Going to receive around $1 million - what to do ?
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Going to receive around $1 million - what to do ?
Hello. my company in which I have shares in will be getting bought out in about 2 months. I will receive about 800k-$1 million after tax. What is the best way to invest the money ?
I live in Los Angeles - 34 years old
Wife + a 2 year old kid + planning to have 1 more kid soon
401k - Around $400k
Real estate in a foreign country - Around 400k ( generates no income or expense .. something I will keep until retirement)
HELOC loan - $50k ( I did some renovations in my house)
Car Loan - $16k
529 plan - I deposit $100/week .. have around $6k in it today
After-tax investment account - $30k
Yearly combined income - around $350-$400k depending on bonus .. wife just started working so her income is expected to grow
I owe $350k on my house which is worth around $800k
What is the best way to grow my money. I was thinking of doing a mixture of few things
1) buy a apartment building that is managed by property manager as I am not willing to manage it
2) invest in the stock market ( three fund portfolio)
3) buy a self service car wash ( I always wanted to own some kind of business on the side)
4) buy some equity in the investment firm (VC) that is buying us out
I live in Los Angeles - 34 years old
Wife + a 2 year old kid + planning to have 1 more kid soon
401k - Around $400k
Real estate in a foreign country - Around 400k ( generates no income or expense .. something I will keep until retirement)
HELOC loan - $50k ( I did some renovations in my house)
Car Loan - $16k
529 plan - I deposit $100/week .. have around $6k in it today
After-tax investment account - $30k
Yearly combined income - around $350-$400k depending on bonus .. wife just started working so her income is expected to grow
I owe $350k on my house which is worth around $800k
What is the best way to grow my money. I was thinking of doing a mixture of few things
1) buy a apartment building that is managed by property manager as I am not willing to manage it
2) invest in the stock market ( three fund portfolio)
3) buy a self service car wash ( I always wanted to own some kind of business on the side)
4) buy some equity in the investment firm (VC) that is buying us out
Re: Going to receive around $1 million - what to do ?
First off, put it in a money market account and take your time making sure you’re totally happy with your plan for it. No reason to rush.lazybones18 wrote: ↑Thu Apr 15, 2021 11:33 pm Hello. my company in which I have shares in will be getting bought out in about 2 months. I will receive about 800k-$1 million after tax. What is the best way to invest the money ?
I live in Los Angeles - 34 years old
Wife + a 2 year old kid + planning to have 1 more kid soon
401k - Around $400k
Real estate in a foreign country - Around 400k ( generates no income or expense .. something I will keep until retirement)
HELOC loan - $50k ( I did some renovations in my house)
Car Loan - $16k
529 plan - I deposit $100/week .. have around $6k in it today
After-tax investment account - $30k
Yearly combined income - around $350-$400k depending on bonus .. wife just started working so her income is expected to grow
I owe $350k on my house which is worth around $800k
What is the best way to grow my money. I was thinking of doing a mixture of few things
1) buy a apartment building that is managed by property manager as I am not willing to manage it
2) invest in the stock market ( three fund portfolio)
3) buy a self service car wash ( I always wanted to own some kind of business on the side)
4) buy some equity in the investment firm (VC) that is buying us out
Then, act when comfortable. I’d go with 2), keep it simple, and put it all in VASGX — the Vanguard lifestrategy growth portfolio. That is 80% stocks (60% of which is US, 40% foreign) and 20% bonds. Well diversified, rebalances itself, set it and forget for a decade till your risk tolerance changes.
Or if that already sounds too risky, there are 60/40 and 40/60 lifestrategy funds as well.
Good luck!
Re: Going to receive around $1 million - what to do ?
There is a wiki on how to handle a windfall.
https://www.bogleheads.org/wiki/Managing_a_windfall
A big point is to just park the money someplace very safe for six months to a year while you come up with a long term plan.
I would pay off the car loan and HELOC before doing that. You may also want to fund the 529 to get college expenses taken care of.
There are lots of opinions but if I was in your situation I would pay off the house too, but that is just me. You could then invest your freed up mortgage payment each month.
You do not really have enough to easily buy an apartment building since you would also need to have funds available for large expenses. Even if you have a property manager you will still need to spend time managing the manager.
With wanting to have another kid soon buying a carwash is not a good idea even if the numbers work since your time will be so limited between your day job and your family.
https://www.bogleheads.org/wiki/Managing_a_windfall
A big point is to just park the money someplace very safe for six months to a year while you come up with a long term plan.
