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

[austinn]

Thanks guys. Been busy dealing with a basement flood. I'll try to answer the questions without the longest multi-quote in internet forum history. It goes without saying but, a big thank you to everyone who gave me advice..

- why so much in bonds? I'm a nervous nelly. If I can hit 2.5% net with a 50/50 portfolio- and i believe that is reasonable (do you?)- that's way more than I can see myself ever wanting or needing. I can adjust down the road if the predictions that bonds are long term losers proves closer and closer to true.

-dividend etf- You hit a sour spot here. I debated going that route for a long time. I might still. You make fair points, all of which I considered. And am still considering. I'm talking about low cost index funds here, so I think it might be six one half dozen the other. Naive? Thanks.

- gift taxes. I am giving most of my money away through what my guy calls "lightning-trusts." This avoids gift tax entirely.

- Suggestions of monthly stipend to parents vs lump sum- I will be giving them a monthly stipend on top of the lump sum (via said trust), I just didn't mention it in the OP. The lump sum is for debts. The stipend amount over 14k annually will "count" towards the gift tax penalty, the lump sum, per cpa (I'm getting second opinions on this to make sure as we speak) will not.

- "Charity to parents." heh. Punishment accepted. Terrible choice of words.

- 2 mill home. I probably won't buy anything that expensive. I just want to know that I could, and be reasonable in doing so. I will say though that the areas I am considering settling down (seattle and boulder), 2 mill doesn't buy a mansion or anything close. The problem I'm finding is that frankly, most young people w/ money want a condo. I don't. So the picking for housing in that range is mostly about making huge compromises for someone like me. Such as 300-500k in "kid amenities" that I don't want or need. First world problems.

- Am I trolling? I'm not. But for the sake of solidarity, you can assume I am and nothing about the thread will change from the advice-givers perspective. Either way it's the same intellectual exercise from your POV. Agree?

- estate attorneys, cpa's, and liability coverage- got it down. Probably overspent. Oh well. Like I said, I'm a nervous nelly.

- No, I did not win a lottery. heh.

- detailed planning. I'm comfortable with fee-based advisors. I know that I will miss out on many "can't lose exotics," (I say that half-sarcastic and half totally serious) but I don't think I'll screw up majorly, either. The biggest way I can screw up as I see it, is with tax planning. I've hired several people with several different hats to help me with this (all fee-based). I'm under no delusion that I'm bulletproof, but I feel I know enough to do this on my own so long as I don't complicate things unnecessarily. I'm happy with a 2.5% return with the knowledge that maybe 3.3% was obtainable if only I hired a team of guys I don't really know/trust. I'm at peace with this.

- why a bond fund instead of CD ladder? Ronstar, if you have time I'd love to hear you elaborate on this opinion. Thank you.

If I missed anything please let me know. Thanks again for this resource.

 

[folivier]

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.

 

[Ronstar]

.....

- why a bond fund instead of CD ladder? Ronstar, if you have time I'd love to hear you elaborate on this opinion. Thank you.

If I missed anything please let me know. Thanks again for this resource.

IMO, interest rates can only go up. I know - people have been saying this for quite some time and it hasn't happened yet. But it will and the bond fund will most likely get stung.

I like your plan, but as a windfall that is almost immediately invested, it is not dollar cost averaging. The cd ladder in effect gives you at least a little dollar cost averaging to your overall portfolio. I'm not necessarily suggesting keeping the cd ladder going forever. Evaluate your plan yearly and tweak it to meet your needs.

The cd ladder will provide you with an income stream that will not be subject to equity market fluctuations. So you won't have to worry about selling something at a loss to generate income. And there's enough in your portfolio to generate a generous income with the cd's.

I may be looking at this through the eyes of a 60 year old instead of a 30 year old, but I would sacrifice the little more income that the bond fund provides for the security that the cd's provide.

 

[austinn]

Thanks a bunch.

 

[Car-Guy]

I'm also beginning to doubt that the OP is legit. That was/is their one and only post.

That was my original thought when I read the OP.

 

[ERD50]

- Am I trolling? I'm not. But for the sake of solidarity, you can assume I am and nothing about the thread will change from the advice-givers perspective. Either way it's the same intellectual exercise from your POV. Agree?

That's a great response (seriously). When it comes to anonymous internet forums, that seems like an absolute truth to me. Take it for what it is, try to learn and/or have fun, or move on.

Thanks guys. Been busy dealing with a basement flood.

