Investing A Windfall When You're Already OK for FIRE

[Vincenzo Corleone]

So, your finances are in great shape, your home is paid off, you have no other debt, etc., etc., etc. You feel confident that you can RE.

Now imagine you've received a windfall that nearly doubles your net worth. Also imagine you have no interest in leaving anyone anything upon your death.

I'd like to hear your opinion about how you'd invest the windfall. 100% stocks? Play it super conservative? Invest it like you've invested your money up until receiving the windfall?

 

[street]

Always fun to dream. Lol

Well, I might invest some but I would buy another ranch. This money I most likely would invest in land and enjoy the outdoors.

 

[Z3Dreamer]

In theory, money that you absolutely need right away should be invested in the most conservative way. Therefore, money you that will NOT depend on, do not need, can be invested in the most aggressive manner.

I would pick some of the most aggressive mutual funds I could find. If I had time to research and follow, I might pick individual stocks.

 

[njhowie]

Then why invest it at all? What is the objective? You now have double what you "need". You're willing to gamble it for something more?

Stash it away in something ultra safe like CDs that will throw off some regular amount of income, use that money to spend as you like. Don't touch the principal - so you have a large emergency fund. Who knows what the future might hold?

 

[Fermion]

I would invest it 100% stocks with the goal of using it for space tourism if that gets rolling before I am too old to take the G's

 

[cooch96]

If I’m already FIRE and I get a windfall, I’d invest the extra in life: remodel the deck, get a fun car and take it out to the track, end enjoy a grand tour of Africa.

Whatever I don’t spend in the first year would be put in a Value Stock mutual fund. I would try like heck to spend it all over the next 5 years.

 

[RunningBum]

Now imagine you've received a windfall that nearly doubles your net worth. Also imagine you have no interest in leaving anyone anything upon your death.

If the bolded part were true, I'd probably invest conservatively unless you have some wild ideas like booking a trip to Mars that might need more money. It sounds like you could improve your lifestyle quite a bit with first class travel and all that without any risk. I'd probably do something like 20-30% stocks and also look at TIPS for inflation protection.

For myself, even if I didn't have heirs, I might want to leave a larger charitable legacy so I'd probably be somewhat more aggressive with the investing. But that's a different goal from what you stated.

 

[Midpack]

Sounds like you've won the game, so you can do anything you want with the windfall. If you don't need the money, maybe leave it very conservatively invested in case of a near geopolitical apocalypse. OTOH if you don't need the money but you want to maximize your final balance for heirs and/or charity, odds are investing at least a portion in equities will do that.

I inherited some cash, also above and beyond our needs, and more than expected but not as much as your windfall. And it's been sitting in cash for almost a year. I'll probably invest it to bring us to 50:45:5 or so, but obviously I'm not in any hurry as we were beyond set without it. Nice problem obviously.

 

[euro]

So, your finances are in great shape, your home is paid off, you have no other debt, etc., etc., etc. You feel confident that you can RE.

Now imagine you've received a windfall that nearly doubles your net worth. Also imagine you have no interest in leaving anyone anything upon your death.

I'd like to hear your opinion about how you'd invest the windfall. 100% stocks? Play it super conservative? Invest it like you've invested your money up until receiving the windfall?

Find a charity of your choice and give it all away!

 

[The Cosmic Avenger]

That's pretty close to our situation, except we do have one kid, and while we're not specifically planning on leaving them anything, we don't want to run out of money either, so chances are there will be significant money left over when we are both gone. Other than that, pretty close, as my father left me more than half of what we had already, and I figured we would already be OK. And while we're not planning or counting on it at all, our one remaining parent could possibly leave us significantly more than my dad did (although now our net worth is a lot more than that), so I've wondered what we would do if that occurred.

Right now, my thought would be to up our spend rate somehow, whether it's charitable giving, gifts to family, first-class international travel, vacation homes...I've thought about it enough that I'm sure I could find a way to keep my WR the same even if our NW jumped. But if it happened right now, I'd probably consider retiring, as right now we are looking to work for 5 more years mostly to pay for college, and in your scenario we would easily have enough to pay cash for that.

 

[unclemick]

Foundation. My ego says thus I can extend my wishes in the after life.



heh heh heh - Unclemick's free range Bison or regenerative urban gardens or or ??

 

[aja8888]

I'd buy selected real estate properties and set DD up in rentals for part of her future income streams. I would set up a college fund for the step-grandson who will need it.

I'd then blow $100K on a 2020 Corvette for me.

Anything left over...I'll make a nice Christmas for my needy nephews back in Connecticut, or just use the funds to help get them out of that tax-crazed state.

 

[Major Tom]

Anything left over...I'll make a nice Christmas for my needy nephews back in Connecticut,

I initially read that as "nerdy nephews" which, amusing as it was, didn't really fit into the context of your answer, prompting a re-read

 

[jollystomper]

Personally I would invest it as I had already invest my money. I would likely however increase my charitable giving - maybe start a charitable foundation earlier than planned - and I would have an interest in leaving most of it to our children. I have no need to increase my lifestyle beyond what I enjoy today, and you can't take it with you.

 

[Major Tom]

In the past, when receiving an extra bit of money, typically, I'd spend a little on something for myself, and save the rest. I'd probably do the same this time, putting the entire remaining amount in VTSAX, with dividends directed into a savings account. That would provide a nice bump to my existing income.

