, they should, over time, outpace the 2% withdrawal. That way I could have this income for life and be able to weather any down turn that lasted 2-3 years without having to sell any stocks at a loss. This is the Morningstar bucket portfolio approach.

  8. Kicking Saturday

    First off 10 million of it was there in the bank
    Rule one pay Tax on the 10 million
    That will leave you 5 Million
    Keep in mind you also have to pay the bank and lawyers now
    Your in the clear retain the 5 million
    Land live off Stock one million forget the 4 why greed you will lose

  9. Great article FS. Along with the article, I also read most, if not all the comments. It was very surprising to me that no one including the author, said anything about saving the entire 10mm.

    I mean saving this giant pool of cash gives you so much buying power when the time comes, and there are incredible deals to had.

    Imagine having 10mm just sitting in a your account when the stock market crashed. How incredible would it be to able to deploy 10mm when stocks were marked down 50 to 75%???

    I would save the entire 10mm (*ok I’m sure I would splurge on something – so I would save 9 to 9.5mm), continue to work at current job, and when patiently wait for a tremendous deal to come across my desk.

    I realize people say you can’t time the markets, but if you are patient enough, and LIQUID enough, I like to think you can.

    Some might just like to live off the interest, but I think multiplying the 10mm by 5x or possibly 10x sounds a bit better. 10mm allows you to build some very serious wealth.

  10. Amber Bolton

    I will bless my church, take care of my family. I will start up family business and also bless and helps others within my community. Then I will pay off student loans, catch up on bills and other debts for myself.

  11. Even the question is mind blowing. In all honesty I am thinking if invested the first year if you gained $200,000 that’s 16,000 a month. It’s already more than I make in a year. It be nice to watch a savings account grow. I believe I could be debt free that first year just off interest. I know someone who wants to do a nonprofit resort for adults going through cancer and other illnesses so I would like to help with that a some other charities. I would hire a financial person to help me. Then I remember at any time I could be the other person sitting or standing across from me and I hope when looking back I will still like me

    1. It’s always good to dream Connie! I have a dream hard enough, sometimes those dreams come true. I never would’ve expected financial samurai to go to what it is today. And I also never would’ve expected to figure out how to manage over $10 million net worth thanks to this bull market.

  12. 10 million hey? Hmm.
    Well unlike you guys, my life and career fully changed about 16 years ago when my partner left me with the kids.
    Since I couldn’t stand a ‘friend’ suggestion of taking my kids to school for the first time, and then for that friend to either always pick them up or even get them ready in the morning, I felt my best ‘plan’ was to quit and look after them full time. Best decision ever I might add.

    ~3months later I wasn’t able to support my mortgage and bills anymore (government money just doesn’t allow it, plus I received zero income EVER from the ex) So we all ended up moving to a remote town in a government house. I honestly thought that people holiday in these places, I never knew that some people really lived there (although not a holiday place, but still a couple of hundred miles from the real city).

    Now they have finally become young adults I have been able to go fulltime again (well I started a couple of years ago really). I’m too embarrassed to say the ‘job’ I do, since I am university qualified with a strong (previous) business experience, but sadly technology moved just too far from my previous skills.

    I think my bank account has $200 in it presently and my belongings are worth about ~3000 tops. And YES I have a personal loan debt of about $4000 because I needed a 10 year old car since moving back to near the real city again (the country folk have a different opinion on what ‘city’ means).

    Anyway, so what would I do with 10 million? Hmm, I’d be happy if I received $10,000, because at least I’d be out of debt and could spend a few bucks on updating some minor belongings.
    But 10 million? Obviously my own house again, and NOT work at this physical degrading job. All the rest would just be happiness. YES I would help out a LOT of good people I have met along the way who are similarly poor like me.

    Anyway, good luck if you have your money, I have learned not to expect anything for a long time now.

  13. hardworkluck

    57 years old. Spent the last 20 years growing a business. Sold it last year. End result is I find myself with $10,000,000 (after tax), no debt, and 180 days until the handcuffs are off.

    I have never had much money to manage as all my money was in the business.

    I ended up picking a Private Banking firm (Keybank) to manage money in exchange for about .75% of the money each year. So far so good (the up market has obviously helped) though I am extremely conservative at this point and am 60% in individual municipal bonds and about 15% in cash.

    I sometimes think that I should just leave it all in cash and pull $200,000 a year for 50 years (because why allow any risk at all?), giving whatever is not spent each year to charity, but have left it managed so far.

    Fear plays some role in my decision making. And the deep desire to not screw it up.

    1. Congratulations! If you have already won the game, why keep playing it I say?

      A 3% annual tax free return is a nice $300,000 a year tax-free. Surely you can enjoy life on that amount. That’s what I’m doing.

  14. Mr.Maurice D Sr

    I will help my wife and kids live in a safer happier house.

    I will help the world.

    I will use some of it to pay four three patent’s and trademarks to three of my inventions us all thing’s that the world is missing,that needed.

    I will help the young generation won’t to be right and do right it can be done it jest have to be done the right way one time.

    We don’t won’t this to happen >>>>>

    THIS IS ANOTHER WORLD ALERT >>>>>The Young population is eight time’s bigger then the older population by a mile stone
    They need help, if they decided to (A) start a young against the older people and against the people how abuse them and Bulling them, and in the 4 type wrong and the parent that has been abusing them for to long think about something better stop this from happening quick we are seeing to much of it every day on our TV’set’s? Yeah- Um we will be in a lot of trouble, and you mite be a good parent won’t matter they all live in different households the number of them is to high it’s way up their in counting.

