So, what would you guys do if you were rich...

[viroid]

...or you owned a business that is making you rich?

What would you do?   What would be most important if money was not an issue? 

How would you invest?

Would you be doing the same thing?  Index fund?

Im a newb and I love the ideas around here, but im having trouble putting it all together because I make more money than I know what to do with.

So, where do I start?  Should I buy a home outright cash money?  I currently rent and I feel hone ownership is not an investment unless youre renting it out.  Financing seems stupid if you dont have to. 

Would that be your first move?  Would you do anything different?  Im looking for places to put my money, but I want the best ROI, ya know? 

[Psychstache]

Way too few details to offer any practical advice. Perhaps post a case study?

[fb132]

TO be honnest, I couldn't care less to be rich, being FI is already good enough. If I were to have 1 million dollars or 5 million dollars, it would be the same to me. My expenses would slightly go up (I would travel once a year, that would be the only expense added to my budget), but not by much. both amount is enough for me to live on (by alot) and that makes me happy.

[matchewed]

You mean I'm not rich!?

I'd probably use the same path I use now. Index funds, tax optimization, life optimization until FIRE...then continue the same three things.

[Bracken_Joy]

You mean I'm not rich!?

I'd probably use the same path I use now. Index funds, tax optimization, life optimization until FIRE...then continue the same three things.

+1. Everything would be the same, it would just be a faster timeline. I would actually feel far more stressed about losing my earnings- the higher they are, the harder they fall. So I would be maximizing the heck out of my savings.

[Gone Fishing]

Do you actually want a house? Or are you just trying to spend some of your money? 

[Chris22]

There's rich and there's rich.  With real rich man's money, meaning $15M+, I'd be living in a Maui beach house and trying to decide whether to golf Kapalua or take the yacht (Morris M42, thankyouverymuch) out every day. 

[matchewed]

There's rich and there's rich.  With real rich man's money, meaning $15M+, I'd be living in a Maui beach house and trying to decide whether to golf Kapalua or take the yacht (Morris M42, thankyouverymuch) out every day.

What if it was $14M? Would you have to sacrifice and get a Haitian beach house?

[Chris22]

There's rich and there's rich.  With real rich man's money, meaning $15M+, I'd be living in a Maui beach house and trying to decide whether to golf Kapalua or take the yacht (Morris M42, thankyouverymuch) out every day.

What if it was $14M? Would you have to sacrifice and get a Haitian beach house?

Might have to step down to a Morris M36. 

[forummm]

I would do what I was doing now. Depending on how rich I was, I would either change to a different job soon or quit altogether. If I didn't like the different job I would quit altogether. If I was rich enough (like Gates level rich) I would start a huge foundation to give it all away. If I was moderately rich I would find good ways to give it away that may not involve a foundation.

[Axecleaver]

I'm somewhat in this situation, myself. My income has doubled in the past year due to some business success, and my wife and I have reduced our lifestyle expenditures to focus on early retirement. Our savings rate is around 50%, but that is after adding in paying for all college costs out of pocket this year. Our FIRE date is now set for June, 2020.

One principle to understand about index investing, is that it scales up no matter how much one person can throw at it. Having more money available doesn't change the efficiency of index investing. It just makes your accumulation phase shorter.

You should take a few, simple steps:

1. Articulate an exit strategy for your business. For me, it's working another five years until my primary contract ends. At that point, if the contract extends (high likelihood), I'll either sell the business or replace my active involvement with an employee and just enjoy the passive income. Are there triggers/decision points which could affect your exit? Write them down and develop contingency plans for these eventualities.

2. Aggressively minimize taxes. With high income earnings come painful marginal tax rates. Look at how your corp is structured, maximize tax deferred earnings as much as possible (I use a solo 401k and Roth conversions).

3. Figure out what makes you happy. Some folks want nothing more than to continue an entrepreneurial lifestyle, starting and selling businesses every couple of years. Some folks want to keep expenses super-low so they can retire earlier than they could otherwise. I'm planning to retire to a lower cost of living place with some land, establish a homestead and enjoy some gardening, homebrewing and livestock.

If you haven't yet, read "Your Money or Your Life" for some good exercises on how to figure out what's important to you. Spoiler: it's probably not "more stuff."

4. Based on what makes you happy, develop a retirement plan to finance your goals. If you only need 30k in retirement, then your 25x goal is just 750k. Maybe you already have enough? This may change your perspective on step 1. You can live a very comfortable lifestyle on $50k - $75k a year. More than that is not likely to make you happier. You can permanently set yourself up for a 75k retirement with a nest egg of $1.875m. Think about putting that much together into an asset allocation that you're comfortable with, and setting it aside.

