Here’s a bit of weekend fun… Jim over at pfBlueprint asked a bunch of personal finance bloggers what they’d do with a million dollars.
This was my answer:
If a million dollars suddenly fell into my lap, I’d invest the vast majority of it. The concept of “financial freedom” is very attractive to me, so I’d focus on building up that nest egg. I’m not saying that I’ll necessarily quit my job when we reach that magical crossover point, but it’s hard to put a price on being in a position to make that decision.
Boring, but true.
So… What would you do?
(Oh, and don’t forget to click through and read the other answers.)
“I’ll tell you what I’d do. Two chicks at the same time.”
…But seriously, I definitely agree. I’d invest (nearly) all of it. Gotta have some fun with it, too you know. Can’t save it all for a rainy day.
Comment by Nehal — May 9th 2008 @ 11:36 pm
Diversify investments and live off 1/2 the interest.
Comment by Sara A. — May 10th 2008 @ 9:29 am
I would invest about 95% of it in a mutual fund most likely. 1 Million is not really enough to retire at my current age so I would also consider working, but would have a lot less pressure worrying about money. Besides, retiring too early could make it a little too boring since there would really be nothing to do for long periods of times.
Comment by Allen — May 10th 2008 @ 9:52 am
I’d pay off all my debt, which isn’t much right now, the pay off my house and buy a house for my parents. Whatever is left over would go into savings.
Comment by Sara — May 10th 2008 @ 10:55 am
i would get a new car! nothing too fancy just a 07 08 toyota. probably avalon. the rest would be put into a cd or something where the interest is paid to my savings or checking so i could live off it for a while. take a nice little 6-12 month break. then get back to work. =)
Comment by kimiyasdad — May 10th 2008 @ 3:38 pm
I would put about 50% of the money on saving accounts. About 10% I would invest in stocks. Some money I would use to make my dreams reality (own martial arts shool etc.) and rest probably on some funds.
Comment by Kacper — May 10th 2008 @ 6:08 pm
I would spend every penny on a million dollar house, which is a whole lot of house in Texas.
Comment by dogatemyfinances — May 10th 2008 @ 6:37 pm
I’ld do just what I do with my “non-million” dollars I have now: Donate some/save some/spend some. In that order.
Comment by Carole — May 11th 2008 @ 9:32 am
A million bucks ain’t what it used to be. I’d probably buy another car - as my Acura is turning 8 and has not been problem free. But I’d still buy used ($25k). I’d probably upgrade my home - maybe to a 4 bedroom with a yard so I could start a family. I’d still take out a mortgage as that’d run me $500k in my neighborhood. But I’d pay at least 50% down ($200k + equity in current home).
I probably wouldn’t tell anyone either - not even my parents. I’d probably go visit and offer to get them a nice gift, same for my sister. But they are fairly simple people who don’t owe any money (both parents and my sister have paid for homes!) and don’t lead an extravagent lifestyle so I have no idea what they’d want as they really have no true needs ($25k).
But you are always reading about lottery winners who become suckers cause every church, charity, con artist, relative is there with a hand out to get their share. (Don’t get me wrong - churches, charities, and family can be good things, but they will always be there with a hand out) That’s why I wouldn’t tell anyone. I’d give where I saw a need and not let anyone think I had anymore than anyone else.
So I guess I’ve spent a total of $250k already not including charities, which would be something I would give to over time. The rest would be invested so I could continue to help my family, myself, and others if needed.
Comment by KC — May 11th 2008 @ 12:19 pm
As you say: add it to your nestegg (which had better be a LOT damn bigger than $1 Mill. by the time you ‘retire’!) … it’s interesting that $1 Mill. now invested wisely will spin off about $25k a year (adjusted for inflation).
$1 Mill. in 20 years (which is what most people will say that they are skimping and saving for) will only bring in about $15k a year (in today’s dollars).
When you think about it in non-emotive terms, $1 Mill. just ain’t what it used to be …
… food for thought?
