Time to close your eyes and dream for a moment. What would you do if you suddenly had a million dollars? I’m not talking about a million in net worth. I mean a million dollars in cash, after taxes, sitting in the bank. This is no time for excuses or to say how implausible this may be. That isn’t the point. The point is to get you thinking about what you would do if you woke up tomorrow and had that kind of cash sitting in the bank.
Some of you could probably answer this question in a few seconds, but for others, I bet it makes you stop and think. A million bucks might not be the kind of money that buys you a private island that you travel to on your private jet, but it is no doubt a potential life-changing sum. What’s even more interesting are the different priorities that surface from person to person. Some may be content to park it all in an investment that churns out interest to live off of, others may donate it all to charity, while some would act like nothing happened and go about their daily lives.
You’re probably wondering what I’d do, so I’ll start things off. First things first, I’d pay off our second house and put a few thousands into some improvements. It needs new carpet, a few fresh coats of paint, some miscellaneous maintenance, and things like that. That would hopefully increase the chances of selling before the end of the year. We might not recover every penny that we have into it, but unloading that from the books would be nice in the long-term. Next, I’d put enough money into an interest-bearing account so that we could pay off our current mortgage in 5 years, which would probably take a little over a quarter of the money. Then I’d secure our daughter’s college fund. Our plan has a $350,000 total maximum, but with nearly 18 years until she heads to college I can let compound interest do most of the work. Just a $100,000 contribution given 18 years to grow at a modest 5% would yield around $240,000 for college. Hopefully she gets scholarships and doesn’t need a penny, but it’s a large enough sum that it’s there if need be, and hopefully enough left over for any possible future children or even pass it on to grandchildren in the future. After those necessities are taken care of the rest would be spread out across retirement accounts, taxable investment accounts, and some kept liquid so that opportunities could be taken advantage of as they come up. Last, but not least, I’d probably put a nice chunk aside to start a scholarship fund at my alma mater. I know, it’s kind of dry and practical, but I enjoy what I do too much to quit, so I might as well just put things in place to secure our future and keep doing what I’m doing.
Share Your Answer and Enter to Win $25
So, now it’s your turn. There’s a poll below that has some general answers, but I know these can’t entirely encompass the goals most of you have in mind. So, just pick the answer that closely resembles what your general action would be. Then, share your thoughts in detail in the comments. Each person who leaves a comment will be entered into a drawing to win a $25 gift card to Amazon. Hey, I can’t give you a million bucks, but $25 is a start! Make sure you include a valid email when leaving your comment and get your comments in before 10 pm EST Friday, February 5th, and I’ll randomly select one comment as the winner.
Author: Jeremy Vohwinkle
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If I had $500,000 that would be enough to buy a business and ensure that that business would not go under. You would need that much for the payroll and to pay your investors until the business starts making monies on its own even if it is a really small business. Let’s say you start say a small franchise that only requires you to have $80,000 of your own monies to invest. You will probably go under before the customer’s even know where you are if all you put into it is $80,000. Here is an example of such a franchise and what it would really take. The break down Opening Package (including Equipment & Supplies), décor, cabinets, point- of-sale system and small wares $130,000 Franchise Fee $25,000 Deposit for Utilities/Lease $6,000 Leasehold improvements $115,200 Architectural drawings $4,500 Signage $10,000 Franchise Premises Rent – 3 months $14,985 Inventory $7,000 Payroll - 3 employees $99,000 Initial Advertising $30,000 Materials & Supplies $2,000 Travel & Living Expenses While Training (Phase 1-4) $12,260 Employee Training $1,500 Insurance-3 months $1,175 Bookkeeping/Payroll Services $1,600 Additional Funds (working capital & living expenses) $20,000 $480,220 After the business is up and running I would use it as a source of monthly income for the household (3,000) maybe. The rest I would save till I had another $500,000 to donate to another retired military disabled veteran with a family of four. This will prevent them from needing to take a loan which they will spend the rest of their lives paying back and have nothing for the support of their families. This will help the community grow as each prospective business prospers. Have a wonderful day. I may consider opening if I had ($250,000) If you have $500,000 to donate or invest e-mail me … email@example.com
cant believe how greedy you people are. invest and keep working? why not give up your job for someone less fortunate. charity last in the poll. god.........i hate people.