As far as a house is concerned - would owning a house make you happy? There are a lot of headaches that come with real estate ownership, so buying really depends on what you want to do with your life and how long you plan to be wherever you are. Good luck! Let us know how it works out for you.

[TheAnonOne]

I am not "Rich" in my view, although everyone in my family would say I am. If I keep working into my late 30s I could have several million I suppose. I may do it, just to say I did.

I don't think much will change. I may have a sports car and a slightly bigger house, but I mainly want to keep most of my cash free for travel.

[Retired To Win]

...or you owned a business that is making you rich?

What would you do?   What would be most important if money was not an issue?...

It's gonna make some people crazy, but I'm not sure I would do anything differently than what I do now.  I'm perfectly satisfied with my base lifestyle satisfaction level.

OH!  There IS one thing I would do.  I would outsource house cleaning.  Absolutely.  Both my wife and I have a big problem with that particular task.

[nereo]

What would you do?   What would be most important if money was not an issue? 

How would you invest?

Would you be doing the same thing?  Index fund?

I would be doing the exact same thing, only faster.  I'd be piling more money into my index fund and moving quicker to towards my FI date.  It's a boring answer but it's the truth.

So, where do I start?  Should I buy a home outright cash money?  I currently rent and I feel hone ownership is not an investment unless youre renting it out.  Financing seems stupid if you dont have to. 

Would that be your first move?  Would you do anything different?  Im looking for places to put my money, but I want the best ROI, ya know?

If you don't think home ownership is a good investment then don't buy a house.  However, at present interest rates having a mortgage can be one of the best hedges against inflation - so long as the Rent-v-Buy equation comes out in favor of 'Buying".  Even if I had an extra $1MM I wouldn't pay off the remaining $170k of my mortgage. No way.

Regarding the best ROI - first max out all your tax-advantaged accounts.  Then invest as much as you can into an index fund.  That's what I would do (actually, it is what I am doing - only I can't max out my tax-advantaged accounts with present salary).
If you dig the whole real-estate thing, purchase some rental units with our very low interest rates - but make sure you do your homework first.

[Chris22]

If you dig the whole real-estate thing, purchase some rental units with our very low interest rates - but make sure you do your homework first.

I have a rental house, and would like another (or several more) but if I already had a lot of money I wouldn't bother.  To me, rental property is a good way for a working man to build wealth at the expense of somewhat significant risk and a potentially high "pain in the ass factor" (dealing with tennants, etc).  But if I had, say $5M to invest, I'd much rather park it in some index or blended fund that threw off 5% than try to grow it with rental properties. 

[Cookie78]

If you dig the whole real-estate thing, purchase some rental units with our very low interest rates - but make sure you do your homework first.

I have a rental house, and would like another (or several more) but if I already had a lot of money I wouldn't bother.  To me, rental property is a good way for a working man to build wealth at the expense of somewhat significant risk and a potentially high "pain in the ass factor" (dealing with tennants, etc).  But if I had, say $5M to invest, I'd much rather park it in some index or blended fund that threw off 5% than try to grow it with rental properties.

Agreed completely.

If I was rich, I'd quit my job and do all the other things I plan to do after I FIRE. Except I MAY keep one of my houses a little longer just to have a home base.

[nawhite]

...

If you don't think home ownership is a good investment then don't buy a house.  However, at present interest rates having a mortgage can be one of the best hedges against inflation - so long as the Rent-v-Buy equation comes out in favor of 'Buying".  Even if I had an extra $1MM I wouldn't pay off the remaining $170k of my mortgage. No way.

Regarding the best ROI - first max out all your tax-advantaged accounts.  Then invest as much as you can into an index fund.  That's what I would do (actually, it is what I am doing - only I can't max out my tax-advantaged accounts with present salary).
If you dig the whole real-estate thing, purchase some rental units with our very low interest rates - but make sure you do your homework first.

Beat me to it. Whether to rent or buy is always a mix of the conditions in your local market and your personal preferences. Buying a house made sense to me because in my market I was convinced that property values would continue to go up for the term I was planning to stay in my area and I wanted to be a homeowner (and make my own gardens, do my own efficiency upgrades etc). Put me in the SF Bay Area and I'd be way too scared that there was a bubble in property values there to buy anything. But it all comes down to your market conditions and your personal preferences.