You should pay someone to do that!

You seem to have it under control, as far as investing, I honestly think it is no different than most of us, except your case is even simpler. You can afford to keep it simple. Just don't do anything stupid - diversify, and you will be more than fine.

Do you have the knowledge and experience to manage a 24M$ portfolio?
I know I wouldn't. Interview a few FA's and pick one you feel will work in your best interest. They can help you in many different ways and have access to investments you won't as an individual. And let your FA worry about your portfolio on a daily basis while you enjoy your life!
Congrats.

I would manage $24 million much like I would manage $1 million, which is no big deal. Why pay a FA $125-250K for essentially sitting on his/her thumbs ?

Very much agree with frayne. An FA could probably be the biggest risk your portfolio could experience. Just pick a 'conservative' AA (or any AA, it won't really matter), spread it across a range of mutual funds/ETFs and call it a day. There is no reason for you to 'worry about your portfolio on a daily basis' - forget about it, live off the divs, and tap some principal if want (within reason, but the OP sounds reasonable).

-ERD50

 

[robnplunder]

What, are you nuts?

Black, not red...

I thought about putting $60k on one blackjack hand. It was the money I didn't expect to get (a loan that someone paid me back - 50% of what he borrowed). If I win, it's like I got the full amount of loan back. If I lose, hell, I wasn't expecting to get back any of the loan anyway. Then, a saner part of me ruled the idea out.

 

[eta2020]

Stick it all in 100% vanguard total world. Try real hard to spend 400k per year until i die. Dead serious.


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I agree. Simplicity is elegant. See if 50% VTI 50% VXUS is cheaper.

Buy and hold and do not rebalance. Just set it and forget it! If you can do that you will be richer and richer at pretty nice pace.

To spice it up I would put 10% into VIG and 10% into SCHD.

With that kind of money you don't need Bonds or CD ladders . But you still need plan and discipline.

 

[eta2020]

By the way that give you about 500k of dividend growing faster then inflation.

That means more and more money every year. Looks like 5-7% annual raise.

IMO anybody with portfolio over 5 million can easily do same thing One can live nicely on 100k as well

 

[Car-Guy]

If I was that much of a gambler I'd put all on red in Las Vegas. The chance is much better than in a lottery.

What, are you nuts?

Black, not red...

You guys may be better off sticking with stocks and bonds or this might happen to you too.

 

[Gumby]

I thought about putting $60k on one blackjack hand. It was the money I didn't expect to get (a loan that someone paid me back - 50% of what he borrowed). If I win, it's like I got the full amount of loan back. If I lose, hell, I wasn't expecting to get back any of the loan anyway. Then, a saner part of me ruled the idea out.

I believe the best casino bet is actually no pass with maximum allowable odds on the craps table.

 

[gcgang]

I believe the best casino bet is actually no pass with maximum allowable odds on the craps table.

Maybe, but as you have to "lay" odds when betting the don't, you won't double your original stake.

Usually what happens when someone goes "all in" in blackjack, is they get a doubling or splitting hand, and end up digging in their pockets for more.


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[stepford]

I don't mean to be too cynical, but in my experience when a young man starts enjoying lots of money, before long a young mate will arrive on the scene - and spending priorities will ...alter. Note that I'm not alleging that said mate will be a gold-digger. Just that having fun, and displaying the resources necessary to continue having fun, tends to pull in persons of the appropriate age/gender - and stuff just happens.

So just start enjoying life, and I guarantee a way to spend whatever you have will manifest itself.

 

[haha]

"How would you invest/live on 24m?"

The living part is what takes a bit of thinking. I was recently in Anacortes, and saw that 1/2 of the boats there were for sale. I know nothing about boats, but would not mind spending some of that money to learn more.

Between $1/2M to $1M would get me a more than passable boat. Perhaps after cruising it up to Alaska and back and surviving the trip, I might decide boating is not for me. But without trying, how would I know?

Ask those people who are selling all those boats in the Anacortes Marina.

Ha

 

[packrat44]

- gift taxes. I am giving most of my money away through what my guy calls "lightning-trusts." This avoids gift tax entirely.

- Suggestions of monthly stipend to parents vs lump sum- I will be giving them a monthly stipend on top of the lump sum (via said trust), I just didn't mention it in the OP. The lump sum is for debts. The stipend amount over 14k annually will "count" towards the gift tax penalty, the lump sum, per cpa (I'm getting second opinions on this to make sure as we speak) will not.