I would pay off the car loan and HELOC before doing that. You may also want to fund the 529 to get college expenses taken care of.
There are lots of opinions but if I was in your situation I would pay off the house too, but that is just me. You could then invest your freed up mortgage payment each month.
You do not really have enough to easily buy an apartment building since you would also need to have funds available for large expenses. Even if you have a property manager you will still need to spend time managing the manager.
With wanting to have another kid soon buying a carwash is not a good idea even if the numbers work since your time will be so limited between your day job and your family.
Re: Going to receive around $1 million - what to do ?
+1, congrats! And pay off the car loan asap.theorist wrote: ↑Fri Apr 16, 2021 12:07 amFirst off, put it in a money market account and take your time making sure you’re totally happy with your plan for it. No reason to rush.lazybones18 wrote: ↑Thu Apr 15, 2021 11:33 pm Hello. my company in which I have shares in will be getting bought out in about 2 months. I will receive about 800k-$1 million after tax. What is the best way to invest the money ?
I live in Los Angeles - 34 years old
Wife + a 2 year old kid + planning to have 1 more kid soon
401k - Around $400k
Real estate in a foreign country - Around 400k ( generates no income or expense .. something I will keep until retirement)
HELOC loan - $50k ( I did some renovations in my house)
Car Loan - $16k
529 plan - I deposit $100/week .. have around $6k in it today
After-tax investment account - $30k
Yearly combined income - around $350-$400k depending on bonus .. wife just started working so her income is expected to grow
I owe $350k on my house which is worth around $800k
What is the best way to grow my money. I was thinking of doing a mixture of few things
1) buy a apartment building that is managed by property manager as I am not willing to manage it
2) invest in the stock market ( three fund portfolio)
3) buy a self service car wash ( I always wanted to own some kind of business on the side)
4) buy some equity in the investment firm (VC) that is buying us out
Then, act when comfortable. I’d go with 2), keep it simple, and put it all in VASGX — the Vanguard lifestrategy growth portfolio. That is 80% stocks (60% of which is US, 40% foreign) and 20% bonds. Well diversified, rebalances itself, set it and forget for a decade till your risk tolerance changes.
Or if that already sounds too risky, there are 60/40 and 40/60 lifestrategy funds as well.
Good luck!
“Doing well with money has little to do with how smart you are and a lot to do with how you behave.” - Morgan Housel
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Re: Going to receive around $1 million - what to do ?
+1 Clear the table of the debt, pile up the income over a few years while you plan out what to do next and then make your move while having a huge cash nest egg and 0 debt.Watty wrote: ↑Fri Apr 16, 2021 1:04 am There is a wiki on how to handle a windfall.
https://www.bogleheads.org/wiki/Managing_a_windfall
A big point is to just park the money someplace very safe for six months to a year while you come up with a long term plan.
I would pay off the car loan and HELOC before doing that. You may also want to fund the 529 to get college expenses taken care of.
There are lots of opinions but if I was in your situation I would pay off the house too, but that is just me. You could then invest your freed up mortgage payment each month.
You do not really have enough to easily buy an apartment building since you would also need to have funds available for large expenses. Even if you have a property manager you will still need to spend time managing the manager.
With wanting to have another kid soon buying a carwash is not a good idea even if the numbers work since your time will be so limited between your day job and your family.
Re: Going to receive around $1 million - what to do ?
Payoff HELOC and car loan. Then do nothing for a good long while, other than stash it into a high yield savings account.
I wouldn't recommend the real estate/ car wash idea at all until you have a very long time to research both.
I wouldn't recommend the real estate/ car wash idea at all until you have a very long time to research both.
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Re: Going to receive around $1 million - what to do ?
1: pay off the car
2: pay off the house
3: put the max for the year into that 529
4: VTSAX
the end
2: pay off the house
3: put the max for the year into that 529
4: VTSAX
the end
Bogle: Smart Beta is stupid
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Re: Going to receive around $1 million - what to do ?
I don't know how car washes work in droughts? My general position is that Southern California is a desert, and we know (from dendrochronology ie reading tree rings) that the area has 100 year periods in the past where a single year's normal rainful fell in the whole period). Human ingenuity compensates, has compensated, but green lawns & any other voluntary water using activity are unlikely to survive the next multi-year drought.lazybones18 wrote: ↑Thu Apr 15, 2021 11:33 pm Hello. my company in which I have shares in will be getting bought out in about 2 months. I will receive about 800k-$1 million after tax. What is the best way to invest the money ?
