If you inherited 1 million what would you do?

[Reyaj]

Serious question.. Here are some thoughts?

1. Investment Property
2. S&P Fund
3. Some kind of profitable business where you won't kill yourself with work. (Need ideas here)

 

[Dr.Suave]

I would buy @corrector a sex robot and put the rest in the bank to see if I can live off the interest.

 

[EyeBRollin]

Investment property

 

[sangheilios]

I'm in kind of a unique situation where I have no mortgage and have a lot of money invested + have a job I really like.

If I was in a more normal situation, this is what I would do.


Pay off any debt like an auto loan, student loans, etc.

I'd invest roughly half of this, so around 500k, and just let that grow.

Buy a home or condo and either pay cash for it or put a sizeable down payment on it to where the mortgage is low/reasonable. I'd only do this in a decently priced area and would not live in one of the more expensive metro areas, states, etc. You could easily pay cash for a nice house for well under 500k in many places in the U.S that aren't in a rural area.

I'd probably take 50k and set it aside for luxury or fun activities, massages, trips, etc. I'm not a big materialistic guy so I wouldn't be buying expensive clothes, jewelry, etc. or start partying every weekend. But getting a massage once per week, going on a nice trip to Hawaii, etc.

I'd actually probably take a month or two off from work and let this new reality of mine sink in and reflect upon what I want to do with the rest of my life. I'd then get back into my routine but I think I would also work a bit less. I'd literally be set for life as long as I kept my lifestyle in check and was willing to still work to some degree. Having around a half a million dollars invested at my age would be incredible, plus having a house paid off or having a very low mortgage and no debt at all means I have a very low cost of living.

 

[BackInTheGame78]

Invest it and live off the interest.

 

[Young OG]

I would buy shares of SCHD and live off the dividends

 

[Reincarnated]

I would buy shares of SCHD and live off the dividends

Not a terrible option. SCHD has a dividend yield of about 3.4%, double the S&P, since the S&P is currently tilted towards growth stocks. So if you're looking for cash flow over asset appreciation, decent option.

 

[mbc0029]

Pay off debt (Car, student loans) = $20,000 (roughly)

The rest I would invest in:

1. Stocks with dividends (reinvested) for asset appreciation; index funds, REIT's, mid-and large cap stocks, etc.

2. Investment property (cash flow and asset appreciation); Houses, Buildings, Land that are undervalued

3. Small cannabis business (cash flow and tax benefits)

 

[Pierce Manhammer]

If you have any debt that isn’t working for you, pay it off first. If there’s anything left toss it in high yield savings for now, till the house of Saud calms the hell down again, approach a small group of angel investors that are successful and looking for capital.

 

[Robert28]

If they don’t take out the taxes before I get the full million in my hands, it’s going to an offshore account right away so they can’t touch it. If I have to pay the taxes before I get the rest, I would spend it differently but I’d invest at least half of it.

 

[CAPSLOCK BANDIT]

Dead in a week or broke in a month

 

[Reyaj]

Investment property

The maintenance sounds annoying..

I'd invest roughly half of this, so around 500k, and just let that grow.

In what?

Invest it and live off the interest.

In what?

Pay off debt (Car, student loans) = $20,000 (roughly)

The rest I would invest in:

1. Stocks with dividends (reinvested) for asset appreciation; index funds, REIT's, mid-and large cap stocks, etc.

2. Investment property (cash flow and asset appreciation); Houses, Buildings, Land that are undervalued

3. Small cannabis business (cash flow and tax benefits)

Can you give a few stocks or REITs? The investment property sounds like a head ache with maintenance

How much do you think the cannabis business would cost to set up and how would you go about it? Is it low maintenance business?

If they don’t take out the taxes before I get the full million in my hands, it’s going to an offshore account right away so they can’t touch it. If I have to pay the taxes before I get the rest, I would spend it differently but I’d invest at least half of it.

How can you guarantee the money is safe off shore?

 

[BackInTheGame78]

In what?

Look up mutual funds that have had solid returns over the last 20 years. That would be a good place to start. Long term, stock market returns 8-12% a year on average.

 

[mbc0029]

The maintenance sounds annoying..


In what?




In what?




Can you give a few stocks or REITs? The investment property sounds like a head ache with maintenance

How much do you think the cannabis business would cost to set up and how would you go about it? Is it low maintenance business?



How can you guarantee the money is safe off shore?

Yahoo Finance is a good resource for information on the stocks, reit's, index funds. Depends on your level of risk you're willing to take. Personally, I would mostly invest in Index funds. S&P 500 Index funds are low risk, with some dividends. Good long term, low risk fund. If you're looking to reinvest dividends, High Dividend Yield ETF's are good. For individual stocks, I would look for Large Cap companies with consistent dividends. If you want to take more risk, Small & Mid-Cap individual stocks are available. Get all the financial information you can on those. Any dividends I receive, I would invest back. As far as REIT's, I don't know any particular ones. I'd have to do more digging and research on those. But get all financial information. They pay out good dividends because the companies have to pay out 90% of the income as dividends. They're a good bet for dividends.

As far as investment properties, I would only buy them if I was fairly certain they were undervalued, or selling low (when the housing market falls). And then use a 1031 Exchange to buy more property without paying taxes. That one would probably take more time and energy.

For a small cannabis business, I would find one that already exists. I'm not looking to start from scratch. See if they're selling, or would be willing to split profits with you. Let them actively run the business. I'd set it up as an LLC.