What is a "lightning trust" and how does it eliminate gift tax?

Can a person directly pay off the debt of the parents without giving the money directly to the parents and not have to count that toward the total lifetime exclusion?

 

[EastWest Gal]

I googled "lightning trust" and didn't come up with much. Does such a thing exist? A trust doesn't avoid gift tax anyway. And who is the person you call "my guy"? I'm getting skeptical of the premise of this whole thread.


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[2015maybetheyear]

Austinn,

First off, congratulations on your success. I think a lot of us are happy for you and also perhaps feel a little bit of good natured envy. To most of us 24m is unfathomable and almost seems unspendable.

However, you are in your early 30s, single with no children and although Boulder isn't the most expensive location it is certainly a lot more expensive than most of the rest of the US.

I have heard and seen how the wealthy live and I just wanted to also be one of the few so far to sound a note of caution which is that $450k/year after tax is a lot of money but doesn't go nearly as far with a family as some may think.

For instance, most of us would, of course, send our children to public school. However, what if you decide to send your children to private school? If you have 3 kids, tuition, other expenses, expected annual campaign contributions could approach 100k annually alone.

If you wanted to take your family of five to Europe for a couple weeks and fly business class instead of coach on a 10 hr + flight and stay at the Four Seasons instead of Holiday Inn that vacation alone could easily be 75k+.

Now of course most of us would certainly look at flying business and the Four Seasons as profligate spending but certainly I would imagine some would guess if you were worth $24m that's the lifestyle associated with it.

The only point of my post is to say even with $24m which is an awful lot of money there are more limits to the lifestyle than perhaps some would think. I think everyone here knows it's not private plane money but I would think some would have guessed business class is a given.

Regardless you are in a wonderful position and have a great adventure ahead of you: young, single, wealthy, and clearly thoughtful to spend time on a board like this seeking perspectives.

 

[haha]

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

The whole idea of a rich young person seeking advice from an Internet board is downright crazy, and imo is very unlikely to be what is going on here.

Ha


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[RunningBum]

Eh, what's the harm? Besides, if someone really wants to troll for reactions, there are lots better ways to do it.

 

[ERD50]

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

The whole idea of a rich young person seeking advice from an Internet board is downright crazy, and imo is very unlikely to be what is going on here.

Eh, what's the harm? Besides, if someone really wants to troll for reactions, there are lots better ways to do it.

Agree with RB - even if it is a troll, it still triggers some interesting thought experiments. See my post # 56.

I googled "lightning trust" and didn't come up with much. Does such a thing exist? A trust doesn't avoid gift tax anyway. And who is the person you call "my guy"? I'm getting skeptical of the premise of this whole thread.

Now that one is raising some red flags. Having a "guy" that can wave away gift taxes through a "lightning trust"? I suspect someone is getting scammed - either the OP by "the guy", or us by the OP. If he starts to offer a sales pitch on how to avoid gift taxes, I think we'll have our answer.

If not, I'd suggest the OP be very, very leery of these "lightning trusts". Back when the Estate tax was much lower, I saw some plans that were being offered, and they sure sounded illegal to me, but the response was that "well, they hadn't been tested in court".... yet.

Careful!

-ERD50

 

[Taxman59]

I did see one place where it referred to lightening trusts as some sort of Intentionally Defective Trusts. These have up front gift tax consequences, but allow you to pay the tax on the income, effectively transferring that amount to the trust tax free. In the right place, they are great, but it wont help transfer the $24 million by much.

 

[chris2008]

I would recommend not to tell anybody - not friends nor family - about the total volume nor buy a home that indicates "guy with more money than he he can reasonably spend".
This includes even parents.
Austinn mentioned that they are in debt now and he wants to pay that off.
They would not be the first family to be even deeper in debt some time after such actof kindness.
OTOH their debt might just be a reaonable home mortgage.
But better be careful.

 

[marko]

Are you the same guy that wanted to hide his money details from his girlfriend?

My thoughts exactly.

While I love and respect the opinions of the members of this forum, I'd be talking to a good accountant/investment advisor and lawyer instead of pinging internet forums for advice.

 

[Rick_Head]

.................


- No, I did not win a lottery. heh.

Why does the number 419 keep popping into my head?

 

[marko]

From Wikipedia:

The modern 419 scam became popular during the 1980s. There are many variants of the letters sent. One of these, sent via postal mail, was addressed to a woman's husband, and inquired about his health. It then asked what to do with profits from a $24.6 million investment