    So I can go on about how i would use $10 Million dollars, make me a right off,, hell right off $50 Million dollars i’m use it for this type of life strengthen the future. It better start real quick.

    Contact me today.

  15. I don’t have 10 million dollars. But i have around 3 million dollars and i make 10% returns every year with minimal risks. That is almost 300,000 a year. It’s much more than enough for me to lead a more than luxurious life here in India.

  16. John Stevens

    I am laughing because of what “T” said above… I started reading this article after googling “What to do with 10 million dollars” about 1 year ago, which is when I realized my business may soon sell, yielding about $12M post tax. I laughed at myself saying “if you are smart enough to make this money, why are you on this site?” and similar.. But I echo what “T” says.. now that I have it, not that I am complaining (AT ALL), but it’s a bit.. melancholy I suppose. So, with that being said, since this article and comments helped me think through things, I thought I might contribute my thoughts from going through this exactly.

    First, after working very hard for 20+ years, I allocated $500k to “fun”… May not be the best thing long-term, but at the end of the day, I believe in moderation of savings and enjoyment. I should note that because of the nature of my business and experience, I will have a lot of earning opportunities in the future, which helped in that decision.

    Second, I placed $2M in trusts for the little (very lucky!) ones ($500k for each of the 4). So that leaves about $10M. I did in fact lease a nice (but not crazy) car – $150k car, leased though, another bucket list item. The rest went right to a good financial planner (i vetted a bunch), who has a long term view. I chose a planner who was also used to people in my situation (Very important) as he helped me with lifestyle decisions too (i.e. he reminds me NOT to buy a boat once a day!).. So, i expect to work half-time or so, take $300k annual distributions, make $200k or so in income, and live a very very nice (but not crazy) life. I am going to buy a $4M house.

    I know that is debated in this thread, but as “T” mentioned, if that is your passion, it’s one of the best investments, you get more use out of a house than anything, and it (generally) appreciates, although luxury real estate is a mixed bag, as most people who can afford that much will likely want to build. So there it is.. thanks to everyone for giving me things to think about, and i wish you all the same luck I had (and the drive to do 55-60 hour work weeks for 20 years :-))

      1. John Stevens

        Thanks! (although windfall makes it seem a bit more lucky than hard work, but I am not offended) :-) .

        The challenge I have w/ a tropical climate is the kids (schools, friends, sports team). Once they leave, maybe. Until then, we will travel alot.

        Re: bonds.. Don’t you think 3% is a bit low, long-term, even though it’s low (essentially no) risk?

      2. Hi FS,
        A fan and regular follower of your interesting and wonderful blog. Your response above has me extremely intrigued. Which tax free muni fund gives a 3-4% yield?

  17. I’m actually in this situation which is why I’m reading this article. I’ve read this blog for years and my online business has gone bonkers the past few years. I bought a 6 million dollar house in SoCal that I love, probably the best use of money so far aside from charitable donations. I get to enjoy it pretty much all the time. I am less inclined to go anywhere (my office included) now because I like being home so much, it’s like a perpetual vacation in a nice resort. Aside from that, I don’t know what to do with the rest. I’m thinking of starting a small car collection. This is a odd place to be in life at age 26. I don’t come from a wealthy family, nor do I have wealthy friends. I’m somewhat bored now and I’m a little disappointed that it seems like there isn’t much else to achieve or strive for. I don’t want a bigger house, can buy almost anything I want (aside from ridiculously expensive things like a G650), and don’t particularly care about growing my business anymore because there would be no point. Why create more stress? In some ways it was more fun when I looked forward to buying my dream house for years, or looked forward to buying a Porsche. Human psychology is strange. I’ve only recently come to the realization that I can retire now if I want to, and have felt strange ever since.

    1. Can you share more about your online business? Maybe, teach other people on how you achieved success.

      1. So 3 years on, my outlook has changed a bit. I don’t really care about the house as much anymore. I don’t regret the purchase, but I would probably not do it again, especially if I didn’t have kids. I’d still live in a nice place, but would strongly consider renting instead. It would be cheaper to rent a nice penthouse or something had have zero worries to deal with. I would invest what would otherwise be tied up in equity. Luxury SoCal real estate has declined in value since 2017, which somewhat influences my thoughts on the house now. Later in the year after I posted here, a threat came out of nowhere that almost destroyed my ecom business. I scraped together every penny I had to save the business, and thankfully was able to fix the problem. I tripled funds I invested to bail the company out, but it could have easily gone the wrong way. I don’t really want more stuff anymore. It just seems like a waste. In the past few years I bought several cars and a couple boats. I wasn’t using any of it enough for it to not seem like a waste though. I have more cash than ever before now, but I’ve chosen to sell a lot of this stuff over the past year to increase cash available to real estate investments, which is my new interest. I now own one AMG SUV I bought slightly used, and a 458 Spider I bought 5 years used which barely depreciates. I’m not bored anymore and I’m enjoying this new path while also acting as chairman of my ecom company. My goal for several years was to hit $10m in investments, and it was pretty uneventful and boring to hit it. Now I’ve just adjusted that goal to exceed $1m in after tax passive cash flow from real estate investments. When I hit that, I’ll just keep working at it because it’s fun. I’m more risk adverse now and will not take a chance of facing a major loss again. Very low risk passive investments are the name of the game now. In terms of my initial strategy, it was a combination of working my ass off and being extremely lucky to start a business in a sector that grew at a lightening pace while I was still in college. I’m not sure if I could do it over again with the same level of success. The timing was perfect and a lot of luck was involved. I could probably create another company earning $500k a year with a few years hard work, but to date, I have not come up with another idea that would net 7 figures. I never planned for the current company to do that though. It just happened organically over time. My only goal when starting it was to try and pay for college. $100k a year would have been fine by me back then.

