What Would You Do If You Had $4 Million

What if you receive a sum of money, what would you do?

Well, you know, say just a couple of dollars. A couple. Million. Dollars. $4 million whooping dollars, tax-free! What would you do?

Take the case of this guy who received $4 million. This 42 year old guy who is single, who doesn’t have kids, whose retirement is set, and has no debts says he has “never been much of a materialistic person” and that he “finds happiness in the simple things.” He doesn’t detail how he received the money (of course, that’s none of our business) but turns to Reddit searching for ways to make the most of this huge money on his hands. Let’s take on the pieces of advice one by one.

First things first: tell as few people as possible

They say it is best to keep things a secret. Chances are when you receive this huge money, especially if for the first time, you would not know what to do. In this moment of confusion, the last thing you want is to become a victim of other’s selfish interests. Whether you like it or not, you will become a target of scammers and the so-called “fair weather” friends. As one comment went, “Never underestimate the deviousness and deception people are capable of.” It’s not really being paranoid or judgmental, but more of cautious. Keep it to yourself at least until you know what to do.

Making your money last will be difficult

You know why it is most likely going to be difficult to make this huge amount of money last? Because money can change people, usually in an unfavorable way. You may start to think that buying a house or two may not really hurt. Or perhaps going off to a private island won’t make a difference. Or spending this few thousand dollars over signature clothes isn’t really a big deal. What’s a few luxuries to the millions that you have, right? But this one comment concisely puts it: “The most practical way for you lose this game is if you lose discipline with your spending.”

Get advice (and always get a second opinion)

A few suggestions include hiring a financial planner that is flat-fee and not commission-based to advise you on important financial concepts you should know. When you have chosen one, get a second opinion. It may mean double the fee but if it is $4 million on the line, it is totally worth it. Side note: One comment says never to pick a close friend or family member as a financial planner. I think you and I could guess why.

Develop financial literacy as a hobby

Heed advice from carefully chosen professionals but make your money a personal responsibility. Every decision must be yours. You must understand things enough to make a sound decision and not just because someone told you so.

Don’t kill the goose that lays the golden eggs

Invest your money (on whatever works for you based on your financial education mentioned earlier) and live off the returns. This is what they popularly call “living on interest”. One suggests to put in your money in a mix of stocks and bonds, then you can “withdraw 4% of your initial nest egg, inflation adjusted, and survive 30 years with something like a 95 or 96% success rate.” (Google: “Trinity Study”.)

So, ready for that million dollars, eh? Well, for now, this might be something so trivial that you and me will never have to worry in our lifetime. But as they say, “better safe than sorry”. One day we may get those million dollars. Who knows?