Mega millions at $120 million, how to invest?

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Enzo IX
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Mega millions at $120 million, how to invest?

Post by Enzo IX »

Friday's drawing is $120,000,000.00, I think I'll take the $79.5 million cash option, how would you invest and would you still invest on your own. Pay the taxes I would still net over $50 million plus what I already have.

I think I would still go 30/70 stock/bond mix with the bonds laddered in state general obligation bonds. I would seek estate tax advice initially to set up a plan, but other than that invest on my own.

Really wouldn't buy anything initially, just sit back and think things out, give imediate family all substantial gifts off of cashflow, and set up a donation schedule off of cashflow for distribution or do the Warren Buffett and wait till the end. Probably opt for the donate during my life, to see the good it has done.

Spend at little on myself but I'm a simple man don't need the McMansion.

How about you?
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Opponent Process
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Post by Opponent Process »

per my policy statement, I'd be:

40% TIPS
40% TBM
10% TISM
10% TSM
30/30/20/20 | US/International/Bonds/TIPS | Average Age=37
knowmad
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Re: Mega millions at $120 million, how to invest?

Post by knowmad »

Enzo IX wrote:Friday's drawing is $120,000,000.00, I think I'll take the $79.5 million cash option, how would you invest and would you still invest on your own.
After buying Bank of America, Citigroup, and Iceland, I would use the rest to start a hedge fund.

All this after paying myself a hefty bonus for my performance over the last year.
Last edited by knowmad on Wed Feb 18, 2009 3:14 pm, edited 1 time in total.
chaz
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Post by chaz »

You have a good plan. Donate the Bill Gates way : set up a foundation. How many tickets do you need to buy to be the winner?
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page
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G-Money
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Post by G-Money »

Opponent Process wrote:per my policy statement, I'd be:

40% TIPS
40% TBM
10% TISM
10% TSM
Hitting the jackpot wouldn't change your need, willingness, or ability to take risk? Or would they balance each other out (less need to take risk, more ability to take risk) such that your IPS would remain unchanged?
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G-Money
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Re: Mega millions at $120 million, how to invest?

Post by G-Money »

Enzo IX wrote:How about you?
Probably along the lines of Bernstein's "Taxable Ted" portfolio, maybe 50/50 or 60/40, but I'll cross that bridge when I get there.
Ron
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Re: Mega millions at $120 million, how to invest?

Post by Ron »

Enzo IX wrote:How about you?
Don't have to worry about it. I never play lotteries, or casino gamble.

OK - somebody had to say it :lol: ...

- Ron
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ddb
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Post by ddb »

If I got an after-tax lump sum of $50 million, I'd do something along the following lines:

1. Create Family Foundation with $25 million donation. Wife and I would be employees of the foundation, and draw salaries of approximately $150K per year each (we'd actually do work for the foundation, of course!).

2. Invest remaining $25 million in diversified portfolio, probably around 30% stocks, 40% fixed income, 10% cash, 20% alternative strategies.

3. Estate plan would be for entire account in number (2) to be bequeathed to the family foundation at the death of the second spouse. Wife and I would each purchase very large permanent guaranteed life insurance policies to be owned by a trust. Would buy as large a death benefit as possible while staying within the annual gift exclusion limits for premium payments (by using each other and two children as beneficiaires, could probably get around $39K per year into each policy without exceeding gift limits, buying around $10 million of death benefit on each of us).

Result of the plan is as follows:

1. Household wages of $300K, which represents just a hair over 1% of the foundation assets. As long as the foundation is properly managed from a financial standpoint, this would basically be a lifetime income stream, and we could give ourselves COLA raises as needed.

2. We would know exactly how much would be passed along to heirs, and could control the timing of the receipt of funds by our children via language in the life insurance trusts.