I like nereo's advice of maximize all tax advantaged accounts. $18k into a 401k (~$41k if self employed), $5500 into an IRA, $3300 into an HSA if you can. To most people in the world, thats "more money than they know what to do with" especially if they are self employed or own their own business. If you're married, double all of those numbers. Thats close to $100k if you and your spouse own your own business (and you're an accounting wizard).

Honestly though, as far as myself, the only way I can imagine this happening is if I inherited a business after FIRE'ing on my own. In that case, I'd be looking for an exit for myself as I'd want my FIRE time and I'd take 5% of the proceeds and call it "fun" money to see if I could figure out Value Investing. The rest, I'd index. Perhaps, if we're talking like >$500k in new wealth, I'd just buy $1k of every company in the S&P500 so I wouldn't need to worry about Vanguard's fee.

[captainawesome]

If I were rich I would probably live a similar lifestyle (spending wise) but wouldn't have to stress about retirement planning. I would just invest my money smartly so that I had a well diverse portfolio and would hedge against anything that would impact that lifestyle. I would OWN a home completely, and just have to pay taxes and such. Most likely own a home on the beach, less than 2k sq feet, with maybe an in-law suite style carriage house over the garage.

As far as "work" I would only do what I enjoy. Coach Rugby, shoot competetively, coach strength and conditioning, make furniture etc. 

My day might look something like this:
Wake up after a restful 8 hours of sleep. Take care of the dogs. Enjoy coffee on my back porch overlooking the water. Cook breakfast and read for 1-2 hours. Workout. Insert daily activity (Paddleboard/fish/hunt/shoot/coach/build something).  Cook dinner and read for another 1-3 hours.  Maybe ride my beach cruiser around the neighborhood.

I would probably also travel quite frequently.

If I had a lot of money coming in right now, I would just make sure to get to my above scenario as fast as possible. Same style of investing (max retirement accounts as applicable, index funds, maybe real estate if I was staying in one location)

[shotgunwilly]

I'd be "lettin bands go."

[neil]

For me, the purpose of money is to minimize the stressful maintenance of life.  I do enjoy travel and maybe would prefer to be lazy in some aspects (outsourcing laundry?  eating out too much?) in order to enjoy the moment of being there.  But the act of "exploring" itself is tiring on its own and I would still settle down at times.  If I abandoned the costs of maintaining a stable home, I wonder how much I would really spend even if I had a stupid amount of money.  Even $100K seems like a stretch.

If I did have a home base, I would probably pick some place with a temperate environment and low stress environment.  Bonus if I can bike around.  I might splurge on cleaning services, but I am fine with other maintenance purposes.  If I spent most of my time at home, I might have an MMM-level of spending without the regular cost of rent or a house.

I just see the acquisition of things as added stress, so there isn't a lot that I would add in my life that I don't already have.  Relocating without the need for commute would really be the biggest change.  I still probably wouldn't rush into any action.

[I'm a red panda]

Am I rich enough that I can sell said business and stop working- and still live lavishly?

In which case, I'd like to travel a lot, in the best accomodations. And devote more time to my hobbies.


But it seems to me most "rich" people actually work really really hard to accumulate more wealth.

[Milizard]

I would probably do the index investing thing with half, and keep that separate.  Then create a diversified portfolio of stocks with the other half, that an RIA would manage for me.  My financial stuff would probably be more complicated, so I would use more help with that.  I would travel more, and volunteer/give away a lot. 

Whenever I dream about hitting it really, really big, I dream about using that money to help my family to keep a minimum standard of living.  Some in my family are doing great, others are on gov't assistance.  The ones on gov't assistance are there because of their own bad choices, so I wouldn't put them on easy street, but just nice enough street.  I also dream about helping to tear down decrepit old houses, and let nature creep back in.  Since people keep building into the natural areas, I think maybe we let the inner city crappy areas become the new nature areas.  (This is inner city in my area, so it's not deep within a major city or anything.)

[Cougar]

 Knowing everything I know now, I'd keep enough to maintain a 100k yearly income/withdrawal at 4% SWR and give the rest to Christian charities and vets.

 imo, 100k yearly should be plenty for anyone unless you have to live in nyc or California and for the costs; having a chaueffer or private jet doesn't give you enough time for having them available; but I could be wrong.

[mozar]

I would run my own restaurant. They are very capital intensive, and it wouldn't be worth it to me unless I had 5m+ so I could do it right.

[iamlindoro]

I like this guy's plan.

[Sayonara925]

Philanthropy.

