What Would You Do with a Million Dollars?

by Vered DeLeeuw · 141 comments

It’s a fun game, isn’t it? Imagining you have won a million dollar windfall and trying to figure out what you would do with it. Or, a different scenario: you work your butt off for 40 years, saving and investing wisely, and eventually get to a net worth of a million dollars. Phew. Now what?

A Million Dollars Isn’t That Much!

I think we’re all very aware that a million dollars isn’t what it used to be. In either scenario, whether you have worked and accumulated a million dollars, or whether you’ve received a windfall, you absolutely cannot go crazy and start spending uncontrollably. Let’s take a look at what you CAN do with a million dollars.

Invest for Income

This applies to the second scenario – the one where your net worth, after years of hard work, is a million dollars. Assuming your investment mix can generate an annual taxable income of 8%, a million dollars can generate an admittedly nice income of $80,000 per year – for many this is all it takes to comfortably retire, and for those of us living in more expensive areas, in major cities along the US coast, it would still be a major boost to whatever other retirement income we might have.

Spend Wisely

If you get a million dollar windfall at some earlier point in your life, when you still have many working years ahead of you, I would advise against viewing this as your ticket out of the workforce. As we saw above, this kind of money generates a nice income – but not necessarily enough to retire on, especially if you’re young and still need to raise kids. In addition, if you start using all the income that your nest egg generates at an early age rather than reinvest, your money will be gradually eroded by inflation.

What Would I Do?

The things on my own list if I ever received a sudden windfall include non-exciting items such as paying off any credit card debt, student loans and home mortgage. I would also reserve a small percentage (anywhere from 1%-5% or up to $50,000) for helping close family members such as parents and siblings with repaying their own debts and give another 1%-5%  to charity.

No Splurging At All? You’re So Boring

I actually do not rule out splurging a little. It’s normal to want to splurge when you receive an unexpected, large sum of money. I guess in my case I would allocate 1%-5% for splurging – this could go towards buying a new car, renovating the house or buying new furniture or art. Whatever floats your boat, by all means splurge a little on it, but do limit that splurge. It’s very easy to waste away a million dollars.

And the Rest?

So I repaid debt, gave some to family and some to charity, even splurged a little. Let’s assume I was left with half a million dollars. Now what? Now I invest, and I treat this as any other investment, creating a mix of stocks, bonds, cash, commodities and REITs – Whatever asset allocation I’m generally comfortable with. Now I sit back, watch the money grow, rebalance once a year and resist the urge to do anything else with that money, except for enjoying the extra security I now have.

What would YOU do with a million bucks?

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{ 141 comments… read them below or add one }

Sharma April 6, 2016 at 12:35 am

I will buy a business of my own choice for sure!!!

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connie bryant June 19, 2016 at 9:55 am

The very first thing would be to pay off mortgage. The second thing would be to help out with the church’s new addition. The third thing would be get all credit cards paid off. The final thing, would be to put on a new set tires on my two pickups.

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Erik June 29, 2016 at 2:43 pm

First and for most I’ll get rid off all coeditors and credits I owe. Secondly I’ll get rid of the renters from my shoulder. Thirdly, I’ll take a good treatment of my shoulder which has been giving me trouble to lift my arm and function for every day life what I’ve been denied from the insurance company. Fourthly I’ll fund my brokerage account opened but never has been funded to start trading stocks for self reliance and independence as well as not to ask for money ever again. Fifthly I’ll send my wife home who never had a vacation and a job, but who kept herself strong to bring up 4 children 14, 16 , 18, 20.respectively one in college one in high school, one raping up Middle school,and one at home for luck of fund after 2 years of study in college. So that she can take care of her sick mother. And finally send my daughter back to school. After that if anything is left I’ll visit my family member ,my parent and my siblings including my friends which never had a chance to go back and see them or contact them in 25 years. Or else I’ll wait until I make enough money to help any one I may be able to see and also cover costs take and bring me back. The longer I wait the more people are passing away before they even test my care……..what is immediate solution other than ask for help from some one who has the ability and the good heart to help. Thanks for reading my request.

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Traci July 13, 2016 at 11:41 am

Once upon a time, my answer to,”What would you do with a million dollars?” would have been invest some, give to family, pay for kids college, buy a nice house, and car…… but today in growing and learning that money cannot buy happiness and children as well as adults who are handed money and things generally learn to expect money and things…. my answer would be different.
Of course I would givesome to family but only the ones who don’t expect it… and I think I would carry cash in my pocket and each time someone did something nice for me for example, holding a door, helping me when I am stranded on the side of the road with a broken car, offer me a drink on a hot day, those people that truly care enough to help people without expectation would be the ones to merit the money I have. I would fold up a $500.00 bill or more…. and stick it in their hand while saying thank you. It’s the people in life and memories of those you love and care about that are important. Just thinking of the surprise on their face later when they realize how much money their good deed paid, well that makes me happy. I don’t know other peoples situation but a small act of kindness could mean more to someone than you might imagine. :)

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