I live in Los Angeles - 34 years old
Wife + a 2 year old kid + planning to have 1 more kid soon
401k - Around $400k
Real estate in a foreign country - Around 400k ( generates no income or expense .. something I will keep until retirement)
HELOC loan - $50k ( I did some renovations in my house)
Car Loan - $16k
529 plan - I deposit $100/week .. have around $6k in it today
After-tax investment account - $30k
Yearly combined income - around $350-$400k depending on bonus .. wife just started working so her income is expected to grow
I owe $350k on my house which is worth around $800k
What is the best way to grow my money. I was thinking of doing a mixture of few things
1) buy a apartment building that is managed by property manager as I am not willing to manage it
2) invest in the stock market ( three fund portfolio)
3) buy a self service car wash ( I always wanted to own some kind of business on the side)
4) buy some equity in the investment firm (VC) that is buying us out
I would
EDIT - yes pay off the HELOC and car loan first
- stick half a million in a 1 year CD and think about it for a year
- put $100k (but not more than) into the VC firm on the principle that if that turned out to be the money that made people rich, you had a piece of the ride aka Fear Of Missing Out--FOMO. I should warn you I did that during the dot com boom, and lost 90% of it.
- invest the other $400k in the 3 fund portfolio
(fix up the house. I am guessing you have checked into the solar panel thing? In that climate, the yield on solar panels is say 2x what mine would be in Southern England).
Also. You are OK where you live? That seems a very low house price, for your income, in Southern California? Great if it meets your needs but otherwise are you looking at a move?
Rental apartments is work. To make money you have to put sweat equity in-- fixing the toilets in the middle of the night, or finding and retaining someone who will (and not steal from you). Good diversification in southern California (albeit always the risk of earthquakes - how do you cover that off?) because there always seem to be people to rent - population growth is still positive. But a friend of mine scooped up properties for $20k at the bottom of the New England crash in the early 1990s. And had tenants who gave him death threats.
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Re: Going to receive around $1 million - what to do ?
The best advice I can provide is to not tell anyone about the blessing that you worked hard for. You see, your problem has nothing to do with how to invest the money. Your problem is how to deal with the emotions of your extended family coming to you and begging for their share.
Re: Going to receive around $1 million - what to do ?
This is so close to my answer the differences don't bear mentioning.Jack FFR1846 wrote: ↑Fri Apr 16, 2021 7:08 am 1: pay off the car
2: pay off the house
3: put the max for the year into that 529
4: VTSAX
the end
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Re: Going to receive around $1 million - what to do ?
You are really young so my advice use a total world etf like VT.
Follow the Buffet model 90% VT and 10% VGSH.
In 40 years nobody know how the world will be but at-least you know VT will adjust to the new world order.
If China becomes the top dog VT will have top 10 all Chinese stocks.
If India\China\USA are all on top then VT will reflect that.
Arbitrary allocation used by many here are not long term sustainable, let the market guide you.
Follow the Buffet model 90% VT and 10% VGSH.
In 40 years nobody know how the world will be but at-least you know VT will adjust to the new world order.
If China becomes the top dog VT will have top 10 all Chinese stocks.
If India\China\USA are all on top then VT will reflect that.
Arbitrary allocation used by many here are not long term sustainable, let the market guide you.
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
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Re: Going to receive around $1 million - what to do ?
Check out the windfall section of this website.
Short version, is this. Do nothing for a little while let it sink in. Pay off all debt. Don’t tell anyone. This is information you an your spouse need to know about. Maybe your accountant, but I’ve come across more then a few people who were swindled by financial professionals. Last an most important do lots of research before doing anything else.
Short version, is this. Do nothing for a little while let it sink in. Pay off all debt. Don’t tell anyone. This is information you an your spouse need to know about. Maybe your accountant, but I’ve come across more then a few people who were swindled by financial professionals. Last an most important do lots of research before doing anything else.
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Re: Going to receive around $1 million - what to do ?
OP,
You should be doing backdoor Roth. Paying off car and HELOC would be no brainer. Paying off mortgage would also be a possibility if you have low risk tolerance but sounds like that is not the case.
No comment on any of your investment ideas except that #2 works for me and most of the posters here. Can't guarantee that it will work out better than the business ideas but can guarantee it will be cheap and match the performance of the global stock and bond markets.
You should be doing backdoor Roth. Paying off car and HELOC would be no brainer. Paying off mortgage would also be a possibility if you have low risk tolerance but sounds like that is not the case.