3. Estate taxes would be zero, as all estate assets would be given to family foundation at death.

4. Have a "buffer" account of $25 million to cover any additional needs not covered for by household income.

- DDB
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB
Stonebr
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Post by Stonebr »

Give most to charity, put a few million in Life Strategy Income, then go to the beach.
four7s
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Post by four7s »

First, and most importantly, I would not tell a soul.
rec7
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Post by rec7 »

1% in some local credit unions. The rest in Short-Term Tax-Exempt Adm. Start my own charity since I do not trust many of the other ones.
Last edited by rec7 on Thu Feb 19, 2009 10:24 am, edited 1 time in total.
Kevin1
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Post by Kevin1 »

Donate half to charity, build a tiny dream house in a zero income tax state, buy a handful of vacation condos around the world, and pay off my parents' and inlaws' mortgages.

With the remainder: 1% tax-exempt money market, 29% total world stock index, 70% short term tax-exempt bond.
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CABob
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Post by CABob »

After buying Bank of America, Citigroup, and Iceland, I would use the rest to start a hedge fund.

All this after paying myself a hefty bonus for my performance over the last year.
What? No "seminar" or "moral booster" at a posh resort for your Boglehead friends?
Bob
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Opponent Process
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Post by Opponent Process »

G-Money wrote:
Opponent Process wrote:per my policy statement, I'd be:

40% TIPS
40% TBM
10% TISM
10% TSM
Hitting the jackpot wouldn't change your need, willingness, or ability to take risk? Or would they balance each other out (less need to take risk, more ability to take risk) such that your IPS would remain unchanged?
read it again. don't worry, my wife is dyslexic. I hope she wouldn't make the same mistake! :D
30/30/20/20 | US/International/Bonds/TIPS | Average Age=37
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G-Money
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Post by G-Money »

Opponent Process wrote:
G-Money wrote:
Opponent Process wrote:per my policy statement, I'd be:

40% TIPS
40% TBM
10% TISM
10% TSM
Hitting the jackpot wouldn't change your need, willingness, or ability to take risk? Or would they balance each other out (less need to take risk, more ability to take risk) such that your IPS would remain unchanged?
read it again. don't worry, my wife is dyslexic. I hope she wouldn't make the same mistake! :D
:oops:
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modal
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Post by modal »

I'd let myself get economically stimulated. :shock:
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modal
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Post by modal »

Seriously, if I won one of these...
-I'd keep my mouth shut.
-I'd move to area of town slightly more expensive closer to things I do.
-I'd travel more on the weekends.
-I'd buy a new computer, camera, and few furniture piece.
- :)
-Maybe fund a Diehards event completely and then have a lottery for who gets tickets :D
-I'd change my name before I collected.
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deepdrive
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Post by deepdrive »

In no particular order:

Buy a nice house with cash. Nothing too fancy, just a modest-sized, nice place.

Buy a new loaded Honda Accord.

Put $5 million in Treasury bills to live off of.

Take the rest and invest/spend every penny in opening up and supporting animal shelters.
Investment difficulty and long-term success are perfectly negatively correlated. Keep it simple.
Grt2bOutdoors
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Post by Grt2bOutdoors »

No need to take risk at that point, all T-Bills or 2 Year Notes.
And I'd keep on working.......
nerf
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Post by nerf »

at that level, the important thing is no longer ROI on the $, it is walling it off from potential plaintiffs. you would become one of the proverbial "deep pockets" that plaintiffs lawyers dream about. so i would begin by thinking about insurance, incorporation or other strategies to mitigate this risk.
snowbound
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Post by snowbound »

If I was considerably younger I would spend it on booze and women then just waste the rest.

Now that I am older I would retire, live comfortably and help local people and organizations that truly have a need.
"When someone you love becomes a memory, the memory becomes a treasure"
Gekko
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Post by Gekko »

$50M?

"you only need to get rich once."

"you're either in the 'get rich' business or the 'stay rich' business."

hence, i'd be -

~100% CASH + BONDS
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White Coat Investor
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Post by White Coat Investor »

I think I'd still have 10-25% in equities.

I'd start a foundation.

Start a few scholarships.