        1. Cool, thanks for the update! How is the business doing now compared to 2017?

          I have to say that the richest I’ve ever felt was every time I play with my daughter and son. There’s no better feeling than hearing the screams of delayed and seeing their smiles. I promise you on this. Maybe it’s time to start a family and enter a new stage of life?

          1. A little late to reply to to this, but things are a lot better now than during 2017. My business and real estate investments “went to the moon” over the past couple years. My net worth more than tripled to about $60m since early 2020. I made major bets against cruise lines very early in the pandemic that generated a 40x return, and also purchased a lot of multifamily real estate with fixed low rates during the pandemic with the thought that future inflation would inflate the mortgage away while rents rise. That bet has been playing out well recently. My goal now is to get to $100m net worth in the next 4 years, which I feel pretty confident I can achieve. I might totally stop working after that, or maybe keep going. I don’t know yet. I don’t need more money but I need something to do that I enjoy. Honestly this blog and Personal Capital changed my life and got me very focused on how what I do impacts net worth.

            Coming from a non wealthy background, it felt very strange accumulating what seemed like a lot of wealth in my 20s rather quickly. I think I’ve adjusted to it much better now though after turning 30. I enjoy managing money and compounding returns has become a hobby. One unplanned thing I did in 2020 was buy a large ranch in a very remote, beautiful place. That was one of the best things I’ve ever lucked into. I immensely enjoy spending time there and working on the ranch. If anyone wants my advice on what to do after “retiring” with a lot of money at a young age (aside from starting a new business), go buy a ranch in a beautiful place and spend a lot of time there. It will keep you perpetually busy and it’s really rewarding, especially if you can share it with other people who enjoy it just as much.

  18. I will split into thirds. I will give one third to my immediate family and best friends (only about a dozen people, but includes taking care of college funds, paying off mortgages) A reasonable amount will go to buying a house large enough for whomever chooses to live with me and my husband, and dog. I think about $2m.

    I will see a charitable donation to animals, and children in need (probably about 1.5m)

    The final third will be in the hands of my best friend, a financial advisor, to help plan the future for my family, and hopefully many to come.

  19. Glad to see you mention charitable trusts.

    With so much waste and conflict in this world, most people find the idea of directing resources towards their own goals a foreign one. I have benefited from several charities in my life, e.g. Big Brothers Big Sisters, and support them now and plan to support them in my will.

    Setting up a perpetuity with new found wealth is a great way to dedicate resources to causes which are important to you, for whatever reason.

    Thank you for reminding us that money isn’t just about us.

  20. There is so much misery in this world and without thinking twice about it, I would use the money to help less fortunate people as much as I can. I would keep enough money for a decent standard of living, not lavish or luxurious but a comfortable lifestyle where I don’t have to worry about earning money. I’m am certain that would be a small fraction of the total $10,000,000. The rest will definitely be given away. No point in hoarding it and if I’m lucky enough to get that money, other people should be too.

  21. Honda Fit > Porsche! You’ll get to your $10 million goal, it’ll just take time and work, that’s all. You also make a good point about doing whatever you’d like to reach that $5 million tax-free threshold before you die. That would be a lot of taxes to pay on $10 million!

  22. Ooh, this is a fun exercise that will leave me depressed in the end.

    I’d do what you suggested, leaving it for three months. I’d keep quiet about it, still go to work, and plan. But after that, it’s time to rock and roll.

    90% would go to dividend growth stocks. Same strategy that I’m doing now. I’d continue to buy high quality businesses with long histories of raising dividends. I’d keep the portfolio safe and conservative, with food, consumer staples, industrials, and the like making up my holdings.

    Then I’d buy a mixed use property. I’d fully pay in cash, or at least only have a very small mortgage. It would likely be a fairly expensive place because it would be in a trendy neighborhood that I would totally live in if only it weren’t so overpriced. No such thing as expensive here. I’d look for a place with only one residential unit and at least one commercial unit (though for those, the more the merrier). I’d rent out the commercial unit and live in the residential. Now living in such a hip, trendy part of town, I probably have a small mom and pop store as my tenant. I’d charge them only half the market rate in rent.

    For all but $200,000 of the remainder, I would split it evenly between P2P lending and commercial real estate crowd sourcing. I may also put $10,000 towards precious metals, most likely silver. And not paper silver or futures, but actual bars and coins in my home.

    $100,000 would go to a fixed annuity. Or perhaps an index annuity. Sure I’m way too young for an annuity, but I’m sure I’d pass an insurance company’s suitability requirements. Even though I could get more money with literally any other investment, this would be done as an insurance policy in case something goes wrong with my other investments (fitting, as annuities are technically insurance products rather than investment products). Not really necessary as everything I’ve done so far has been extremely conservative, but it’s good to have contractually guaranteed lifetime income somewhere in my greater portfolio. I’d wait until I was at traditional retirement age to annuitize though.

    Now we’re down to the last $100,000. About $70,000 would go into a high yield emergency savings account with an online bank, just as I’ve spoken about in a recent post. The remaining $30,000 would stay in my regular checking and savings accounts to do with as I please.

    I’d quit my jobs. Both of them. I’d spend a lot more time writing and engage in other creative endeavors. I’d make a Twitch or YouTube account and do Let’s Play videos. I would reach out to IDW Publishing and see if I could join the writing team for their Teenage Mutant Ninja Turtles book. I have so many great ideas for the future of that comic and have been a HUGE TMNT fan for decades. And I’d only ask for minimum wage from them. I’m completely serious. It would be a wonderful way to spend my time.