No comment on any of your investment ideas except that #2 works for me and most of the posters here. Can't guarantee that it will work out better than the business ideas but can guarantee it will be cheap and match the performance of the global stock and bond markets.
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Re: Going to receive around $1 million - what to do ?
My hind sight - because you are young - front load your retirement or Financial Independence money.
Then I'd make sure to do retirement, kids education, financial independence things with your yearly income.
Then figure out what things on your list you want to do with money from your income:
1) buy a apartment building that is managed by property manager as I am not willing to manage it
2) invest in the stock market ( three fund portfolio)
3) buy a self service car wash ( I always wanted to own some kind of business on the side)
4) buy some equity in the investment firm (VC) that is buying us out
If you opt to pay off your HELOC and car loan (maybe the mortgage) with the windfall money (and then invest the rest for FI or retirement) - that HELOC/Mortgage PI payment amount COULD become the amount you would use monthly to fund something from your list. Pay off the mortgage and car loan (maybe mortgage) and then use that payment money going forward to build wealth however you want on one of your pet projects. Just realize the "pet project" will involve work and be a money suck - until it's not.
One thing to consider about your Mortgage - you don't want to pay it off and then borrow money at a higher interest rate. I'd research your Pet Projects and how you'd best finance the one you pick - and then decide if paying off the mortgage is the best plan.
I'm assuming you and your wife would continue to fund retirement/FI and kids educations, etc in a way that best serves your family's goals and interests.
Then I'd make sure to do retirement, kids education, financial independence things with your yearly income.
Then figure out what things on your list you want to do with money from your income:
1) buy a apartment building that is managed by property manager as I am not willing to manage it
2) invest in the stock market ( three fund portfolio)
3) buy a self service car wash ( I always wanted to own some kind of business on the side)
4) buy some equity in the investment firm (VC) that is buying us out
If you opt to pay off your HELOC and car loan (maybe the mortgage) with the windfall money (and then invest the rest for FI or retirement) - that HELOC/Mortgage PI payment amount COULD become the amount you would use monthly to fund something from your list. Pay off the mortgage and car loan (maybe mortgage) and then use that payment money going forward to build wealth however you want on one of your pet projects. Just realize the "pet project" will involve work and be a money suck - until it's not.
One thing to consider about your Mortgage - you don't want to pay it off and then borrow money at a higher interest rate. I'd research your Pet Projects and how you'd best finance the one you pick - and then decide if paying off the mortgage is the best plan.
I'm assuming you and your wife would continue to fund retirement/FI and kids educations, etc in a way that best serves your family's goals and interests.
Re: Going to receive around $1 million - what to do
It was unclear to me whether you expect to continue working in the company that was bought out and whether some (many?) other employees also will be receiving a windfall.
A company after an acquisition can be a very different place than before. That makes me suggest being more conservative than you might otherwise be. Assuming you expect to continued to be employed at the company, this expectation could change either because the company no longer wants you or you no longer want to work there.
A company after an acquisition can be a very different place than before. That makes me suggest being more conservative than you might otherwise be. Assuming you expect to continued to be employed at the company, this expectation could change either because the company no longer wants you or you no longer want to work there.
Re: Going to receive around $1 million - what to do ?
Don't forget to pay the huge tax bill.
VTI 48%, VXUS 12%, BND 40%
Re: Going to receive around $1 million - what to do ?
And to build on this, why don't you and your wife have Roth IRAs? Open them, and fully fund them every year.Jack FFR1846 wrote: ↑Fri Apr 16, 2021 7:08 am 1: pay off the car
2: pay off the house
3: put the max for the year into that 529
4: VTSAX
the end
Enjoy!
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Going to receive around $1 million - what to do ?
Because:mikejuss wrote: ↑Fri Apr 16, 2021 1:00 pmAnd to build on this, why don't you and your wife have Roth IRAs? Open them, and fully fund them every year.Jack FFR1846 wrote: ↑Fri Apr 16, 2021 7:08 am 1: pay off the car
2: pay off the house
3: put the max for the year into that 529
4: VTSAX
the end
Enjoy!
https://www.schwab.com/ira/roth-ira/contribution-limits
VTI 48%, VXUS 12%, BND 40%
Re: Going to receive around $1 million - what to do ?
Have you ever managed a car wash? Do you have expertise in the car wash business? If not, cross it off your list. VC investment (even in a firm) is VERY high risk. The success rate for start up's is about 10%, that is 10 out of 100.