I'd give the maximum non-taxable gift each year to parents, siblings and their children.

Buy a nice house and a couple of nice cars. Maybe a ski boat and some jet skis. Maybe a nice lakeside place with a dock on Lake Tahoe.

And I'd probably cut back to half time.

But investing? That'd be the least of my worries. I'd probably buy a few annuities and CDs up to the maximum insured amounts and put the rest in treasuries and MMFs.

And I would definitely up my professional liability and umbrella policies.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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tetractys
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Post by tetractys »

I really don't know, other than I would build a temple to establish it as a 401(c)3 and live in as the caretaker, and then invest very conservatively and probably in institutional shares.

dbr's plan looks like a good framework to consider.

Tet
Last edited by tetractys on Wed Feb 18, 2009 8:46 pm, edited 2 times in total.
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Adrian Nenu
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Post by Adrian Nenu »

I don't gamble but here is my plan for the $50 million anyway:

10% - cash
90% - stocks

Even if stocks fall further from here, it would not affect my lifestyle. I can afford to wait until the economy recovers and win big.

Adrian
anenu@tampabay.rr.com
four7s
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Post by four7s »

If you net out 79.5 million you can afford to spend from the capital. Take about 2-4 million and buy a great house in your favorite city. Then withdraw $365,000 per year to live on. A grand a day is plenty. Allow $500,000 per annum for unexpected expenses. If you live another 30 years you'll have only spent about 20 million or so. Upon your demise that will leave 60 million for your family and friends and charities.

Please refer to my earlier post. TELL NO ONE. Jealous coworkers, neighbors, family and friends will not be happy for your good fortune. If you give them only a million they'll think you're a cheapskate. If you won't give them what they want they'll hate you even more.

Whatever you do stay anonymous. When it was asked of Michael Jordan what it was like to be rich and famous, he replied," if you have the choice pick rich."

Remember, MUMS THE WORD!
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Dale_G
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Post by Dale_G »

I'd hire someone to:

1. Mow the lawn
2. Show me how to maintain my citrus trees
3. Straighten out my garage

Now that you mention it, a fractional share in a private jet might be handy, I hate those security lines.

Dale
Volatility is my friend
rockbottom
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Re: Mega millions at $120 million, how to invest?

Post by rockbottom »

Enzo IX wrote:Friday's drawing is $120,000,000.00, I think I'll take the $79.5 million cash option, how would you invest and would you still invest on your own. Pay the taxes I would still net over $50 million plus what I already have. […] How about you?
I'll take the exact amount of money *you* spend annually on lottery tickets and sink it instead into my local Vanguard muni fund. That way, at least I'll get something back from the State.

On the other hand, if you win, I'd be delighted and honored to advise you on how to invest your money … er, for an insignificant fee … in that case, I'd strongly urge you not to waste your precious time investing on your own …
at ease
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Post by at ease »

i'd pay it on my bills...as far as it would go;
chaz
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Post by chaz »

four7s wrote:If you net out 79.5 million you can afford to spend from the capital. Take about 2-4 million and buy a great house in your favorite city. Then withdraw $365,000 per year to live on. A grand a day is plenty. Allow $500,000 per annum for unexpected expenses. If you live another 30 years you'll have only spent about 20 million or so. Upon your demise that will leave 60 million for your family and friends and charities.

Please refer to my earlier post. TELL NO ONE. Jealous coworkers, neighbors, family and friends will not be happy for your good fortune. If you give them only a million they'll think you're a cheapskate. If you won't give them what they want they'll hate you even more.

Whatever you do stay anonymous. When it was asked of Michael Jordan what it was like to be rich and famous, he replied," if you have the choice pick rich."