Folks who keep mentioning taxes. The original article says One Million Dollars CASH, AFTER TAXES!!
I have no debt right now but pretty much work paycheck to paycheck with a little extra left over for some fun stuff.
-Buy a condo cash for 180k
-Furnish condo for probably another 20k
-Not having any kids so no expenses related to that
-Start my own business (All I need is about 10k to start it)
-Purchase car cash for no more than 30k
-Due to the dollar becoming worth less every day, I would put about 500k into precious metals (physical silver coins and bars) to be put expensive fire proof safe
-Put 200k cash in safe
-Put 50k in personal bank account for everyday expenses
-Have 10k in cash for immediate use in wallet, under mattress, etc.
I would quit my full time job and work part time and enjoy life!!
I would invest enough of it to leave myself a $40,000 annual paycheck with the interest. Since I am a grad student working in international development, this would leave me enough money to continue working for some of my favorite organizations such as Water for People, the UNDP, ect.
Then, I would consider what social psychologist Andrew Baidt says. We get the most happiness from giving away money. And second, he says that small steady sums lead to more happiness than large lump sums. I would give significant yet modest gifts to more of my friends and to organizations I respect.
And with the remainder? Invest through Calvert mutual funds. They are a socially responsible company, and based on my personal values I would invest in entrepreneurs in Central America.
Thank you, and please consider me for the Amazon gift card!
Well, I've seen this question raised many times. But I do believe that it all depends on individual's age. Age should be one of the factors to consider here. Middle age person like me, I would definitely invest the money in preparation for an early retirement. A more diversified portfolio of a diversified stocks of about 50%. And the rest would be ETF's and IRA.
First, I would pay my tithes and offering. Second, I would pay the government. Next, I would go on a year vacation around the world. Since I do not have any bills, I would look for some land and build a 5 bedrooms,5 bathrooms, small living room, dining room connected to the kitchen and family room, library on the upstairs level, a balcony in the front and back, with a beautiful swimming pool, a separate carport away from the house, tennis court, and basketball court, volleyball area, picnic area, a pond to fish in, and a prayer room. Then, I will help others.
Pay off line of credit
pay off son's student loans
buy bass boat for my husband
lump sums to all my children
invest for retirement.
First, I'd pay off the rest of my college undergrad education. Then, after I graduate, I'd marry my long-term boyfriend :) We'd help his mom get a nice house, and then we'd get a nice house too. And we'd of course donate some money to church/charity, as we'd owe our thanks to God for such a wonderful blessing. :)
(note: every day is a blessing, with or without a million dollars- my thanks goes to God every day!)
First, I'd head on a LONG cruise so I could reflect and think about it. Then, I would put about $750,000 aside to live off of and buy a house with the $250,000.
I'd look to buy a condo close to where I work.
Not sure it'd be enough, housing still expensive
here in silicon valley.
First on the list would be making somewhat-aggressive investments with roughly $500K. I have a couple years before coming out of college, so there's quite a while before I retire!
My next purchase would be an old house -- Victorian fixer-upper, preferably. This probably wouldn't be the best fiscal itself decision, but I love old houses, decorating and remodeling work.
Additionally, I'd try to use the house as a personal investment, providing a meeting place with clients and somewhere to host others to network and socialize. If all goes to plan on the remodeling front, too, I would hopefully be able to do some design consulting on the side! (Dream job, nothing to do with my degree in Finance, haha.)
I voted for "Invest it, but keep working," but that's only part of the story.