The apartment idea has more merit, however, did you ever own an apartment building? I worked with a RE Private Equity Boutique in LA. They own dozens of apartment buildings in LA. They are on the hunt for deals every waking hour of every day as are their competitors which number in the hundreds. What edge do you have over these professionals? If none, steer clear as the learning curve will mute your returns, or worst case cost you money.
Having chased alpha for about 30 years, I came to the conclusion in my early 50's the best way to invest money is in the Total Stock Mkt index.
Dave
The apartment idea has more merit, however, did you ever own an apartment building? I worked with a RE Private Equity Boutique in LA. They own dozens of apartment buildings in LA. They are on the hunt for deals every waking hour of every day as are their competitors which number in the hundreds. What edge do you have over these professionals? If none, steer clear as the learning curve will mute your returns, or worst case cost you money.
Having chased alpha for about 30 years, I came to the conclusion in my early 50's the best way to invest money is in the Total Stock Mkt index.
Dave
Last edited by Dave55 on Fri Apr 16, 2021 1:19 pm, edited 1 time in total.
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
Re: Going to receive around $1 million - what to do ?
There are no income limits for those contributing to a Roth IRA--backdoor. The OP should check this out, and get on the Roth train today.gwe67 wrote: ↑Fri Apr 16, 2021 1:07 pmBecause:mikejuss wrote: ↑Fri Apr 16, 2021 1:00 pmAnd to build on this, why don't you and your wife have Roth IRAs? Open them, and fully fund them every year.Jack FFR1846 wrote: ↑Fri Apr 16, 2021 7:08 am 1: pay off the car
2: pay off the house
3: put the max for the year into that 529
4: VTSAX
the end
Enjoy!
https://www.schwab.com/ira/roth-ira/contribution-limits
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
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Re: Going to receive around $1 million - what to do ?
My contrarian take is that fixed low-rate debt has value in today's world because it serves as an inflation hedge. If your car loan is in the 0.x% range and your mortgage is in the 2.x% range, I would keep them. If rates go down from here, you've lost a few basis points and if rates go up from here, you have a below-market loan, which is an asset. Personally, I expect interest rates to go up and have been taking on more debt.
With the 401(k) you have around $1.5 million to invest at age 34, plus $500k in home equity. It is not clear whether you anticipate ever having another windfall in the future. If not, I'd put the whole amount into a sensible allocation for you (maybe 70/30?) right now, and then let it grow. You are still somewhat far from financial independence, unless your expenses are pretty thin and in LA; I'm guessing they are not.
I am not a fan of 529 plans either, as you have no idea what college will look like in 20 years. Will all tuition be free? Will all courses be online? Will a 529 plan account balance be grabbed as quickly as possible, but the investment account of a parent ignored? Too many unknowns for me.
According to the Rule of 72 your $1.5 million could be $3 million at age 45, $6 million at age 55 and $12 million at age 65. If you plan to keep working at your current salary, you can afford a very nice lifestyle and not have to worry about any savings ever again. Enjoy it!
With the 401(k) you have around $1.5 million to invest at age 34, plus $500k in home equity. It is not clear whether you anticipate ever having another windfall in the future. If not, I'd put the whole amount into a sensible allocation for you (maybe 70/30?) right now, and then let it grow. You are still somewhat far from financial independence, unless your expenses are pretty thin and in LA; I'm guessing they are not.
I am not a fan of 529 plans either, as you have no idea what college will look like in 20 years. Will all tuition be free? Will all courses be online? Will a 529 plan account balance be grabbed as quickly as possible, but the investment account of a parent ignored? Too many unknowns for me.
According to the Rule of 72 your $1.5 million could be $3 million at age 45, $6 million at age 55 and $12 million at age 65. If you plan to keep working at your current salary, you can afford a very nice lifestyle and not have to worry about any savings ever again. Enjoy it!
"The Basic Choices for Investors and the One We Strongly Prefer" |
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Re: Going to receive around $1 million - what to do ?
#2
And keep working.
At 34, 1 mil will give you a boost in retirement savings and later at age 50 or earlier or it depends, the option to retire early.
No apartment building unless you have business ambitions to switch to that and grow more. R/E income property is not as passive as most think. It’s a business.
Preserve your windfall for the long term.
Meanwhile, go out and make more.
j
And keep working.
At 34, 1 mil will give you a boost in retirement savings and later at age 50 or earlier or it depends, the option to retire early.
No apartment building unless you have business ambitions to switch to that and grow more. R/E income property is not as passive as most think. It’s a business.
Preserve your windfall for the long term.
