how would you invest/live on 24m? Details forthcoming

[Gumby]

People on this thread are either the nicest or the most gullible people in the word.

I vote for nicest.

 

[Jmo1969]

Buy the lunch with warren buffet. Cost 1.6mm. Take your parents. Win.


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[eta2020]

It makes me think about what would be minimal sum at which I would not care about CD ladders and Bonds and could take unlimited risk of 100% equities with 0% worries and have enough yield to live on....

Certainly 24 Million would do it, but I think at 5 Million you enter that teritory.

 

[NW-Bound]

It makes me think about what would be minimal sum at which I would not care about CD ladders and Bonds and could take unlimited risk of 100% equities with 0% worries and have enough yield to live on....

Certainly 24 Million would do it, but I think at 5 Million you enter that teritory.

It still depends on your lifestyle.

I do not have 5M, but I think I can go 100% equity and live off the S&P yield of 1.95% right now, but cannot have 2 homes, travel expenses, charity donations and gifts to relatives. When I get to SS FRA, I will be in fat city again with SS added to that 1.95%.

But life's too short to be stingy. So, I am spending cap gain, if not principal right now. Me worry?

 

[eta2020]

It still depends on your lifestyle.

I do not have 5M, but I think I can go 100% equity and live off the S&P yield of 1.95% right now, but cannot have 2 homes, travel expenses, charity donations and gifts to relatives. When I get to SS FRA, I will be in fat city again with SS added to that 1.95%.

But life's too short to be stingy. So, I am spending cap gain, if not principal right now. Me worry?

Well to maximize all benefits one should just quit at 50....have enough money to last till 70 and then collect 3k plus in SS.

This will work out perfectly for high earners since they do not increase their SS benefits much by working after 50.

So I would say 2 Million will do in this bare bone plan where you leave this world exactly as you entered it....that is with nothing and yet live pretty comfortable life from 50 to maybe 90.

 

[NW-Bound]

I cannot turn back the clock to when I was 50.

I do not think I will get to 90, but if we can hold out until 70, we will get close to $70K of SS for both of us.

So, at my age now, if I am to deplete my stash in 12 years while waiting for SS, that would be a WR of more than 8%, even if I get 0% return after inflation. That's a lot of money to spend each year.

Perhaps I should turn my RV around and go back to Anacortes Marina.

 

[bld999]

...
That's a lot of money to spend each year.
Perhaps I should turn my RV around and go back to Anacortes Marina.

If spending your yearly allowance leaves you out of breath, a boat, esp. one that stays in the water all the time, would solve the problem for you.

 

[NW-Bound]

So, let's say I trade my 2 homes for one of those boats docked at Anacortes, then use 8% of my cash stash for fuel and to maintain the sucker... When I croak, the kids can split whatever they can get for the floating junk.

I have a question for boaters in this forum. How much is the expected maintenance cost for a trawler costing between $500K to $1M?

 

[eta2020]

So, let's say I trade my 2 homes for one of those boats docked at Anacortes, then use 8% of the cash stash for fuel and to maintain the sucker... When I croaked, the kids can split whatever they can get for the floating junk.

I have a question for boaters in this forum. How much is the expected maintenance cost for a trawler costing between $500K to $1M?

Just do it NW

Hey at 80 what would you pay if you could live again 58-60? Time is priceless.

That is you do not need 24 million to get a lot out of the life.....but you probably do need something over 1 million

 

[rodi]

24 Million is a nice problem to have.

Someone mentioned business class as a negative... I can tell you that if I had 24 M. I would only fly business class. Not sure about the 4 seasons - I prefer rental apartments to hotels...

Assuming the OP doesn't have any other assets (savings, real estate, etc.) (or my fantasy "me" that has a 24M windfall and nothing else) then I'd allocate as follows:

2M for a house. But I'm in a pricey area - the median list price for homes (SFR and condos) is 2.4 million in La Jolla 92037. But slightly inland you can get a killer house for under $2M.

For the parents - I'm not sure I'd allocate a full $2M... but could see paying off their mortgage (and making it clear this is a ONE TIME thing) and then, perhaps, offering an annual stipend of $14k each. If they have debt - they can service the debt with the stipend.

I would keep $1M in cash for operating expenses - spending and parents stipends, etc would flow through this account. Dividends/cap gains/etc would refill this account

I would keep the investments simple - 60% index fund equities, 40% index bond funds.

