# If I had a million dollars.... **URL:** \ **Category:** In My Humble Opinion\ **Created:** [January 12, 2015, 8:51pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649 "2015-01-12T20:51:05Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [January 13, 2015, 6:59am UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/41 "2015-01-13T06:59:11Z")
> [@XT](#): > > Simply look at the answer to this thread and you’ll see why most instant millionaires end up broke in a fairly short time. Not trying to be mean, but most people don’t have any idea what to do with this kind of money, and far from solving all their problems it will probably make things worse in the long run. Your thought here is spot on…first thing to do is hire a trusted and competent money manager. And… > …follow this general advice. If you are 70ish then you can think about spending the principal. If not, then seek advice if you ever get a windfall like this, even wrt paying off debt or a house prior to spending a dime. I didn’t get anywhere near a million bucks, but 20 years ago I took a nice buy out to leave AT&T, and invested pretty much all of it. I can testify that **XT** ’s advice is good advice. Many people have well understood hangups about investing, including loss aversion. Look at all the people who sold in 2009 who didn’t need to. Just as in many other areas, it is good to have someone involved who is not emotionally invested in your money. ---
**Author:** ![Becky2844](https://avatars.discourse-cdn.com/v4/letter/b/91b2a8/32.png) [@Becky2844](https://boards.straightdope.com/u/Becky2844)\ **Post date:** [January 13, 2015, 8:21am UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/42 "2015-01-13T08:21:27Z")
First I would consult a money manager. I assume paying off the house and covering our debts would be next. I would invest some of the money. I would buy each son a dwelling that pays them, like a duplex where the other tenant’s rent covers expenses. Or a small farm growing a cash crop, or raising cattle to be sold as needed. (“Cash” cows.) I would make contributions to far-reaching endeavors like Matt Damon’s or Bill Gate’s forays into potable water available globally. I would finally visit the United Kingdom. If there was enough left over, I would sell the house and buy a little land with a creek or on a river. Dot it with some modest housing (lodges?) and outbuildings for specific use: a smokehouse, a barn, a music studio, a windowed artists’ space…with some kind of communal hall. Charge those who could afford the retreat. Make available the time to create for some who couldn’t. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [January 13, 2015, 12:00pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/43 "2015-01-13T12:00:40Z")
By the time my kid is ready for college, a million dollars should be just enough. > [@buddy431](#): > > Your money manager is going to charge you 1% each year to manage your money. If you hire a money manager, you’re saying that you think he can do $10,000 a year better than you can on your own. If you literally have no idea about finance, that might be true, but if you take even a little bit of time to research it, it’s probably not. This is largely sound advice. However I would say that more important than hiring some money manager is hiring a good accountant. They’re a lot cheaper and where they can really help you is with is in reducing your tax burden as you invest your million. ---
**Author:** ![GrumpyBunny](https://avatars.discourse-cdn.com/v4/letter/g/bc8723/32.png) [@GrumpyBunny](https://boards.straightdope.com/u/GrumpyBunny)\ **Post date:** [January 13, 2015, 12:06pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/44 "2015-01-13T12:06:48Z")
[ol] [li]Pay off existing debts.[/li][li] Buy a house near water. Do a little renovation if needed.[/li][li] Give a bit to the local animal rescue group.[/li][li] Put the rest in savings.[/li][/ol] (I was going to say, vacation, but if I’m not paying rent, I can afford a vacation!) My dad can do the financial management and accounting stuff. He’s good at that. 🙂 ---
**Author:** ![Velocity](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/velocity/32/18006_2.png) [@Velocity](https://boards.straightdope.com/u/Velocity)\ **Post date:** [January 13, 2015, 12:08pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/45 "2015-01-13T12:08:10Z")
Pay off all debt and go to flying school. ---
**Author:** ![Urbanredneck](https://avatars.discourse-cdn.com/v4/letter/u/ea5d25/32.png) [@Urbanredneck](https://boards.straightdope.com/u/Urbanredneck)\ **Post date:** [January 13, 2015, 12:25pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/46 "2015-01-13T12:25:04Z")
Now I do know someone who had a big windfall from inheritance and put $1.6 million into an investment thats guaranteed to pay him $10,000 a month (to start, its higher now like $12,000) for 20 years. But those investments are hard to find. ---
**Author:** ![GuanoLad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/guanolad/32/42_2.png) [@GuanoLad](https://boards.straightdope.com/u/GuanoLad)\ **Post date:** [January 13, 2015, 1:03pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/47 "2015-01-13T13:03:45Z")
Can’t do much with a million these days, so best use it wisely. I’d try to live off the interest, but probably couldn’t achieve that, unless I lived very frugally. It would augment my income healthily, though. Another option is buy a house outright, which would eliminate a lot of ongoing expense. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [January 13, 2015, 3:24pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/48 "2015-01-13T15:24:55Z")