    I’d also run an investment seminar business. A friend and I tried to do that last year only to discover that the costs far outweighed the benefits. But I would love to monetize my love of investing in ways other than investing. I don’t think I would offer personal consultation, as the laws and licensing requirements for those are very strict. But for basic seminars offering generalized investment education, the requirements are pretty lax.

    Well, that was a fun fantasy. Now the real life version of me will be hanging out with a friend. Then tomorrow, I will spend time working at my second job before I go back to the bank on Monday where a customer’s ranting and raving about the extended hold on their check will fail to penetrate my depression-clogged ears.

    Whoever said “Money doesn’t buy happiness” can go suck my–

    ARB–Angry Retail Banker

  23. For me.

    #1 quit my job.
    #2 pay off my house $166,000
    #3 buy an RV I’m going middle to high end here $300,000
    #4 gift to my family max for years $52,000.
    #5 I like the Charity trust, so we will go with $1,000,000 there with the option to add more
    #6 Blow it $500,000
    #7 Invest the rest splitting between RE and Mutual funds/stocks/Bonds/cash etc. at 2% a year it is more then I make.

    I would find something to work and/or volunteer at part time that I truly enjoy for 20-30 hours a week.

  24. Dan Holland

    Man I’ve done this thought exercise so many times in my head. I’ve thought about it in so many different ways from the very practical – crunching all the numbers, to the very altruistic and paying it forward, but the one that makes me smile the most is this.

    Because it was just handed to me, I would feel the need to use it a free way. Meaning, enjoy it, but also spread it around. I would put it into a very stable growth fund and draw 10% from the balance on a yearly basis. The money I withdraw would be split into two buckets – 50% in each. With one bucket I would spend it and have fun with family and friends, taking trips,traveling the world and enjoying all the experiences I can. The other half would be earmarked to give away to as many charitable causes I could find. Probably not the large charities we all know but the local charities and local people so I can see this gift at work. I think that by taking only 10% of the remaining balance each year, the money could last quite a while and what better way to be a steward of this blessing?

    Of course this money is the 10 mill given to me and not the money I work for. That is a totally different story, lol.

  25. Not that it happened all at once, but here is what this guy has done. 1) Don’t spend a dime…okay easy to say because I already had the fancy sports cars and SUV. (note…see step 4) 2) Take some time off to really think about what you want your life to be about. For me it was taking the time to travel the world and see where I’d like to call home. 3) Come up with a game plan…for me it was/is sailing. I asked myself what were the best 10 days you have had in the last 10 years…they were almost all on the water. So I went to school and got my sailing training and certification. 4) Life simplification…when you actually have the money, surprisingly I find myself wanting less stuff not more. I think we tide ourselves over from the stress of day to day life by rewarding ourselves with stuff. That goes away, or at least I’m lucky and it did for me. 5) Cast off and go see the world slowly (this is the step is in progress along with step 4.

    I think a lot of it though depends on your age. If you are 35, you probably are not done working and need that sense of purpose that hard work provides. If you are 45, you’ve been there, done that & really don’t have anything left to prove. Working more just to have buy more stuff you don’t need suddenly seems very silly. At 55, it better be a no-brainer…get out there and enjoy life. A very wealthy professional athlete told me during one of those celebrity charity golf outings…if you need more than $200k year for expenses, you don’t have a earning problem…you have a spending problem. Ironically $200k will be thrown off essentially risk free on $10M. I find I spend way less than that and I’m happier than I’ve ever been.

    1. “I think we tide ourselves over from the stress of day to day life by rewarding ourselves with stuff. ”

      Way too true! Not only stuff; I’ve used food and mindless entertainment (an addiction to telly and bad soapies) to get through the stress of travelling to and from work and the stress of work itself.

  26. Smart move sitting on it for several months. People definitely do have rash behavior if windfall lands on their laps.

    At $10M, you can definitely generate risk-free income to make sure you aren’t losing too much to inflation. I would consider staying at my job until I figure out what exactly I’d be able to do with my time.

  27. OlderAndWiser

    $4.4M retirement savings
    $1M for charitable giving, over time
    $1M to family (in equal amounts), in a way that would not incur gift taxes
    $1M in real estate (2nd home?)
    $2.6M annuity or alternative

    The lifestyle changes would be: more travel, $10-20 instead of $4 bottles of wine, and maybe the 16-year-old car would get traded in instead of waiting for it to die before replacing.

  28. According to the movie ‘Office Space’, if they had $1 million dollars they would use the money to ‘do two chicks at the same time’. Using that logic, if I had $10 million dollars, I could ‘do twenty chicks at the same time’. Sounds like a start to me!

    In all honestly, I would probably invest most of it in dividend stocks, and concentrate on paying off any existing debts that I have.

  29. I’ve been reading your website for about a year now, and while I don’t always agree with what you say, there are far too many times where I am shaking my head in agreement. This is a fun little exercise!

    With that being said, if a hypothetical $10m came my way to use as I see fit, I would have no problem spending it as follows:

    1. Payoff primary residence – about $150k. I would probably “upgrade” at some point, but I like my area and I live on a lake, so no need to really move at this time, especially with the freedom that $10m entails.

    2. Buy brand new Jaguar F-Type R – about $100k, because I love cars too much not to. I drove a version of this that was one trim level lower, and it was absolutely incredible. Though I live in a snow region, the car has AWD and I would keep my current Buick as a “beater.” Based on step 3 and 4, can use the depreciation as a tax deduction. Also falls within the 10% of income range based on 3 and 4 (at least on a pre-tax basis).