Remember, MUMS THE WORD!
Don't forget to deduct the income tax on the winnings.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page
Derek Tinnin
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Post by Derek Tinnin »

I doubt this conversation will cause me to buy my first lottery ticket this decade, but if I happen to find the winning ticket stuck on the front of my car (odds on that?), I would invest whatever is left after gifts, random acts of kindness, a nice cabin on the lake, and a few other "necessities" like this:

20% DFTCX*
10% DFTWX*
70% VMLUX/Treasuries

And I might have to get one of these:

http://www.youtube.com/watch?v=LO0PgyPWE3o

*no advisor fee required :wink:
xerty24
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Re: Mega millions at $120 million, how to invest?

Post by xerty24 »

Enzo IX wrote:Friday's drawing is $120,000,000.00, I think I'll take the $79.5 million cash option, how would you invest and would you still invest on your own. Pay the taxes I would still net over $50 million plus what I already have.

How about you?
First thing I'd do when I discovered my winning ticket was move to an income tax free state like TX or FL before I claimed my prize. That alone should be worth $5-10M.
Random Walker
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UBS

Post by Random Walker »

I hear that UBS has some highly "tax efficient" strategies to help people in your situation! :wink:

Dave
Rodc
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Post by Rodc »

ddb wrote:If I got an after-tax lump sum of $50 million, I'd do something along the following lines:

1. Create Family Foundation with $25 million donation. Wife and I would be employees of the foundation, and draw salaries of approximately $150K per year each (we'd actually do work for the foundation, of course!).

2. Invest remaining $25 million in diversified portfolio, probably around 30% stocks, 40% fixed income, 10% cash, 20% alternative strategies.

3. Estate plan would be for entire account in number (2) to be bequeathed to the family foundation at the death of the second spouse. Wife and I would each purchase very large permanent guaranteed life insurance policies to be owned by a trust. Would buy as large a death benefit as possible while staying within the annual gift exclusion limits for premium payments (by using each other and two children as beneficiaires, could probably get around $39K per year into each policy without exceeding gift limits, buying around $10 million of death benefit on each of us).

Result of the plan is as follows:

1. Household wages of $300K, which represents just a hair over 1% of the foundation assets. As long as the foundation is properly managed from a financial standpoint, this would basically be a lifetime income stream, and we could give ourselves COLA raises as needed.

2. We would know exactly how much would be passed along to heirs, and could control the timing of the receipt of funds by our children via language in the life insurance trusts.

3. Estate taxes would be zero, as all estate assets would be given to family foundation at death.

4. Have a "buffer" account of $25 million to cover any additional needs not covered for by household income.

- DDB
That is right in line with my thinking.

I have had that daydream.

Not likely to come true as I never get around to buying the lottery ticket.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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Random Musings
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Post by Random Musings »

Besides a foundation and estate tax avoidance strategies, I'd be around 20% in equities right now in my bucket (let's say $10 million).

If the S&P would go down in the 600 range, I'd probably bump up to 30% equities in my bucket. The ol' willingness of risk....

RM
diasurfer
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Post by diasurfer »

Opponent Process wrote:per my policy statement, I'd be:

40% TIPS
40% TBM
10% TISM
10% TSM
Does you IPS have a clause for "in the event of winning the lottery"? Sir, "hope" is not an investment strategy! :wink:
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RaleighStClaire
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Post by RaleighStClaire »

I'd put it all equities. Who cares about a 50% decline? 75% decline? I'm still rich, *****!!!!
Where's that red one gonna go?
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RaleighStClaire
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Post by RaleighStClaire »

Rodc wrote:
ddb wrote:If I got an after-tax lump sum of $50 million, I'd do something along the following lines:

1. Create Family Foundation with $25 million donation. Wife and I would be employees of the foundation, and draw salaries of approximately $150K per year each (we'd actually do work for the foundation, of course!).

2. Invest remaining $25 million in diversified portfolio, probably around 30% stocks, 40% fixed income, 10% cash, 20% alternative strategies.

3. Estate plan would be for entire account in number (2) to be bequeathed to the family foundation at the death of the second spouse. Wife and I would each purchase very large permanent guaranteed life insurance policies to be owned by a trust. Would buy as large a death benefit as possible while staying within the annual gift exclusion limits for premium payments (by using each other and two children as beneficiaires, could probably get around $39K per year into each policy without exceeding gift limits, buying around $10 million of death benefit on each of us).