Meanwhile, go out and make more.
j
Re: Going to receive around $1 million - what to do ?
"Fully fund them every year" implies contributing from salary.mikejuss wrote: ↑Fri Apr 16, 2021 1:09 pmThere are no income limits for those contributing to a Roth IRA--backdoor. The OP should check this out, and get on the Roth train today.gwe67 wrote: ↑Fri Apr 16, 2021 1:07 pmBecause:mikejuss wrote: ↑Fri Apr 16, 2021 1:00 pmAnd to build on this, why don't you and your wife have Roth IRAs? Open them, and fully fund them every year.Jack FFR1846 wrote: ↑Fri Apr 16, 2021 7:08 am 1: pay off the car
2: pay off the house
3: put the max for the year into that 529
4: VTSAX
the end
Enjoy!
https://www.schwab.com/ira/roth-ira/contribution-limits
And doing a Roth conversion in a year with about $1.5 million in taxable earnings is a really bad idea. Not to mention California income tax as well.
VTI 48%, VXUS 12%, BND 40%
Re: Going to receive around $1 million - what to do ?
https://www.bogleheads.org/wiki/Backdoor_Rothgwe67 wrote: ↑Fri Apr 16, 2021 2:11 pmmikejuss wrote: ↑Fri Apr 16, 2021 1:09 pmThere are no income limits for those contributing to a Roth IRA--backdoor. The OP should check this out, and get on the Roth train today.gwe67 wrote: ↑Fri Apr 16, 2021 1:07 pmBecause:mikejuss wrote: ↑Fri Apr 16, 2021 1:00 pmAnd to build on this, why don't you and your wife have Roth IRAs? Open them, and fully fund them every year.Jack FFR1846 wrote: ↑Fri Apr 16, 2021 7:08 am 1: pay off the car
2: pay off the house
3: put the max for the year into that 529
4: VTSAX
the end
Enjoy!
https://www.schwab.com/ira/roth-ira/contribution-limits
"Fully fund them every year" implies contributing from salary.
And doing a Roth conversion in a year with about $1.5 million in taxable earnings is a really bad idea. Not to mention California income tax as well.
This is what is being discussed it is 1 step longer than directly contributing from salary, but essentially equivalent. It is not a roth conversion that would increase taxes in the year it is done.
Re: Going to receive around $1 million - what to do ?
1. Pay-off the car loan and HELOC.
2. Put $200k in Kid1's 529 - this will eventually pay for Kid2's college, too....so $100k/kid. Invest 65% in S&P 500, 20% in Extended Market Index, and 15% in International Index. It's combined return should hopefully at least slightly exceed tuition increases therefore, you should have about 4 years of tuition/room & board paid for per kid at State U.
3. I'd take plop $100K towards my mortgage just to feel good.
4. Remainder goes in the same % as the kids' 529's.
5. Take a 2 week Hawaiian vacation at first class hotels (sans the kid, hopefully!) - and this might be the first thing I'd do.
2. Put $200k in Kid1's 529 - this will eventually pay for Kid2's college, too....so $100k/kid. Invest 65% in S&P 500, 20% in Extended Market Index, and 15% in International Index. It's combined return should hopefully at least slightly exceed tuition increases therefore, you should have about 4 years of tuition/room & board paid for per kid at State U.
3. I'd take plop $100K towards my mortgage just to feel good.
4. Remainder goes in the same % as the kids' 529's.
5. Take a 2 week Hawaiian vacation at first class hotels (sans the kid, hopefully!) - and this might be the first thing I'd do.
Re: Going to receive around $1 million - what to do ?
I used to install and repair car wash equipment. If I received enough money I would build a new car wash. Our company owned one with just two automatic bays and a few vacs that did very well for them.
What I learned
1 Build new, nobody sells a car wash that’s turn key from what I’ve seen.
2 If you can’t put some time in and do your own repairs don’t do it. Some new systems you can program and reset remotely. Be a good plumber and at least know basic electrical. You have presoak that will blind you, three phase electrical, high pressure air and hydraulics.
3 Hire someone that’s handy and trustworthy. You can end up with someone pocketing cash and washing cars through the programmer and not be able to trace it. Some washes had guys there seven days a week.
4 Lots of good cameras even facing opposite of the normal traffic flow
5 Good insurance. Automatic wash setup is around $130k
6 Get ready for the general public. People don’t think and it’s your responsibility to get their wedding ring out of the vacuum that the last person used to clean who knows what.