I wonder how many of the “pay off the mortgage” folks are actual better off doing that, because it’s usually a dumb move. ---
**Author:** ![Great\_Antibob](https://avatars.discourse-cdn.com/v4/letter/g/e47c2d/32.png) [@Great\_Antibob](https://boards.straightdope.com/u/Great_Antibob)\ **Post date:** [January 13, 2015, 3:35pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/49 "2015-01-13T15:35:47Z")
> [@msmith537](#): > > This is largely sound advice. However I would say that more important than hiring some money manager is hiring a good accountant. They’re a lot cheaper and where they can really help you is with is in reducing your tax burden as you invest your million. Pretty much this. I talked to a few guys at some of the banks around Houston. The wealth management guys are just going to shuffle your money around in various mutual funds, and after taxes and fees, you’d be better off just parking it in low cost index funds anyway. That 1% is big, and those guys don’t out-perform the S&P 500 over the long term, anyway, not for just $1M. They only start to get a little interested once you have something in the neighborhood of $5M. And even then, you’re the small fish in the big pond. Even there (or even with $10M), just put your money in a rough mix of low cost index funds, and you’ll do just fine. When you have that much money and are close to retirement, you can already live out the rest of your life in your accustomed style even with slightly suboptimal returns. That is, unless your goal is to see just how big you can make your bankroll or you were already in the top 1% to begin with. ---
**Author:** ![Doctor\_Jackson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/doctor_jackson/32/32_2.png) [@Doctor\_Jackson](https://boards.straightdope.com/u/Doctor_Jackson)\ **Post date:** [January 13, 2015, 3:59pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/50 "2015-01-13T15:59:48Z")
10 percent to charity, 20 percent to pay off mortgage and renovate my house, 10 percent cash gifts to family, 10% in a liquid account, 50 percent invested. Is paying off my mortgage the wisest financial decision? Maybe, maybe not, but I do feel better when I am debt free and that’s worth something. ---
**Author:** ![Bill\_Door](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@Bill\_Door](https://boards.straightdope.com/u/Bill_Door)\ **Post date:** [January 13, 2015, 4:35pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/51 "2015-01-13T16:35:38Z")
> [@LSLGuy](#): > > The taxes I was referring to are the taxes on the income you make off the 1M. Which taxes you have to pay out of that income. > > e.g. You take the $1M & buy bonds that pay 5%. So that gets you $50K of income. All of which is taxable. So you \*must \*pay ballpark $10K in taxes (20% tax rate) on that $50K. So now you’ve only got $40K left to spend. But, if inflation is 2% this year, and you \*choose \*to keep the principle intact, you need to put $20K of that $40K towards buying more bonds. That ensures that next year your income still has the same spending power. > > After you buy those additional bonds, you have $20K left to spend. > > To be sure, a person can elect to either spend principle, or to keep it at just $1M and permit inflation to slowly erode the value of the money. Spending at least some principle is probably a smart decision for a 70 year old. Probably not for a 20 year old. > > Spending significant principle at a young age is how most lottery winners blow all their windfall. You put $5,500 in an IRA dropping your taxable income by that much and instead of bonds which you’ll have a hard time finding any risk free that pay 5% you invest in a portfolio of dividend paying stocks which have a maximum tax of 15% unless you earn more than $229,000 a year. You’ve already put $5,500 in an IRA so you don’t have to buy any more bonds, you just reinvest the dividends you don’t need to spend and just keep DRIPping away. Easy as pie. Ten years down the road you won’t even remember what it was like to be poor. ---
**Author:** ![slalexan](https://avatars.discourse-cdn.com/v4/letter/s/e47c2d/32.png) [@slalexan](https://boards.straightdope.com/u/slalexan)\ **Post date:** [January 13, 2015, 4:52pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/52 "2015-01-13T16:52:44Z")
I would pay off my student loans and other debt first. Then I would cry tears of joy. Then I would consult a financial manager to figure out how much I should put toward retirement vs a college fund for Baby. I would try to leave a little behind, maybe $50k, to buy my husband a car and a vacation together. But I would definitely pay off debts first. Psychologically, it would be the best thing to do even if it wouldn’t be financially. ---
**Author:** ![Machine\_Elf](https://avatars.discourse-cdn.com/v4/letter/m/82dd89/32.png) [@Machine\_Elf](https://boards.straightdope.com/u/Machine_Elf)\ **Post date:** [January 13, 2015, 4:55pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/53 "2015-01-13T16:55:29Z")
> [@Doctor\_Jackson](#): > > Is paying off my mortgage the wisest financial decision? Maybe, maybe not, but I do feel better when I am debt free and that’s worth something. Hope it’s worth a lot. Assume you owe $150,000 on your mortgage, with a 4% rate and fifteen years remaining if you pay it down on schedule. Suppose you invest $116,102 in a fund that returns, say, 8%; that chunk of money, plus its ROI, would be enough to pay down your $150K mortage on schedule. IOW, by paying $150,000 to eliminate your mortgage right now (instead of investing $116,102 to pay it down over time), your peace of mind is costing you $34,000. The counterargument is that no investment is without risk, and paying off the mortgage is a sure thing, To my mind, that is a hefty expense for a sure thing; the stock market, over a period of fifteen years, doesn’t pose much risk. ---