    3. Buy a precision manufacturing company – about $3m assuming a 90% Price/Rev multiple. I value private companies for a living, and these are by far some of the best ROI companies around. I would assume 20%-30% EBIT, with Dep = CapX for simplicity. This would mean $3.3m in revenues with EBIT profits of $825k/year. While utilizing some debt financing could juice the ROE, at the end of the day the security of owing nothing outweighs that.

    4. Buy a mobile home park – about $6m assuming 300 pad sites at $20k/site. As far as real estate investments go, these things are great, with multi-family residential being close behind. I would assume a 50% EBIT margin, with Dep = CapX once again for simplicity. This would generally equate to $1m in revenue with $500k in EBIT profits each year (and that is being generous at $275/mo/site, when could certainly go to $400 in a better location). Also again, could utilize debt financing, but assumptions are free and clear of debt.

    5. That leaves $750k in liquid cash for living expenses, working capital, and safety net.

    $1.325m per year in business income, taxed at an effective 40% rate for state and federal leaves $800k for reinvestment and living expenses each year, and a 9.0% after tax return on the $9m investment. The great thing is the models I referenced the figures from incorporate professional management, leaving the owner free to do whatever they desire to do; active management would thus provide more salary to the equation and a better return. Further, since I live in the Midwest, my $800k/yr goes pretty far relative to the coasts. Ideally, debt would be utilized, and the earnings after debt service would be used to buy additional complimentary businesses to scale up to a level that provides significant return in dollar terms.

  30. Fun exercise, part of it depends on how I received the $10 million. If inherited, then no tax due. If won in lottery, that’s a lot of tax. So I would probably set up a charitable foundation to not only save income taxes but also to have money to give away. I’d probably want to keep at least $6 million. Then new house and new cars. Pay off debts on other properties and save/invest the rest.

    I’d probably start with a very conservative asset allocation which I may gradually increase more toward equities over a 5-10 year time period to guard against a potential drop in the next 5-10 years.

    I would want to keep working, but maybe more in the way that FS does – be more discriminating about the jobs I accept and take on.

    I’d also take month long summer road trips with the family to see this great country of ours.

  31. 1. Move out of the country. Husband usually jokes about this, it would allow us to escape the ‘attack’ from all distant relatives who’d instantly fall in love with us and request help for all kinds of crap.

    2. Sit on the money for a while – GREAT IDEA, never thought about it. It would allow us to plan properly.

    3. We don’t have debt, so we’d probably save a lot of money, get a home somewhere nice (not a big home) and continue to work and travel.

  32. A fun exercise but in real life, the $10mm won’t just appear. You’ll hit $1mm, then $2mm… you get the idea. You develop money management skills along the way. :)

  33. Gen Y Finance Guy

    With $10M I would take a 3 month sabbatical from work and travel with my wife as we try to figure out our new life.

    We often talk about living abroad for 3-6 months out of the year when we achieve financial freedom. This would be a good time to see what that feels like and to check out some of the possible places on our list.

    We would still want to have a home base here in SoCal.

    Upon return from the Sabbatical I would decide whether I wanted to stay at my job or not. 8 Months ago if you asked me this question I might had said I would quit, but my role has and career trajectory has gotten really interesting. I guess it depends on timing…but I think I have at least 5 years of engaging, interesting, and challenging work I will hang in there for.

    I don’t expect we would had touched more than $50K of the money while on the sabbatical.

    The other thing we dream about is building our own house on a few acres out in wine country here in SoCal. With a father in-law that is a designer and builder, I would estimate that all in after buying the land and paying to have the house built to order that it would put us out about $1M.

    We would pay off the mortgages we have on our rental condo and current residence in the amount of about $500K, which would leave us completely debt free.

    This would leave us with about $8.5M. It will then be time to start working on allocating that capital to investments. At this point capital preservation becomes more important the huge gains.


  34. quantakiran

    What a dream! True financial freedom now! I am a low risk financial freedom fighter so please don’t hate me!

    1. Take the $10 million dollars and fix it in a fixed deposit account for 5 years (Current interest rate is 10.62% at a local bank). Have it set up to pay the monthly interest into my account. Keep money aside for 42% tax rate.
    2. Quit job.
    3. Travel while at the same time looking for a country to emigrate to.
    4. Do writing full time.
    5. Live happily ever after.
    6. Whatever monthly interest money that is not finished by the end of the year will go to various charities/shelters/starving students.

      1. quantakiran

        Hi Sam

        I know to follow that rule if I want to keep on working. I’m having a bad week; as a contractor I basically get treated as a roach. I’m not American so the benefits definitely don’t compete with ten million US dollars! *sigh*

        Great blog btw and the comments are also very good. I’ve found everything on this site to be very helpful.

      2. That only works in well in private industry. I work for someplace where severance packages do not exist.

  35. $10 Million sounds nice. The first thing I’d do is accelerate the Freedom40 plan! So instead of 2.5 years from now – it would be now! I’d probably invest almost all of it, then start travelling slowly around the world. Not extravagantly, just mindfully. I think the tricky thing would be keeping it a secret from all my friends as I wouldn’t want them to treat me differently…

  36. Danny McGee

    This happened to me.

    I cashed out my stock options at a tech company 2 years ago at age 46 – after taxes it came to $20MM.

    First, I quit my job and said goodbye forever to all of the fucktards I used to work with. Then, I entrusted all of it to a money manager that charges me 0.5% to “manage” it, which so far means slowly lose it. My basic lifestyle has not changed – I had previously paid down my mortgage, and had no debt. I bought a house for my in-laws, and gave some of it away to charity and family members. But I still live in the same 2000 square foot bungalow, and my life is similar except I don’t have drive in to work every day. I did go to Hawaii twice, but that’s about it. I guess I’m pretty lame. It’s just that I don’t care about fancy cars, and I don’t want to travel, and I have no hobbies. So here I sit. No big whoop.