Comment by AJC @ 7million7years — May 11th 2008 @ 8:36 pm
I wrote a post on Why I Still Play The Lottery that also covers what I’d do if I won:
http://www.dontfeedthealligato.....he-lottery
Comment by MITBeta @ Don't Feed The Alligators — May 11th 2008 @ 8:44 pm
“I’ll tell you what I’d do, man: two chicks at the same time, man.”
Seriously though I would pay off all my debt which would leave me with just about $700,000. Invest the rest, quite my job, and go work construction installing underground utilities with the local union at $35/hr May thru Nov and then ski Dec-April.
Comment by Josh — May 11th 2008 @ 11:47 pm
Tithe 10%, invest the rest in index funds to pass on some day to my children.
I don’t particularly like the idea of quitting my career and “living off the interest”. We have a young family, with 3 children 3 and under (and #4 on the way!). $1million could completely finance their college education, and help to buy my children’s 1st homes, etc.
Although now that I’ve said it, I am not exactly sure how good it would be for them to have everything provided for “free”, no worries, etc. Think Paris Hilton. I’ve had to work for everything, to manage the family finances carefully, to live below our means and save for the future. Could raising a trust-fund-baby actually be a curse in disguise?
Jonathan
Comment by Jonathan — May 12th 2008 @ 10:23 am
With 1 million dollars, I would pay off my condo, purchase 3 more in the same development, and start renting 3 of them out. I’d pay off any of my friends debts, and put the rest in the bank.
Comment by zeromoney — May 12th 2008 @ 11:20 am
If I had a million dollars…I would convert my house to solar. Open a coffeeshop and invest the rest.
Comment by sharetheroad — May 12th 2008 @ 2:54 pm
I would invest most of it in tax efficient investments for non-retirement accounts. Most likely I would choose Index funds + municipal bonds. I would move the money into the investments over a year or two so that I’m dollar cost averaging.
Depending on the rate of return I may pay off my mortgage, and be debt free. I’m not certain though as the mortgage is only at 5%.
I wouldn’t make any radical career changes for at least a year. $1Mil isn’t really enough to live off forever, but with a bit of compounding it could be… I think I would work part time so I have more time with my family while the kids are young. Longer term I might try opening my own company or take a very rewarding but low paying job.
I would spend a bit of it short term to celebrate, say 5% to take some very nice vacations, get some nice toys (a large screen TV, new computer etc).
-Rick
Comment by Rick Francis — May 12th 2008 @ 6:32 pm
I’d hide it from my wife!
Comment by TheMightyQuinn — May 12th 2008 @ 7:27 pm
I’d pay off all my debt including my house, sell my current old cars, buy new reliable cars with good gas mileage (nothing fancy), & invest the rest. Any extra money I have at the end of each month I’ll invest in the account. I just like the idea of not oweing a dime to anyone.
Comment by Calvin — May 13th 2008 @ 12:16 pm
I agree with MIT Beta - donate/save&invest/spend. A million dollars is enough to do a little bit of a lot.
Unlike Flexo @ Consumerism Commentary, if I Had a million dollars I wouldn’t start my own foundation, I would contribute a portion to a foundation already doing good. There are so many deserving causes that already have the infrastructure in place to do good… why waste funds setting up another?
Comment by Casey @ OYFP — May 13th 2008 @ 2:01 pm
Are we talking about a million dollars tax-free?
Comment by Brian P. — May 15th 2008 @ 2:14 pm
My husband and I would probably buy some land just outside of town and build a house with all the things we didn’t know we needed in our first house (can you say 3 car garage and solar/wind power). With more land we would need bigger garden tools…
We have both had some business ideas rolling around in our heads the last year or so, and I suspect this kind of capital would push us to make it into a real business plan.
We have some debt, and would undoubtedly buy something expensive (hybrid car/European vacation). I have thought for a long time I wanted to pay off my Dad’s student loans.
Since it is true that $1M is not what it used to be, the point of this exercise is not usually to brag about how great we are off financially and how generous we would be with this money, but to determine what it is you really want out of life.
Given that, once we get other things in order my husband and I should start saving for the next house and start drawing up the business plan. $1M or no $1M.
Comment by Danielle — May 15th 2008 @ 3:13 pm