Our sales pitch was always seven years to pay off and 70% of revenue was profit. I can’t confirm any of that but a $20 wash costs you a few dollars. Count the cars lined up on nice. The self serve bays and vacs generate a lot of cash too with less risk of damage.
What I learned
1 Build new, nobody sells a car wash that’s turn key from what I’ve seen.
2 If you can’t put some time in and do your own repairs don’t do it. Some new systems you can program and reset remotely. Be a good plumber and at least know basic electrical. You have presoak that will blind you, three phase electrical, high pressure air and hydraulics.
3 Hire someone that’s handy and trustworthy. You can end up with someone pocketing cash and washing cars through the programmer and not be able to trace it. Some washes had guys there seven days a week.
4 Lots of good cameras even facing opposite of the normal traffic flow
5 Good insurance. Automatic wash setup is around $130k
6 Get ready for the general public. People don’t think and it’s your responsibility to get their wedding ring out of the vacuum that the last person used to clean who knows what.
Our sales pitch was always seven years to pay off and 70% of revenue was profit. I can’t confirm any of that but a $20 wash costs you a few dollars. Count the cars lined up on nice. The self serve bays and vacs generate a lot of cash too with less risk of damage.
Re: Going to receive around $1 million - what to do ?
Personally I would not pay off anything and put entire amount into Vanguard PAS. Leave the money there and forget about it. Pay off my individual debts with my income via snowball. Your 1,000,000 can turn into 2,000,000 in 10 years with 7% growth and zero contributions.lazybones18 wrote: ↑Thu Apr 15, 2021 11:33 pm Hello. my company in which I have shares in will be getting bought out in about 2 months. I will receive about 800k-$1 million after tax. What is the best way to invest the money ?
I live in Los Angeles - 34 years old
Wife + a 2 year old kid + planning to have 1 more kid soon
401k - Around $400k
Real estate in a foreign country - Around 400k ( generates no income or expense .. something I will keep until retirement)
HELOC loan - $50k ( I did some renovations in my house)
Car Loan - $16k
529 plan - I deposit $100/week .. have around $6k in it today
After-tax investment account - $30k
Yearly combined income - around $350-$400k depending on bonus .. wife just started working so her income is expected to grow
I owe $350k on my house which is worth around $800k
What is the best way to grow my money. I was thinking of doing a mixture of few things
1) buy a apartment building that is managed by property manager as I am not willing to manage it
2) invest in the stock market ( three fund portfolio)
3) buy a self service car wash ( I always wanted to own some kind of business on the side)
4) buy some equity in the investment firm (VC) that is buying us out
Re: Going to receive around $1 million - what to do ?
>>>>> A company after an acquisition can be a very different place than before.
This. Just sold our software company to one of the big dogs in the industry. We had a very unique company, highly profitable and everyone shared in the money. Everyone got big payouts when we sold, but almost everyone hates being part of big company politics. I’d be cautious about getting too tied to the new company via investing in them.
This. Just sold our software company to one of the big dogs in the industry. We had a very unique company, highly profitable and everyone shared in the money. Everyone got big payouts when we sold, but almost everyone hates being part of big company politics. I’d be cautious about getting too tied to the new company via investing in them.
Re: Going to receive around $1 million - what to do ?
I would not do PAS. You can do yourself what they would do and save the fee.
A broad index fund- say VTI for domestic, VXUS for international and then either BND or VTRB, depending on your tax bracket.
It is more efficient to use total stock market than S&P 500 plus extended market.
Buy an apartment building? Why? One undiversified real estate investment with the return limited by what you have to pay a management company.
If you had enough to own, say, a dozen buildings across the country then you could at least be diversified. Still not a great idea, but better.
As for a car wash- same question as above: do you know anything about running a business? About running a business like that? Why do that rather than completely passive investing?
If you have skills that lead you to a $1M buyout, then you are better off focussing your efforts there than being a part time manager of a completely unrelated business.
A broad index fund- say VTI for domestic, VXUS for international and then either BND or VTRB, depending on your tax bracket.
It is more efficient to use total stock market than S&P 500 plus extended market.
Buy an apartment building? Why? One undiversified real estate investment with the return limited by what you have to pay a management company.
If you had enough to own, say, a dozen buildings across the country then you could at least be diversified. Still not a great idea, but better.
As for a car wash- same question as above: do you know anything about running a business? About running a business like that? Why do that rather than completely passive investing?
If you have skills that lead you to a $1M buyout, then you are better off focussing your efforts there than being a part time manager of a completely unrelated business.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either |
--Swedroe |
We assume that markets are efficient, that prices are right |
--Fama
Re: Going to receive around $1 million - what to do ?