    1. BarbChicago

      This sounds very sad. I know I would want to travel or live somewhere else and experience a different culture. You only have one life to live and I would try to enjoy it more. You don’t need $20m in the bank. I would spend it slowly and live a little more. I know that if I had a large windfall, I would move to London for a while. However, I think I would need to volunteer or do something for others eventually. I would need a purpose to wake up in the morning.

    2. Have you seen Leaving Las Vegas? Do a Nicholas Cage with one of your millions! Just don’t die!

      Maybe also use some of your money to help others? There’s lots of satisfaction in seeing people gain better lives!

      1. That is very true and I forgot to include that in my list even though I would do it. We already give to charity but to do more would feel really good.

  37. #1 Quit our jobs.

    #2 Sell our townhome and buy a house. Nothing too much bigger than we have now (so between 1500-2000 sf), but something with more land as I dislike living so close to other people. I like quiet, and nature, so I’d rather pay for the land than the house itself.

    #3 Help out family.

    #4 Travel. Nothing extravagant. But I do love exploring new places. I’d be very tempted to buy an RV and see the entire U.S. at a leisurely pace.

    #5 Invest the remaining money so we can live off the dividends.

  38. I love thinking about this stuff! It’s fun to dream…

    I would take at least a year off from my job to explore new career paths, interest, and hobbies. (I’m feeling pretty burned out with my work right now.) With that, I’d likely take $100,000-200,000 off the top for living expenses and “fun money.” I’d pay off all my debt and invest a good chunk of money in real estate and equities.

    Beyond that, I would reach out to close family and friends to help them out. I’m not sure I’d give them spending money, but I would offer to pay off their debts. I’d also set my parents up so that they never have to work again.

    I would also donate money to charities that I feel passionate about.

    The biggest priority would be to set my family and I up for financial security/independence for the rest of our lives.

  39. Fascinating to hear you think through this scenario in detail, and realise it wouldn’t change your life much at all – a pretty great sign of where your life is at right now! And also highlighting how one you have a good degree of freedom, the rest is up to you – money can only get you so far!

    As for me, I’d definitely invest most of it, pay off the sizeable mortgage, would immediately cut my work hours, perhaps down to 2 or 3 days a week or on a casual / project basis, plan a few extended holidays for my family, perhaps pay a little for some coaching or support to help develop some new products and/or my site, and start exploring and experimenting with other work and charitable ideas (and of course, a regular round of golf at least once a week on some of the beautiful courses in this part of the world!)

    1. 2 to 3 days of work a week is pretty sweet. It is funny how after doing this exercise, the #1 most valuable thing comes back to FREEDOM. The freedom to choose and do whatever you want. If you make $50K/year but have total freedom, I say you are richer than the $10M person with no freedom!

  40. I live in Denver and only make just under $100k a year, but I also only work an average of 10-20 hours a week… and I do it half naked from my home office.

    I could easily live well off $80k/yr, so I’d invest $4 million in long term mild-risk equity. Invest the other $6 million into more growth-oriented equity. Move enough into bonds down the road, eventually, so that I could maintain a decent enough income. But in the meantime, I’d continue working in my current job for as long as I could manage to keep working only 10-20hrs for almost six figures and doing it from home.

    When that opportunity was no longer available to me (I’ve been doing it for my entire adult life — twenty years), I’d take enough out of the mild-risk equity and put it into bonds so that I could bring in about $80k/yr and spend the rest of my life relaxing and pursuing personal hobbies and projects (that don’t require significant capital investment, so won’t deplete my investments).

    1. What about buying the baddest ass pajamie jamie pants to work at home with?

      Are you 20 yo and working 10-20 hours a week? Or are you 18 + 20 = 38 and working 10-20 hours a week? If so, what are you doing and what is your ideal income/work hours situation?

  41. My first order of business would be a new passenger-side door panel on my 2003 Honda Civic. After that, I’d head over to the whole sale T-shirt store and load up on some new T’s, 5 for $10. Then a trip to Target for 2 new pairs of jeans, a dark color and a light color, $15/pair. With my new threads and fixed up ride I’d like to do some light travel around the U.S. There’s plenty of national parks and cities that I’ve never seen in my home country.

    Most of the ten mil would head into a Vanguard low-cost index fund. In real estate I’d like to own a house on the beach, a place in the desert and another in the mountains.

    The bigger issue would be if I were to quit work what would I do with all that time. How would I continue to be a valuable member of society? #firstworldproblems #richandbored

  42. My husband and I were talking about this scenario the other day. If we ever ended up with 10 million after tax we were going to invest all most all of it in somerhing low risk (after consulting with a fee based financial planner). My husband would quite his job (I’m a SAHM) and we would live off the interest. We would take some of the money to do home improvements and go on a vacation. Though I’d imagine once our kids are older we might do some sort of side business part time.

  43. I’d probably be pretty boring with $10m if I inherited all that dough. After immediately quitting my job, I would probably invest $9.5m into the market and leave $500,000 as a little fun money as we travel around the country. Even with all that dough, I still wouldn’t turn into much of a spender on things – no new car or house. I would spend on experiences, so the wife and I would probably go out to eat more as we traveled rather than cook and might choose some more expensive areas to stay with the RV. I’d try to make that $500,000 last as long as possible

    All the while the $9.5m is steadily growing in the market.

    1. I’d be afraid the $9.5M might actually go DOWN in this market. -10% is a gut punching -$950,000! there’s no way I’d allocate more than $4M of the $10M in public equity at the moment.