You've got 21M invested 60/40 (plus a 1M cash buffer, and a 2M house.) If you use a 2% WR - that's 420k/year to live on. You'd have to pay taxes, pay the stipend to the parents, plus upkeep on the pricey house... but I think most of us could live within that $420k budget.

And yeah - I'd be flying business class if I had $420k/year spending.

 

[Rickt]

With $24M to invest, you do not have to worry about money to live.....Congratulations!
I'm sure spending the money won't be a problem, you'll figure it out.

At age 30 and with 50-60 years to live, what you need to be thinking is how to spend/invest your time in worthwhile endeavors so as to help yourself and others that need help in this big wide world.

Cheers

 

[FUEGO]

At age 30 and with 50-60 years to live, what you need to be thinking is how to spend/invest your time in worthwhile endeavors so as to help yourself and others that need help in this big wide world.

With $24 million I would have enough to outsource that thinking to someone else. A professional philosopher maybe?

 

[NW-Bound]

... you do not need 24 million to get a lot out of the life.....but you probably do need something over 1 million

No, you definitely do not need $24M. And many people here have more than $1M, or pension higher than that $1M would generate.

Andrew Tobias wrote that "It's possible to live well whether you are rich or poor. When you are poor, it just costs less". True. However, most people draw the line somewhere north of living under a bridge. With at least $1M, you are out from under a bridge.

One does not need a $1M boat to live well. I saw a sailboat suitable for a beginner there at around $30K. But it could be leaky... What do I know?

Anyway, just joking about living on a boat. I get seasickness easily.

... I can tell you that if I had 24 M. I would only fly business class...

And yeah - I'd be flying business class if I had $420k/year spending.

Heck, I would be flying business class exclusively at a wealth threshold well below $24M. Not sure how much a jet charter would cost, but I would certainly look into that.

With $24 million I would have enough to outsource that thinking to someone else. A professional philosopher maybe?

We have free "philosophising" here on this forum all the time. Who's to say that a decamillionaire can't be frugal and take advantage of this freebie?

 

[robertf57]

With $24 million I would have enough to outsource that thinking to someone else. A professional philosopher maybe?

Fortunately, I am available for a mere $10M

 

[petershk]

I don't have 24m but I did have a reasonable windfall type scenario.

My advice is to over value experiences and undervalue "stuff." If you like your house and car... Don't change it. If you don't... Get what you need but don't go nuts.

If you want a Ferrari... Rent one for the weekend instead. Stuff is a headache.

Yes. Vacation...business class... Awesome hotels or nature trips... Whatever.

I'd also make sure to dedicate time really thinking about what you want to do beyond that.

Something you can see on this board a bunch is that when you suddenly have much more than other people it can also make stuff weird.


If you start pulling up in a Ferrari... Wearing fancy clothes and buying a beach house.. you will attract unwanted attention. Now...if you LOVE cars and want a Shelby or something... That's different.

For parents... I think it depends on the people. If they are good with money... Fine give them a couple mil. If not... I would set up a trust or something. 2 million can go fast if you dont pay attention and if it comes out of nowhere it's easy to not pay attention.

In any case... It's a chance to have a fulfilling life and make a difference if you want. Good luck!

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[unclemick]

Research creating a foundation.

Pssst Wellesley.

Buy a pair of Bib Overalls preferably Carhatt and adopt a low profile.

heh heh heh - just kidding - sort of.

 

[Travelwanted]

I don't have 24m but I did have a reasonable windfall type scenario.

My advice is to over value experiences and undervalue "stuff." If you like your house and car... Don't change it. If you don't... Get what you need but don't go nuts.

If you want a Ferrari... Rent one for the weekend instead. Stuff is a headache.

Yes. Vacation...business class... Awesome hotels or nature trips... Whatever.

I'd also make sure to dedicate time really thinking about what you want to do beyond that.

Something you can see on this board a bunch is that when you suddenly have much more than other people it can also make stuff weird.


If you start pulling up in a Ferrari... Wearing fancy clothes and buying a beach house.. you will attract unwanted attention. Now...if you LOVE cars and want a Shelby or something... That's different.

For parents... I think it depends on the people. If they are good with money... Fine give them a couple mil. If not... I would set up a trust or something. 2 million can go fast if you dont pay attention and if it comes out of nowhere it's easy to not pay attention.

In any case... It's a chance to have a fulfilling life and make a difference if you want. Good luck!