For the business and investment property, I would hire a good CPA and lawyer. If you're gifted $1 million out of nowhere, you wouldn't have a problem affording them.

 

[NoBiscuits]

I would buy useful life assets first and then invest the remainder. The economy is too uncertain now to expect perpetual growth as the norm anymore. More countries are added to BRICS every month.

I'd get:
1. A house in a location I'm comfortable living in for the rest of my life if need be
2. A vehicle that's easy to service and can last 20+ years
3. Some kind of little shop or small business that can keep me going even through a major recession
4. Possibly a bunch of dried food, soap, first aid kits, and water, stuff like that that can last a family of 5 for 6 months

Physical security first. Then financial growth.

If I was thinking in 1990s terms, I'd just invest the whole lot. But we can't expect the gravy train to last forever. Not after so many good people went homeless, small businesses got looted, and especially not after a moment of walking into a supermarket and seeing hardly anything on the shelves.

 

[IKO69]

Two chicks at the same time

- Office Space

 

[mbc0029]

Start working for yourself as an LLC, and set up as an S-Corp. Tax savings go through the roof.

 

[NoBiscuits]

Start working for yourself as an LLC, and set up as an S-Corp. Tax savings go through the roof.

I've looked into this route and couldn't find benefits on filing S-Corp for a small operation. It seems to only benefit towards the big guys. eg. In Delaware, you'll get access to a special court system that fast lanes business related issues instead of sharing time slots with criminal and civil cases. But that's only really useful if you're in court regularly (implying you're big enough for to staff a legal team).

What benefits have you gotten out of the S-Corp filing?

BTW, I see no reason NOT to file as an LLC instead of sole proprietorship for a one man startup. SP will put you personally in danger of lawsuits while the LLC shields you. You can still file taxes as a "single member LLC" with the protection active. It's mostly the same as 1099 filing except you can add more deductions to it. If you go this route, you must keep everything as separate as possible at all times. eg. Set up your business account to pay you through ACH every two weeks, never directly take from it. If you get in legal trouble, the other guy can issue discovery on your bank account, prove you used it for personal reasons through a couple grocery store payments, and then sue you as an individual person instead of suing the LLC (meaning, you as a person are on the hook for debts instead of the business entity). This is known as piercing the corporate veil. Don't be victim to it.

 

[mbc0029]

I've looked into this route and couldn't find benefits on filing S-Corp for a small operation. It seems to only benefit towards the big guys. eg. In Delaware, you'll get access to a special court system that fast lanes business related issues instead of sharing time slots with criminal and civil cases. But that's only really useful if you're in court regularly (implying you're big enough for to staff a legal team).

What benefits have you gotten out of the S-Corp filing?

BTW, I see no reason NOT to file as an LLC instead of sole proprietorship for a one man startup. SP will put you personally in danger of lawsuits while the LLC shields you. You can still file taxes as a "single member LLC" with the protection active. It's mostly the same as 1099 filing except you can add more deductions to it. If you go this route, you must keep everything as separate as possible at all times. eg. Set up your business account to pay you through ACH every two weeks, never directly take from it. If you get in legal trouble, the other guy can issue discovery on your bank account, prove you used it for personal reasons through a couple grocery store payments, and then sue you as an individual person instead of suing the LLC (meaning, you as a person are on the hook for debts instead of the business entity). This is known as piercing the corporate veil. Don't be victim to it.

I've never filed as an S-Corp or any other business type entity for tax purposes. I've only filed with W-2 wages as an employee. I learned this in a Corporate Tax class when I was in college. Also, I work for a small HVAC business where they set up as an LLC/S-Corp. The primary benefit would be higher cash flow (generally more so than as a sole proprietor or C-Corp.). Basically, you save more by setting up this way, which as a cost of doing business, is more cash going back into your pocket.

For small businesses, especially start ups, you may or may not make a profit early, but it wouldn't hurt to go ahead and set it up this way. I look at legal protection as a shield against higher costs down the road. It'll save you headaches later. I'm looking at it from a purely accounting perspective.

You have to pay yourself a salary (SE tax, 15.3% of salary, deduct employer 1/2 on 1040), you can take distributions (usually not taxed unless you overdraw, then taxed as a CG), and report share of profits (K-1 income, goes on 1040).

The key is to report the minimum salary (to reduce SE Tax), don't overdraw on distributions (to avoid CG tax), and to report as many business expenses as possible (to reduce taxable profits).

It's all legal, and the IRS allows you to do it. Also a legal Corporation is similar in legal protection to an LLC. But it's simpler to set up as an LLC.

1. Salary (no affect on ownership basis)
2. Share of Profits (increases ownership basis)
3. Distributions ( decreases ownership basis)

Those 3 items is where the IRS will try to tax you on.

Also, once you start making profits, you add those profits to your basis (ownership), which in turn, allow you to take more distributions before the CG tax kicks in. The more profits you accumulate over time, the higher your basis will be. You can play around with that in regards to distributions.

 

[FlirtLife]

If you have any debt that isn’t working for you, pay it off first. If there’s anything left toss it in high yield savings for now, till the house of Saud calms the hell down again, approach a small group of angel investors that are successful and looking for capital.

Someone instantly at $1 million NW with no experience should avoid Angel Investing. They're competing with much higher NWs who have greater experience in a market that isn't very clear. Higher NW with more experience (esp running their own business) is a different story.

Suggest SEC website on Angel Investing to start.