  44. I’d probably invest most of it, say 90%, and say to my friends and family I made 1 million, that I’d spend with them on random fun stuff, crazy parties, etc…

  45. FS, how about setting aside $1,000,000 to throw off $20,000 to cover your Silver Plan Universal Health Care premium for two, each year? (You’ll need to pay taxes on the dividend payout of $20K, so take $3K leaving $17K for the premium)

    The $4 million to invest/spend, the $1mm paying down debt that is currently deductible, you’ll need to set aside another $1.5 million to throw off the $30,000 (minimum) for the increased tax bite. And the $1.5 million spent to pay off loved ones’ needs and debts will incur taxes paid by them, so you will want to bump it another $300,000 to $1.8mm.

    So you’ll need another $2.8 million, which you can remove from that generous $3 million charitable foundation, leaving $200,000. If you took the ‘live-a-little’ $500,000 and combined it with the $200K, you could still do the charitable foundation that at 2-5% would still throw off $14,000 – $35,000 a year and, though gone forever, would provide some tax advantages.

    Gahh!! Taxes!!*slaps forehead* $10 million is a great dream, but is $30 million the new $10 million?:-)

    1. Time it right with the family.

      DW gift to Dad Dec. 31 $13,000
      your gift to Dad Dec. 31 $13,000
      DW gift to Mom Jan 1 $13,000
      your gift to Mom Jan 1 $13,000 That’s $52,000 avoiding the gift tax right there.

  46. Ah, that sure would be nice! I like your first point about doing nothing at first and letting the buzz wear off to prevent doing something irrational with it. I think I’d do a mixture of invest, pay off debt, help my parents, support some charities, and take a nice vacation. I’d really love to see multiple millions sitting in my accounts – the financial security of that would be amazing. I think I’d still work, but maybe 3-5 days a week instead of my usual 6-7. I enjoy working and wouldn’t want to just kick back and do nothing if I suddenly came into great wealth.

  47. One other thought… this post had me thinking about a great story named “Brewster’s Millions”. It’s been made into a movie a few times, but it’s based on an original story published in 1902. The basic idea is that Brewster must spend some large amount of money (and show that he has received value, he can’t just give it away) so that he can inherit an even larger amount. I think this is equivalent of the old idea of a father catching a son smoking, and then making the son smoke a whole box of cigars so that he’ll never want to smoke again.

    It’s kind of a good fictional (and humorous) take on how you’d manage to spend a large sum of money in a short amount of time. The Book and the 1945 movie versions are available for free for Amazon Prime members. The 1985 movie starting Richard Pryor and John Candy (two people who died too early to enjoy their fortunes) is not available streaming anywhere that I can see, but it’s worth looking for.

  48. fun in the sun

    I wouldn’t pay down debt, and would ensure that the $10 million capital is never touched. My debt is all in cashflow positive investments at reasonable interest rates, so no need to pay it off, the investments take care of themselves. $10 million is more than enough money to generate huge income, which I could use for charity, helping family, any personal indulgences.

    I would at first spread the money around into very low risk investments, while I go back to school and study financial planning and tax management. May as well figure out how to properly manage your fortune.

    Then once I am familiar with risk management, and tax minimization strategies I would try to create a diversified low risk long term strategy to generate $500k – $1 million on average a year.

    With that income set for life, I would probably spend most on travel, and starting little businesses. No need to buy a fancy car, I am happy to pay to short term rent one, as the thrill of any luxury purchase eventually wears off.

    Giving part of the capital to less financially savvy relatives or friends probably won’t help their lives in the long term, and minimizes the amount of good you can do with the future cash-flow.

    Spending the money on helping others, creating things, and new experiences is the easiest path to happiness.

    1. What would be a low-risk strategy to generate 5-10% annual returns? I don’t think there is such a thing at the moment. If you are able to get closer to 10% low-risk, you would probably be able to run the biggest money management empire in the world!

      1. fun in the sun

        10% is a little optimistic, but with solid diversification, I would be looking at long term gains well over 5%.
        If you diversify enough by both geography and asset class (and $10 million should be enough to achieve this), then you are hedged against all but world war 3 without wasting money in treasuries.

        1. You could put a large portion in a private fixed income fund that invests in Freddie mac commercial mortgage-backed securities. That’s very low risk and surprisingly high returning. I’d also look into a seniors housing fund for relatively low risk and even higher returns.

  49. First thing I would do is payoff every debt I have (student loans, primary residence mortgage, rental house mortgage), and every debt my mom/in-laws have….figure that would take about $1 million.

    At that point my mom (SS/small pension) and in-laws (retirement savings) are fine financially (given that they have paid off homes, no debt, and thus relatively small expenses that could be covered by what they already have). If not, I’d buy annuities that would let them live comfortably — say, another $1 million at most.

    Then I have $8 million. $7 million goes into the Vanguard LifeStrategy Growth Fund (or the equivalent funds…I guess I have time enough to rebalance manually rather than paying the slightly higher but still reasonably low expense ratio to have Vanguard do it for me) and we live off the dividends (at around 2% a year that’s probably $140k a year, which is a lot when you have zero debt — we’d probably spend half of that, and use the other half for charity). I can always dip into principal if necessary to pay for college for kid/future kids.

