What Would I Do With Five Million?

FMF at Free Money Finance recently asked this very question.

First off, I have to share his amusement with the comment that “a million just isn’t what it used to be!” Spoken generally by those who have substantially less than that million in the first place. Of course a million would change your life unless you happened to have several million already socked away. In which case, I’d imagine your average personal finance blog probably wouldn’t be where you’d be hanging out! It might not change your life to the point where you were, for instance, considering which port city you were going to be docking the yacht in this week. Still, that piddly one million bucks would certainly change it.

But since the game is $5 million, I’ll play it that way. I’m going to assume after-tax dollars because otherwise we’re talking about the $1 million range again… Here’s how my $5 million would be spent:

• First off, all of our debts would disappear. As would our sisters’/brothers’/parents’ – we’ve got a few farmers in the immediate family and, unfortunately, some hefty long-term debt often goes hand in hand with farming. I don’t know exactly what this amount would be (we’re Midwesterners – we don’t talk about our money, whether we have a lot or whether we owe a lot), but I’m going to guess substantially short of $500,000. For the sake of simple calculations, a half million it is…
• $250,000 invested in a few reasonably safe investments to take care of our two-year-old’s education. By reasonably safe, I’m talking along the lines of something like the Vanguard Target Retirement Fund 2025.
• I ascribe to no particular religious beliefs, so I won’t be tithing. But I would take $750,000 of it and set up a charitable foundation. I don’t want to commit myself to contributing it all in one shot, because you just never know what great advance or what great need will arrive tomorrow.
• $2 million would be socked away for retirement investing, allocated pretty much exactly as they are now, percentage-wise, just with bigger dollar amounts… Though I’d probably be on the lookout for a few more tax-advantaged investments as I deal with the capital gains taxes I can generally avoid today. Oh, and the date I’d consider myself retired may be much earlier than I assumed the day before I found this money…
• $1 million would used for much more aggressive investing. For instance, a prospectus for a very interesting new business in search of a few local angel investors recently crossed my desk. A client wanted me to look through it, just to see if their numbers passed the smell test. I really like the business idea. And the numbers, while likely a little optimistic – as all prospectuses tend to be – are definitely not out of line. The kicker: minimum investment of $100k. I certainly couldn’t do that today, and the potential risk is just too great for me to even consider borrowing that amount. But if I had it sitting in an account put aside for these opportunities when they arise, I wouldn’t hesitate to do a bit more researching today, followed by a little investing tomorrow. No, I wouldn’t throw the whole million at it – all my eggs in one basket and such – but I certainly would be considering a couple hundred thousand.
• The rest? Blow money. That $500,000 would last us through quite a lot of screwing around. We aren’t aggressive spenders, despite the fact that we had (and still have) a good chunk of credit card debt – it took us many years to build that up, and all on stupid little junk. We’d probably do a little more home renovation (but not a lot, because we already like our little house), replace our old cars with a couple new reasonable ones, do a bit of clothes shopping, grab several hundred books and CDs, do a little travelling, yada, yada, yada. I’d bet that blow money would actually last quite a few years.
• Would I quit my job? Doubt it – I like my job. Plus, it gives me easy access to those aggressive investing opportunities I mentioned above! Though I’d imagine a good long vacation may just have to be scheduled in there more often than they are today…

Hmmm, that all sounds pretty good. Now the question is, where exactly do you stumble upon a quick five mill?

[tags]dreaming,five million,angel investor,charitable foundation,retirement,blow money[/tags]