Result of the plan is as follows:

1. Household wages of $300K, which represents just a hair over 1% of the foundation assets. As long as the foundation is properly managed from a financial standpoint, this would basically be a lifetime income stream, and we could give ourselves COLA raises as needed.

2. We would know exactly how much would be passed along to heirs, and could control the timing of the receipt of funds by our children via language in the life insurance trusts.

3. Estate taxes would be zero, as all estate assets would be given to family foundation at death.

4. Have a "buffer" account of $25 million to cover any additional needs not covered for by household income.

- DDB
That is right in line with my thinking.

I have had that daydream.

Not likely to come true as I never get around to buying the lottery ticket.
Your crazy Aunt Ruth bought you the ticket.
Where's that red one gonna go?
YDNAL
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Re: Mega millions at $120 million, how to invest?

Post by YDNAL »

Enzo IX wrote:Friday's drawing is $120,000,000.00, I think I'll take the $79.5 million cash option, how would you invest and would you still invest on your own. Pay the taxes I would still net over $50 million plus what I already have.
<< snip >>

Spend at little on myself but I'm a simple man don't need the McMansion.

How about you?
All of you guys & gals are crazy!

Allocate 50/50 Swedroe/Ferri.

Can't wait for the annual (group, of course) meetings to discuss performance. :)
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
snowman9000
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Post by snowman9000 »

I'd buy this forum and establish a folder for politics and economics.
noah
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Post by noah »

Even tho you're playing in fantasyland, please remember that Gates and Buffet and Hewitt all greated private foundations with much appreciated stock- stock that they paid less than 1 cent a share for and were able to deduct fair market value for their gifts. A private foundation is great for sheltering a whole bunch of current income-its not so great, given administrative costs, for using fully taxed dollars.
Grt2bOutdoors
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Re: Mega millions at $120 million, how to invest?

Post by Grt2bOutdoors »

xerty24 wrote:
Enzo IX wrote:Friday's drawing is $120,000,000.00, I think I'll take the $79.5 million cash option, how would you invest and would you still invest on your own. Pay the taxes I would still net over $50 million plus what I already have.

How about you?
First thing I'd do when I discovered my winning ticket was move to an income tax free state like TX or FL before I claimed my prize. That alone should be worth $5-10M.
I work for the Treasury Department :lol:
Ron
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Post by Ron »

snowman9000 wrote:I'd buy this forum and establish a folder for politics and economics.
Amen! 8)

- Ron
exeunt
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Post by exeunt »

Donate most of it to charity.
Topic Author
Enzo IX
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Post by Enzo IX »

Darn missed it by that much. That's ok now the jackpots $145,000,000.00, still gonna take the cash payout of $95.2 million. After taxes I should still net $62 million.

Question why do the big winners sometime put the winning ticket in a family partnership or trust.
xerty24
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Re: Mega millions at $120 million, how to invest?

Post by xerty24 »

GRT2BOUTDOORS wrote:
xerty24 wrote:First thing I'd do when I discovered my winning ticket was move to an income tax free state like TX or FL before I claimed my prize. That alone should be worth $5-10M.
I work for the Treasury Department :lol:
Not quite sure how your comment was intended... a quick survey shows that many state lotteries don't tax non-residents on lottery winnings (and some states with income taxes also chose not to tax their lottery winnings). Changing your tax domicile prior to claiming the prize seems like an option worth at least considering depending on one's personal situation.
xerty24
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Post by xerty24 »

Enzo IX wrote:Question why do the big winners sometime put the winning ticket in a family partnership or trust.
For one thing, estate tax planning is probably much easier if you split up the assets ahead of time rather than trying to distribute them later. For example, claim the ticket jointly with your kids if you intend to leave them some share of the money, etc.
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