2.5: Max out 401k/IRA options.redmaw wrote: ↑Fri Apr 16, 2021 8:45 amJack FFR1846 wrote: ↑Fri Apr 16, 2021 7:08 am 1: pay off the car
2: pay off the house
3: put the max for the year into that 529
4: VTSAX
the end
This is so close to my answer the differences don't bear mentioning.
Re: Going to receive around $1 million - what to do ?
How is this possible? No expense to maintain the asset? I don't understand.Real estate in a foreign country - Around 400k ( generates no income or expense .. something I will keep until retirement)
Re: Going to receive around $1 million - what to do ?
Could be raw land. Have to assume no taxes.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either |
--Swedroe |
We assume that markets are efficient, that prices are right |
--Fama
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Re: Going to receive around $1 million - what to do ?
Could be foreign relatives who live in a foreign house rent free and maintain it. As far as property taxes go, do all countries/areas have property taxes ? Or even if they do, they might be like California where taxes are based on last sale, so may be almost 0 expense.
Re: Going to receive around $1 million - what to do ?
Consider buying Time for yourself & your family: FIRE (back door roth); super vacations; house cleaning, yard or nanny services; weekends with your wife or just time with your kid(s).
When your first born is 7 or 8, consider buying that car wash and bring the kid(s) along each week. Learning to do accounting, management, plumbing & electrical work will be very handy throughout their lives!
When your first born is 7 or 8, consider buying that car wash and bring the kid(s) along each week. Learning to do accounting, management, plumbing & electrical work will be very handy throughout their lives!
Ipsa scientia potestas est. Bacon F.
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Re: Going to receive around $1 million - what to do ?
There’s so much awesome knowledge on BH.furb wrote: ↑Fri Apr 16, 2021 6:33 pm I used to install and repair car wash equipment. If I received enough money I would build a new car wash. Our company owned one with just two automatic bays and a few vacs that did very well for them.
What I learned
1 Build new, nobody sells a car wash that’s turn key from what I’ve seen.
2 If you can’t put some time in and do your own repairs don’t do it. Some new systems you can program and reset remotely. Be a good plumber and at least know basic electrical. You have presoak that will blind you, three phase electrical, high pressure air and hydraulics.
3 Hire someone that’s handy and trustworthy. You can end up with someone pocketing cash and washing cars through the programmer and not be able to trace it. Some washes had guys there seven days a week.
4 Lots of good cameras even facing opposite of the normal traffic flow
5 Good insurance. Automatic wash setup is around $130k
6 Get ready for the general public. People don’t think and it’s your responsibility to get their wedding ring out of the vacuum that the last person used to clean who knows what.
Our sales pitch was always seven years to pay off and 70% of revenue was profit. I can’t confirm any of that but a $20 wash costs you a few dollars. Count the cars lined up on nice. The self serve bays and vacs generate a lot of cash too with less risk of damage.
Re: Going to receive around $1 million - what to do ?
Anyone else hear a mic drip as they finished reading this? There was certainly cause for one.Jack FFR1846 wrote: ↑Fri Apr 16, 2021 7:08 am 1: pay off the car
2: pay off the house
3: put the max for the year into that 529
4: VTSAX
the end
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Re: Going to receive around $1 million - what to do ?
VTWAX and chill.
Re: Going to receive around $1 million - what to do ?
I’m no car wash expert either, but I live in drought ravished Australia and during some of the big drys here, we were told to stop washing our cars with tap water from the house. However you were allowed to visit commercial car washes as they use recycled water. The car wash business did very well during the drought with people lined up to use them.Valuethinker wrote: ↑Fri Apr 16, 2021 7:22 am I don't know how car washes work in droughts? My general position is that Southern California is a desert, and we know (from dendrochronology ie reading tree rings) that the area has 100 year periods in the past where a single year's normal rainful fell in the whole period). Human ingenuity compensates, has compensated, but green lawns & any other voluntary water using activity are unlikely to survive the next multi-year drought.
I studied Physics not Finance, so best to ignore anything I say about money.
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Re: Going to receive around $1 million - what to do ?
Congrats on the windfall.... I would utilize that money to clear all of your debt including your mortgage. I would also use a small portion of the money to enjoy yourself with - say 5%. The rest of the money you should invest in your AA. All of the other ideas sound..... less than ideal. You have a fantastic income so you can cash flow other investments and or businesses in the future if that's what you want to do.
Stay the course!