First, I'd stop looking for another money job and work at writing. My current novel is a little over half done, and I'm enjoying being able to work on it every day without the mental fatigue that would come from a money job.
Second, I'd take a portion of it and pay off the remainder of our mortgage (in the low $100K range). Then I'd set up automatic transfers of our monthly mortgage amount into the same investments as the remainder of the million to rebuild it.
Once the million was rebuilt, I'd start looking at charitable organizations to give the bulk of our mortgage amount to each month.
Long and convoluted plan, but there it is.
Just had a baby, and I suspect that by the time he gets to college, that's what it'll take for him to go.
1) Take out 40% and save it for tax time
2) Pay off our mortgage
3) Secure our 2 daughters' college fund.
4) Invest the rest.
1) Take out 40% for taxes (you know they'll come get you!)
2) pay off our mortgage
3) fully fund our daughter's college fund
4) Invest the rest.
Have to pay off the rest of our debt, very little when compared to this sum of money. Then invest the rest, mostly for retirement and interest. See what happens when the kiddo needs some money for school, years to go!
Interesting question, and a fun game to play as well.
1) Immediately eliminate all debt, including mortgage and car loan (approx. $230,000)
2) Fully fund my "Emergency" Account ($30,000) to top it off at $50,000
3) Fund 529 plans for my 2 children ($75,000 apiece). We're currently contributing about $5,000 p.a.
4) Repairs/upgrades to our home (i.e. updated kitchen and bathrooms = $50,000)
5) Fund savings accounts for my 2 children for private school (the public schools in our area are decent but on the decline = $65,000 apiece)
6) Invest in my "on the side" business ($25,000)
7) The remainder would be invested in some select equities and index funds.
This seems kind of boring and I'm sure a nice vacation would be thrown in for the family, but we really don't need much.
I chose other. I'd pay off all our debts immediately, give some to my parents to help them out, splurge on a trip (we never get vacations) and invest the rest for ourselves and our children.
First, pay off hubby's old tax debt. Then max out our retirement accounts and pay off the house. Fix up the house & car & yard; take a couple of trips; try and come up with awesome gifts for family members that they wouldn't get themselves. I would not quit my job or buy a new house or car or anything. I might not even pay off my ridiculously cheap student loan, though I probably would.
Pay off mortgage and invest. I can't imagine I would be any less frugal than I am now, even with $1 mil in the bank.
I'd share some with family and friends then invest the rest and retire and live modestly with the rest and travel around.
I picked "Invest it and keep working", but I would probably work part time and try to start a business. Knowing that I don't need to save as much money with some sitting there, I could take more of a risk and hopefully not have to work at a job again.
I chose the "Share it with friends and family". If I won/had a million dollars, I would first settle all of my personal debt. Then, I would help clear the debt of my family and closest friends. While doing this, I would ensure that I had enough money left over to invest in the best way possible. This would be to ensure that I can continue to live debt free and help the others in my life do the same.
I would pay off my credit card debt, put a down payment on a house, donate to charities that are important to me, and then give some to my Dad. I used to have a pact with a friend of mine that if one of us won a lot of money, we'd pay off the other's debts. Thankfully I'm not friends with her anymore, because she'd come out way better on that deal than I would!
So much to do, so little money.
First, I would pay off all debt (student loans, etc) probably 15%.
Second, I would set up a trust fund with 25% for my kids (to be received at at 28).
Third, I would invest 50% of it.
Fourth, I would take the last 10% and travel to all the places I have dreamed about - London, Paris, China and Africa.
100k to Charity, 100k to two friends and one family member who are awesome and wouldn't spend it on hookers and blow, 100k to pay off the house and debt, and split the 500k between a savings account and investment account. Then I'd use the savings as necessary to grow the business.
1. Buy a comfortable, inexpensive home for cash, and save a similar amount for future repairs and expansion. Total: $300,000.