Sent from my HTC One_M8 using Early Retirement Forum mobile app

Excellent post.

My NW is around 8 figures, but not as high as OP. My opinion is money is security. First and foremost don't screw that up. After that stuff is just stuff. I love cars but ultimately I grow bored with them. And, I have often found the idea of the "thing" is often better than actually owning it. Having nice stuff can be fun but it won't fulfill you. And, to petershk's point, money can be difficult. Friends and family will often treat you differently. New friends can be harder to make if they have an idea of your NW.

Experiences are much more fulfilling. Travel, do charity, get involved. This is where it's at IMHO.

I'd invest conservatively and simply. Your exact AA will only matter if your spending gets crazy. I suggest a couch potato type portfolio. Vanguard will give you free advisors at 10 million (Flagship Select Services).

Be careful. You have a target on your back now. Make sure you have great insurance. Get an umbrella liability policy ASAP. I recommend Chubb or PURE.

Watch out for "advisors" preying on you. Again, you have a target on your back. Do your homework before hiring any CPA or attorney. The more you can do on your own the better. When you need a good CPA/attorney - go with a larger firm. My friend and attorney once gave me this great advice: You want the firm to be accountable if the person screws up. A small shop or solo practitioner could be gone in the night. This advice holds true if you decide you want to hire a FA.

Good luck and be careful. Done properly this should entail lots of thought and some work.

Fools rush in where angels fear to tread.
-Alexander Pope

 

[Danmar]

It makes me think about what would be minimal sum at which I would not care about CD ladders and Bonds and could take unlimited risk of 100% equities with 0% worries and have enough yield to live on....

Certainly 24 Million would do it, but I think at 5 Million you enter that teritory.

Well, I am in this position. Somewhere between 5 and 24 million invested 100% equities. Yield around 3.75%. Although, I do have a very generous pension that provides some security. So I know the lifestyle it generates. Very nice lifestyle but certainly not unlimited. No 100 ft yachts, or private jets. Still need a budget but we do travel business class.
Good previous advice about "being careful" learn as much as you can about money and do as much as you can yourself. Generally be conservative until you feel comfortable. Don't go crazy. It's not a billion, and therefore might not last if you screw up.

 

[eta2020]

Experiences are much more fulfilling. Travel, do charity, get involved. This is where it's at IMHO.

I'd invest conservatively and simply. Your exact AA will only matter if your spending gets crazy. I suggest a couch potato type portfolio. Vanguard will give you free advisors at 10 million (Flagship Select Services).

Excellent advise for anybody who is FI.

The nicest things in life cost almost nothing. Stuff is boring.....

 

[NW-Bound]

Quite often, you need stuff to get the experience. But then, people concentrate on the "stuff" and forget about the experience part. They bought fancy RV, but then where do they go, and how often? I got plenty of RV travel experience with my el cheapo class C, which can be treated as disposable although I still take care of it as if it's my first and last RV. And a bigger RV would be detrimental to my style of travel, as it precludes places where I want to go.

If I were really interested in boating, I would be able to sample that experience with a much lesser boat than a $500K trawler like I joked about earlier.

If foreign travel and encountering different culture is the objective, what do you see if you are chauffeured from place to place, and do not walk the streets, nose into the shops, check out restaurants that the local frequent, etc...? (However, business class seats do enhance the experience significantly, if one can afford it).

And one can blow away any amount of money. Billions too. Look at McAfee who sold his business to Intel for $8 billion, then squandered most of it, and was wanted as a murder suspect in 2012. Have not seen him mentioned in the media recently.

Here's his portrait (photo linked from the Web).

 

[Closet_Gamer]

I want to believe that given a $24M windfall I would set up $5m to fund my current lifestyle plus a little bit and then set up a $19m charitable trust.

Of course, we are all susceptible to accommodation where our goals/desires change in light of changing circumstances.

I hope some day to find out!

Congrats to the OP.

 

[Nords]

I wonder if the OP is Nords playing us

Yeah, you know my first comment would be:
"That's a trick question-- what's your asset allocation plan?"

$20 million would generate maybe $600,000 -$800,000 per year pre tax. Once the investing decisions are made, and I agree it really isn't much different than investing $1million, the real issue is how to spend/gift it every year. Make a multi year budget to allocate to the things that are important to you.
It really isn't that difficult to spend that kind of money, but it does take a while to adjust to your new wealth level. Go slow don't make any big commitments for a while.