**Author:** ![Telemark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/telemark/32/372_2.png) [@Telemark](https://boards.straightdope.com/u/Telemark)\ **Post date:** [January 13, 2015, 4:57pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/54 "2015-01-13T16:57:40Z")
> [@Ruken](#): > > I wonder how many of the “pay off the mortgage” folks are actual better off doing that, because it’s usually a dumb move. It’s probably not the best financial move, but for a lot of folks getting that level of security means a lot. It frees them up mentally to spend money on other things, or removes the temptation to spend down their money on non-critical items while they still have debt. Not all financial moves have to make the best bottom line sense to still be the right move for a particular person. ---
**Author:** ![Bill\_Door](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@Bill\_Door](https://boards.straightdope.com/u/Bill_Door)\ **Post date:** [January 13, 2015, 5:07pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/55 "2015-01-13T17:07:35Z")
> [@Machine\_Elf](#): > > Hope it’s worth a lot. Assume you owe $150,000 on your mortgage, with a 4% rate and fifteen years remaining if you pay it down on schedule. Suppose you invest $116,102 in a fund that returns, say, 8%; that chunk of money, plus its ROI, would be enough to pay down your $150K mortage on schedule. > > IOW, by paying $150,000 to eliminate your mortgage right now (instead of investing $116,102 to pay it down over time), your peace of mind is costing you $34,000. > > The counterargument is that no investment is without risk, and paying off the mortgage is a sure thing, To my mind, that is a hefty expense for a sure thing; the stock market, over a period of fifteen years, doesn’t pose much risk. The thing to do is to allocate it just like any investment. If normally you’d be 70% equities and 20% bonds and 10% cash you should count the money used to pay down the mortgage as part of your bond allocation. That puts extra money into equities. The same with annuities, I have a small ($400/month) pension from a job I quit 20 years ago. It would take an investment of $120,000 to earn the equivalent cash. When I calculate my allocation buckets, that counts as a bond. It keeps me from being overcautious. You should do the same with any guaranteed income. ---
**Author:** ![Great\_Antibob](https://avatars.discourse-cdn.com/v4/letter/g/e47c2d/32.png) [@Great\_Antibob](https://boards.straightdope.com/u/Great_Antibob)\ **Post date:** [January 13, 2015, 5:23pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/56 "2015-01-13T17:23:06Z")
If people can hit their retirement goals and they get something of value (cliched, but peace of mind is real) by not maximizing their ROI, what’s the problem? Meh. Next, we’ll be berating people for buying Maseratis when Audis are a better value proposition. ---
**Author:** ![Smeghead](https://avatars.discourse-cdn.com/v4/letter/s/f1d935/32.png) [@Smeghead](https://boards.straightdope.com/u/Smeghead)\ **Post date:** [January 13, 2015, 5:25pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/57 "2015-01-13T17:25:46Z")
Pay off my student debt, invest the rest, use the returns to supplement my income for the rest of my life, sleep a metric fuckton better at night. ---
**Author:** ![Machine\_Elf](https://avatars.discourse-cdn.com/v4/letter/m/82dd89/32.png) [@Machine\_Elf](https://boards.straightdope.com/u/Machine_Elf)\ **Post date:** [January 13, 2015, 5:42pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/58 "2015-01-13T17:42:27Z")
> [@Great\_Antibob](#): > > If people can hit their retirement goals and they get something of value (cliched, but peace of mind is real) by not maximizing their ROI, what’s the problem? > > Meh. Next, we’ll be berating people for buying Maseratis when Audis are a better value proposition. If people undertand the objective dollar value of their choice, and _still_ make that choice for subjective reasons, then hey, great - an informed decision is a wonderful thing. Example: two years ago I bought an expensive car that gets shitty fuel economy. But I’ve done the math - I know exactly how much it costs me to own/operate it, and I have no regrets because it’s a blast to drive. But I get the feeling that people in this thread who say “I’ll pay off my mortgage immediately” have never really sat down and worked out the actual dollar value; they know it feels good to pay it off now, but they have no idea how much that choice is costing them. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [January 13, 2015, 5:46pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/59 "2015-01-13T17:46:45Z")
Looks like we have plenty of fodder here for the “Financial disacuity” thread. Walter Mischel should have ditched the marshmallows and studied supposed grownups with low-interest debt. ---
**Author:** ![Si\_Amigo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/si_amigo/32/2877_2.png) [@Si\_Amigo](https://boards.straightdope.com/u/Si_Amigo)\ **Post date:** [January 13, 2015, 5:47pm UTC](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649/60 "2015-01-13T17:47:06Z")
Pay of all of my debts, keep my job and take 4 weeks of vacation each year with a different high dollar hooker each time. Other than that my life wouldn’t change but I’d think that I’d get along better with people and be a nicer person. [Previous page](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649.md?page=2) [Next page](https://boards.straightdope.com/t/if-i-had-a-million-dollars/709649.md?page=4)