2. Put away money for kid's college education. Total: $200,000.
3. Buy dividend-paying investments to generate passive income. Total: $500,000.
@Matt - I like your idea of blowing some of it, just to blow it. I think I might do that too now that I think about it. I'd probably get a really sweet bike (as in bicycle, not motorcycle). There's one that I read a review for that sounded really nice...but it was $17k! If I had money to blow, I'd probably get one of those to just have, and then maybe a few others (different styles) that are cheaper for myself and my wife...maybe 40K on bikes and 10K on a vacation :)
The funny thing about a million is that while it's a life-changing amount of money for most of us, it gets whittled down pretty quickly once you start to divy it up. It's not enough to retire on, at least not for me. And I don't have any appreciable debt to pay off. But I could fully fund retirement savings for the kids I don't yet have and accelerate a lot of things.
First things first, tithe: $100K
Fund 529 plans for two kids: $200K
Home Improvements $50K
Just absolutely blow some*: $50K
Save the rest: $600K
*Yes, blow it. Just go nuts. Maybe I get the golfers in the family together at Pebble Beach to play a round. Maybe I bring a few of my favorite bands in to play a private concert. Maybe a second honeymoon to Bora Bora. Only two rules for blowing some of the money:
- Once the budgeted amount is gone, it's gone. You don't get to spend it twice.
- No guilt - you were responsible with the other 95%, so live a little.
First I would pay off our mortgage. Then I would contribute to my kids education. I would then invest the rest and wait for it to be big enough to retire early.
First I would pay off my mortgage (popular idea).
Taking a longer holiday, I would go with some friends to the world soccer championships (off course watching all important games) and having a great time. Okay, Winter Olympics in Vancouver for a week or so, as well.
I put the rest in a secure investment.
After all, still staying at the present job.
They named the bean "tlilxochitl", or "black flower", after the mature bean, which shrivels and turns black shortly after it is picked.
Aren't these types of questions fun to answer?
I would start by paying off my student loans and mortgage. Then I would start a business. But, I would never go into debt again!!
1) Pay off my remaining student loans. ($25k)
2) Pay off the mortgage for my parents' house. With that out of the way, dad could retire and do well on what he has available now. ($150k)
3) Restore my old car, 1971 Dodge Coronet ($50k)
4) Buy a few bicycles and another velomobile for my dad and I. ($25k)
5) Share a good chunk with extended family. ($200k)
6) Figure out the details on a good way to safely invest and be able to pull some of the interest, allowing me to choose a job that I like, not one that I need for a paycheck. ($500k)
7) Fritter away the rest to friends and fun stuff. ($50k)
I would pay off my daughter's student loan, invest the rest and work doing some sort of humanitarian service internationally.
Funny, a co-worker and I were just discussing this earlier today.
I would pay off the mortgages on my rental property and my primary home. I would then get rid of all of my student loan debt. With the remaining $600,000, I would make several donations to charities ($75,000) and invest the rest in mutual funds, CD's and cash savings.
I'll try to keep this short and sweet and hard to beat:
Invest, keep working.
Donate to charity (deduct what I can later on).
Share a reasonable amount with family.
Return to school.
Plan to retire earlier than anticipated.
I would invest it (some CDs/bonds, some stock market) and keep working until I felt comfortable that I could live off the interest/dividends.
I'd pay off my own and my boyfriend's debts (about $250K), set aside enough money for a six-month emergency fund and a new car (though I don't need one yet, saw that suggestion above and thought it was great!), set some aside for my sister and dad as annuities, and invest the rest in a diversified portfolio.
OK, so I would totally retire early. I've held down steady jobs since I was 13. I put myself through college and grad school with zero financial help from my parents or other family members. I did my time in corporate America. And now I have my own business.
If I had a million dollars, I would retire early, enjoy life, and still be involved in projects that my friends and contemporaries are doing without the worry of bills, where my next meal is coming from, or if this purchase is going to deduct from some other financial need. Life is too short for those kinds of decisions.