My spouse and I had a lengthy conversation about this last month. After reading Danmar's (and other's) posts for a few years I understand lifestyle expansion, but I wonder if the stewardship imperative would be just as strong.

Last month we were invited to a house of a member of our angel investor group. (He owns several residential properties around the world, so I'm not sure that "home" is the right word.) The property is on Diamond Head (not "near" but "on the slope of an extinct volcano"), an easy paddle from Doris Duke's Shangri-la estate. A 6000 sq ft home on a third of an acre. Zillow claims his address is worth $9.5M.

I knew it was serious money when I hosed off at his beach shower and realized that it was plumbed for hot water as well as cold. But I think it came from a solar water heater.

The house is gorgeous. Koa wood was everywhere. The landscaping is park-like impeccable, with nary a dying blade of grass anywhere. The bronzes and sculptures scattered about the yard had to cost at least five figures (each). We never got into the house proper but its entire back wall (ocean view) was plantation shutters.

So we sat there in the upper cabana, next to the back deck and the outdoor kitchen (built-in gas grill) and the infinity pool and the hot tub, watching the surfers and the commercial shipping traffic. And we had our usual DIY home-improvement discussion about what we'd need to do to take care of the place, even if we were just house-sitting.

By the time we were done we had a payroll of the gardener, the housecleaner, the pool guy, the aquarium service, the shoreline stabilization consultant, the handyman (especially for the lights in the palm trees), and the security firm. We realized that we'd be running a facilities business and having to deal with people every day.

As the afternoon wore on, we noticed another issue: he and his spouse are very concerned about the property's security. They don't live there year-round, so it needs a caretaker. (Oops, better add that to the payroll too. We need to call our accountant. Oops again.) They had ceiling cameras all over the back lanai, and he said the whole house & property was wired for video/audio. He did not want guests taking photos with their cell phones. When I surfed the break off his property, we had a ridiculous amount of trouble with the keys for the lock on the beach gate. $9.5M and it doesn't have a cypherlock or even just a combination lock?!?

By the way, the ocean took away 10 feet of beach sand last winter. He thinks most of it will come back, but he's started keeping track. In 10-20 years a seawall would not be out of the question.

We're much happier with our "smaller" 2400 sq ft home (on a third of an acre) that we can care for without assistance. It's lifetime functional fitness, and I'll probably stop pruning the 10-foot-tall bougainvillea hedge by myself when I'm 90 years old. But we really enjoy being left alone in relative obscurity, taking care of our own stuff.

If we ever accumulated an eight-figure portfolio, we'd take the Giving Pledge and leave about 95% of it to a foundation.

Hmmm, very interesting.
If you're a bit nervous then I would suggest also buying a small working farm in a remote area with a long growing season and hire someone to operate it for you. That way if the SHTF and money doesn't count anymore you will be way ahead of the game.

Rumor is that our local billionaire Pierre Omidyar has a whole warehouse set up with food, water, and other disaster supplies for his entire family and staff. You can't just put this stuff in a storage locker and swap out the water bottles every year or two, either-- it takes a full-time emergency-readiness manager to stock and maintain the inventory for a couple dozen people. But when you're a billionaire, you can self-insure for the Cat 5 hurricane.

Someone mentioned business class as a negative... I can tell you that if I had 24 M. I would only fly business class.
[...]
And yeah - I'd be flying business class if I had $420k/year spending.

Pfffft. NetJets membership.

Besides, you'd only be flying a half-dozen times per year because you'd stay in each place at least a couple of months.

 

[Danmar]

Nords: there are lots of ways to spend/gift. Each person makes their own decisions. Respecting other's decisions/approaches is important I think. I respect yours' and others' here. But the question in this thread was pretty specific and assumed a certain level of wealth. It seems quite difficult for many people to imagine spending or wealth different than their own. I am guilty of this as well.

 

[jkern]

I recommend against buying (or improving) a house worth more than 80% of the sale price in your housing market. The reason is that when you go to sell (as eventually you will) potential buyers will be few and far between. The other is the 'lifestyle' issue, better to be seen as comfortable than rich.

I guess it depends on your housing market. In the SF Bay Area, you can buy a house at 100% of the typical sale price and when you go to sell it potential buyers may be lined up out the door.

 

[Rick_Head]

Anyone else waiting for the forthcoming details? I'm guessing the source of the $.