What Would You Do With $1 Million Dollars?
This topic is not really in line with saving day to day or financial managment, but since its Friday, we thought we would have a little bit of fun. Shown below, is a couple that won $270 million dollars and looked as though it was an inconvenience. Very entertaining to watch to say the least. So the question is…”What would you do with just $1 million? How would you spend it?”
Ben:
I think that given the tax bracket would be ramped up due to higher income level on a lump sum, I would elect to get them in monthly payment. Given that, the first thing I would do would become debt free as fast as possible. Pay off my car, student loans and the little bit remaining on my credit card. After that, I think I would split the rest between a high interest savings account and an IRA and some long term ETFs. With even a fraction of that, you could be very comfortable with simply the interest that would be generated.
If it were more I would take a hard look at real estate. Prices are dropping as the bottom is getting knocked out of the whole market and with that much capital it would be easy to swoop in and snap things up when the winds of change are more favorable. With anything I came up with I would be turned around and rent out for some passive cash flow. I was tihnking some vacation apartments.
But given that it would only be 1 million dollars, I would not quit my job. Inflation is too intense for me and given the state of the economy, it would not be wise to do so. Now 500 million…that’s a different story. What would you do if you won the lottery?
Frank:
First, I’d buy Ben a green dress, but not a real green dress that’d be cruel. In all seriousness, if I were to win a million dollars today, the decision on what to do with the money is easy. A windfall of cash as big as this, represents two things to me: 1) I can now live debt-free and 2) early retirement. When I look at my long-term financial goals, these two items rank at the top and are basically stand alone.
Debt Free
Unfortunately, both my wife and I went to an overpriced private college which we are paying for now. Speaking for myself, I do not regret the decision completely, as it has led us to where we are today, and in my opinion, this is a good place. Having said that, we are now left with a substantial amount of debt to pay off, which a cool mill will come in handy. My wife and I are lucky enough to have no credit card debt, as well as do not have an outstanding car loan. Therefore, the only debt we have coupled with the student loans is our home mortgage. Although there may be a benefit to invest all of the money to hopefully earn about 8% annually, and continue making payments on our low interest federal student loans payments month to month, which have an interest rate of 3.5%. The reason for this is the interest I could potentially receive from the investments would be greater than the amount of interest I would be paying on my loans, thus more money in the bank. The reason I would not go this route is because in my opinion, the “phew” feeling of being debt free, has no price tag.
Retire Early
Currently, it’s safe to say, depending on your lifestyle, that a million dollars is enough to retire on at age 55. I would love to retire at age 55; however, with this extra cash in my lap, I could conservatively expect to reduce this number to age 45. Yes, I would continue working and living moderately in order to retire at age 45 with some luxury. Assuming after taxes and paying off debt I’m left with about $500,000, I could invest this for twenty years with an 8% earnings and retire at age 45 with $ 2,667,862.49 (remember, this amount would continue to earn interest, likely faster than I could spend it). Sound good to you? I wouldn’t get risky with the investment; I see no reason to not invest in a low-cost index fund. Why try to beat the market with a free huge windfall of cash like this? I’m going to take it, invest it, and relax knowing that in twenty years, I’m done.
Now, back to reality, see ya at work on Monday.
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Invest!
Did you know you can invest in real estate inside your IRA or Solo 401(k) just as you can traditional assets?
Millennium Trust Company (http://www.mtrustcompany.com/services/ira/real.asp) located in Oak Brook, IL, custodies real estate in self directed IRAs and solo 401(k)s. They can walk you thru the process. Try contacting Sandra Reese at sreese@mtrustcompany.com for more info.
1 Million Dollars is not really money in this economy.. Is buy car wax and axe spray an answer..?
@ MobiBlog: You make an excellent point that we discussed before writing this article…While in today’s terms, 1 million does not hold the pwoer it once did, it is still enough to make for a great leaping off point and to resolve some debt. If we asked what would you do with 1 billion, that would have been too easy…1 million is just low enough where you have to be careful. Nice site by the way.
10% to charity off the top
pay off bills
invest in a mix of funds that pay good dividends…
quit my job
travel and become a full-time student
profit!