 

[GrayHare]

I would diversify in order to reduce risk, then seek worthy charities to donate or bequeath to, this is all after paying the customary tribute, of course.

 

[Mdlerth]

Easy come, easy go

I would deposit the windfall into the account for which DW keeps the checkbook. That oughta take care of it.

 

[OldShooter]

... I'd like to hear your opinion about how you'd invest the windfall. ...

It's really not about what someone else would do. You're looking for ideas on what you might do. No way to answer that question without knowing what problem you're trying to solve.

That is actually a very common problem with this type of question. Do you want to eventually buy a Cessna Citation jet? A condo in Aspen? Do you have charities where you'd like to make a difference? Do you want to take one of National Geographic's private jet tours around the world or live full-time on a cruise ship?

If you don't have a goal, then any decision is as good as the next one.

For DW and myself we might up our travel a little bit, but most of a large windfall would end up in our estate for son, grandchildren, and already-identified charities. One of them is a community foundation, which will get fairly serious six figures. These community foundations (https://www.cof.org/community-foundation-locator) are small enough and focused enough that we can be very involved with setting objectives for grants from our money and our money is not just a drop on someone's national charity bucket.

 

[Vincenzo Corleone]

It's really not about what someone else would do. You're looking for ideas on what you might do. No way to answer that question without knowing what problem you're trying to solve.

That is actually a very common problem with this type of question. Do you want to eventually buy a Cessna Citation jet? A condo in Aspen? Do you have charities where you'd like to make a difference? Do you want to take one of National Geographic's private jet tours around the world or live full-time on a cruise ship?

If you don't have a goal, then any decision is as good as the next one.

For DW and myself we might up our travel a little bit, but most of a large windfall would end up in our estate for son, grandchildren, and already-identified charities. One of them is a community foundation, which will get fairly serious six figures. These community foundations (https://www.cof.org/community-foundation-locator) are small enough and focused enough that we can be very involved with setting objectives for grants from our money and our money is not just a drop on someone's national charity bucket.

I'm not trying to solve a problem. I don't expect anyone to put a whole lot of detailed thinking into it by conjuring up a whole slew of possible scenarios. Assuming no heirs, no family, etc., and assuming that, of course, you'd donate to charities whether while alive, upon death, or both - how would you invest the money, e.g., 100% stocks; 100% TIPS; 50% stocks/50% TIPS; 50% domestic stocks / 50% international stocks, etc., etc., etc. I realize everyone is different, but I thought it was a simple question. Maybe not.

 

[Vincenzo Corleone]

If you don't have a goal, then any decision is as good as the next one.

I thought about your response a little further and focused on the above quote. I suppose that's the issue. I suppose I'm looking for people to provide me ideas for possible goals and - given a goal - how they would invest the windfall. As I said, DW and I are already set for a decent-to-comfortable ER, so... <shrug>

 

[kgtest]

Diversify. Spend 1/3 on equities, 1/3 on Real Estate and spend the rest. This allows me to buy the dip, take advantage of a buyer's market and adjust my spending as needed without really impacting much. BTD! Blow That Dough baby!

I like skiing, and beautiful women...so a condo in the mtns, and one on the beach. Then maybe a nice car or two...net jets membership...

Then, I would give away a little of my stash...to the vets that need a little extra.

I might hire out some things for a while, see how that pans out...yard work, cooking, a driver?

 

[OldShooter]

... ideas for possible goals and - given a goal - how they would invest the windfall. ...

For goals, I'll go a tiny way out on a limb here to say that it seems most here want to ensure a comfortable and low-risk retirement while at the same time wanting to leave an estate to family beneficiaries and charity. That's pretty much where we are.

If the windfall is truly something you don't need and you have no family beneficiaries to consider, then your path pretty much leads to charity.

Not necessarily waiting for your death, though. Maybe sooner. I mentioned the community foundation we're working with. We actually have established a small fund there already. The purpose of the fund is to help people who are experiencing some kind of crisis. One gift, bird-dogged by a school counselor, was to buy winter clothing for a grade-schooler whose parents had nothing. Another was to make a down payment on a water well repair that was a financial catastrophe for the impoverished owner. A third was to buy all the car parts needed by a high school shop class to fix up a donated car, which was then given to a needy person. We're going to do some more cars if we can. We like that scenario. It is really both fun and satisfying when we hear from the foundation how our money is being used.

Not a charity, but we have some longtime friends who have always struggled a bit financially. He was in advertising and had several long periods out of work. For their 50th anniversary we gave them fifty $50 bills in an unmarked envelope. Fun to think about and fun to do.

Investment? At 72YO, we are 25% fixed income and 75% worldwide equities (VTWAX mostly). The 25% is probably more money than we will ever need. We have been very lucky in life.

 

[pacergal]

Most likely invest as I do already, ranging anywhere from 50:50 to 60:40, and up my spending and charitable giving to reflect a higher income.
More trips, probably a new house with an acre or two, hire house cleaner and gardener.

 

[pb4uski]

So, your finances are in great shape, your home is paid off, you have no other debt, etc., etc., etc. You feel confident that you can RE.

Now imagine you've received a windfall that nearly doubles your net worth. Also imagine you have no interest in leaving anyone anything upon your death.

I'd like to hear your opinion about how you'd invest the windfall. ...

Beer and hookers?

 

[RobbieB]

I don't have any goals, so I would invest as I have in the past.

But don't forget to Blow a Big Chunk too!