    The other $1 million becomes the dream/fun fund. Much needed new cars for my wife and I. A nice, long, multi-month vacation to Europe, Africa, Australia, New Zealand, Southeast Asia, and Tahiti (we won’t be working given our wealth, or, at least, we won’t HAVE to work — I’d still probably do some legal aid type work while trying out something new like writing or teaching/lecturing at a college/law school). A permanent, paid-off house wherever we decide to live (we like our current condo, but want a house with a yard for the kid and dog — so the current condo becomes a rental property or is just sold). Some new clothes. A great, fancy dinner out to celebrate. A fund to pay for personal training for a couple years at least. A fully stocked, state of the art wine cellar……

    Ahhh, it’s nice to dream. Back to the hustle to make it happen the hard-work way….

  50. Mike from NYC

    i have thought about this too…i was thinking of setting up a fund for personal use and charitable donations as well…
    i never really thought about helping family members (except for my Mom and sister)…
    i would probably buy a nicer house for around $1 Mil, which would be an upgrade but not as daunting with the maintenance as a $5Mil house…
    the one big upgrade would be my wardrobe because i’m not a big spender when it comes to clothes and shoes…
    great article

    – Mike

  51. Wow, what an interesting question. That much would be enough for me to retire, but I don’t think I would retire right away. I’m surprised by that answer, but there it is. I’m about a year away from making partner at my firm, and I think I’d keep working long enough to make it to that milestone, and then maybe a couple years more.

    And I really, really like your idea of sitting on the money for the first couple of months. I’d kinda want to see how property values are affected when the fed does the first little rate bump. Maybe they won’t be affected much, but if they took a little dip, that would be good. Then I’d spend around $5 million buying rental property.

    I like the charitable foundation idea, too. I might put a couple mil in for that. I would probably also buy some beachfront land somewhere on the west coast (or Hawaii) to build a house on later, when I am ready to move away from the rat race in Southern California. If there’s anything left over, I’d probably put it aside in cash, waiting for the next big opportunity. It’s fun to dream!

    1. I’d definitely MAKE partner, and then at least work 5 years making PARTNER MONEY! To leave before that would be like going to grad school and then retiring within 5 years. Gotta maximize the return I say!

  52. I’ve done this exercise many times before FI, and came up with similar answers to what you’ve come up with Sam… so great minds think alike. Of course, when you come upon this number through hard work rather than all-at-once, the answer usually comes out differently (because as you say, you’d be investing and re-allocating as you go, and you sometimes loose sight of the bigger goals).

    However, I’ve thought about your point #3 a lot (pay down debt) a lot, and I guess this one really depends upon what the debt costs. For example, on a rental property, if you’re cash-flow positive, and the debt cost is <2.5%, is it really worth paying off or using the money to make other investments? I guess this one for me is a toss-up. Obviously, if the cost of the debt is more than you could make otherwise, then the answer is clear.

    Also, with your point #6, I think you could probably get some of the stuff you're buying more cheaply when you have access to capital and are spending more (e.g., the first-class round the world trip could probably be a lot cheaper if you use credit card rewards and hotel/airline miles). Plus, I would suspect your frugal bones would probably revolt if you really tried to live it up too much. (and why not live it up, but still bargain hunt for the fun of it?)

    Finally, you kind of hint around this, but one of the things that I'd do is to create something (a business, intellectual property, etc.) with a portion of the funds. There is nothing like the return on investment (and satisfaction) you get from your own creations.

    In summary, my answer to this question is similar but slightly more general
    1) 40% Help myself (set up some income streams through investment, and leave a small portion to "live a little")
    2) 30% Help my family (set up a trust for perpetual giving to them)
    3) 15% Create something (a business, art, intellectual property, whatever) and
    4) 15% Help my community (similar to your perpetual giving trust).

    1. Looks like a good plan!

      I like to pay off no primary mortgage debt, even if it is tax deductible. Once you reach the $10M+ mark, you don’t want to be beholden to anyone or any organization as much anymore.

  53. I like your thought process, Sam. Very well considered.

    I wouldn’t change my life much but I’d put that capital back to work, investing in other companies (which is what I am doing now but always need more capital). As the snowball keeps growing you can re-allocate the cash flow streams to fund new projects. That’s a lot of fun, and it involves you with more people where you can add value and build relationships from the perspective of an investor and partner. Eventually it will mostly go back to the government or to charitable contributions but it should be a fun road to take.

    No way I’d buy a $5M house with that- you thought that through correctly.


    1. I would try my best not to give it back to the government, but to give it to people/organizations directly. Too many layers in the government to have any reasonable sort of efficiency!

  54. I’d probably invest most of it. I might stick some in a self-directed charity fund (though nowhere near $3 million of it, you generous Samurai! ;) ). I’d definitely like to have the financial flexibility to give away $100-200 at random times when I saw a need pop up, and know that it wouldn’t matter at all in my larger financial picture.

    Maybe upgrade our current house for $50k or so, or possibly sell it and spend a net of a few hundred thousand moving to a much nicer neighborhood IF we felt it was truly an upgrade from the groovy neck of the woods we live in now.

    Definitely help out family. Buy a half dozen plane tix for my in laws to go visit family in Cambodia that they haven’t seen in a while. Maybe buy a modest house (or provide a down payment) for 1-2 of my wife’s siblings, and, in the sake of fairness, give a cash lump sum to the other siblings. Help out her parents too.

    Beyond that, I would probably spend some on toys and take nicer vacations more often (until I got tired of it!).

    1. Sounds good to me Justin!

      I like the idea of being able to perpetually give $60,000 – $150,000 a year through the charitable trust, while having the option of moving my principal or reallocating the proceeds to another charity if needed.

      Cambodia was so hot this summer. That would be cool if you went back!

    2. You know what you can’t do? That is take it with you when you are dead. So, for me, I am 62, I would take care of my children and grandchildren, then buy a lot and build a house with all that I like. Then travel the world…When it runs out…it runs out.

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