[big_slacker]

Personally? At this point in life I'd take a harder look at the advice here about allocating investments:

http://jlcollinsnh.com/2012/09/21/the-smoother-path-to-wealth/

I'd need to spend some time fixing up my parent's place. My dad is a retired tradesman and knows construction but takes for f'in ever to do anything. I'm betting I could over a year get the place in pretty nice shape for them to enjoy the rest of their lives. And my brother that still lives down there could move in after they're gone (hopefully in a long time) and it wouldn't be a dump.

I'd need to decide whether to buy a condo back home in tahoe for retirement (could vacation rental and live part time) or just some land and a winnebago to go back and forth. I kind of like that idea cause I could take trips with the parental house fixing thing and then maybe do similar building a retirement place in the mountains. Have to kick that one around.

I'd also do a lot more mountain bike riding, I've wanted to do some epic stuff for a while but my work makes training and execution of that a little tough right now.

So basically I'd spend time traveling and helping out people I care about.

...or you owned a business that is making you rich?

What would you do?   What would be most important if money was not an issue? 

How would you invest?

Would you be doing the same thing?  Index fund?

Im a newb and I love the ideas around here, but im having trouble putting it all together because I make more money than I know what to do with.

So, where do I start?  Should I buy a home outright cash money?  I currently rent and I feel hone ownership is not an investment unless youre renting it out.  Financing seems stupid if you dont have to. 

Would that be your first move?  Would you do anything different?  Im looking for places to put my money, but I want the best ROI, ya know?

[arebelspy]

I am rich. I live simply and appreciate each day and help when I can. I'm leaving a bundle to charity.

Love it.

I tip my hat to you, sir.

[Bateaux]

I should have saved more in taxable accounts.  Just this year have i started doing so.  I have socked away a lot in retirement accounts and the money will be there in the future.  I'm not rich even though my assets are over 1.6 million.  I still work a blue collar job for benefits and investment dollars.  Every debt has been paid off.  Finally building a financial bridge to FI and FIRE in 2018 at 49 years old.  I hope to have 5 years living expenses in my taxable accounts by then.  After which i hope to do Roth laddering. 
Make sure you aren't poor like I am am at my age of 46.  Over 1.6 million and still can't retire because of tax laws.

[nereo]

I should have saved more in taxable accounts.  Just this year have i started doing so.  I have socked away a lot in retirement accounts and the money will be there in the future. ...
Make sure you aren't poor like I am am at my age of 46.  Over 1.6 million and still can't retire because of tax laws.

This seems incredible to me - how much are you anticipating on needing annually in retirement?  Seems like you have a lot of assets to still be 5 years away from FI/REing.  What about going to part-time employment so that you can start a ROTH ladder sooner?  SEPP? 

[fb132]

I should have saved more in taxable accounts.  Just this year have i started doing so.  I have socked away a lot in retirement accounts and the money will be there in the future.  I'm not rich even though my assets are over 1.6 million.  I still work a blue collar job for benefits and investment dollars.  Every debt has been paid off.  Finally building a financial bridge to FI and FIRE in 2018 at 49 years old.  I hope to have 5 years living expenses in my taxable accounts by then.  After which i hope to do Roth laddering. 
Make sure you aren't poor like I am am at my age of 46.  Over 1.6 million and still can't retire because of tax laws.

Tax laws???Geez, how much do they charge for withdrawing or retire early? I would be FI at this moment with that kind of money and I am only 33.

[kpd905]

Make sure you aren't poor like I am am at my age of 46.  Over 1.6 million and still can't retire because of tax laws.

Why?  How much do you plan on withdrawing each year?  You could just pay the 10% penalty if you really had to, it is most likely still a lower tax rate than you are paying now.

[Bateaux]

I can't stomach paying 10% penalty and taxes.  It would be likely 25% in federal tax.  I'd like to be in the 15% bracket and they would tack on an extra 10%. If someone knows a way around the penalty I'm all ears.

[amberfocus]

...or you owned a business that is making you rich?

What would you do?   What would be most important if money was not an issue?...

It's gonna make some people crazy, but I'm not sure I would do anything differently than what I do now.  I'm perfectly satisfied with my base lifestyle satisfaction level.

OH!  There IS one thing I would do.  I would outsource house cleaning.  Absolutely.  Both my wife and I have a big problem with that particular task.

Ha! I don't mind fighting entropy indoors (read: cleaning), but I'd totally outsource the yardwork/landscaping. Because when it's puny me vs. Mother Nature, Mother Nature wins. :P

[Roland of Gilead]

If I were rich I would hire someone to waste time for me on the internet.

[Suncoast]

I can't stomach paying 10% penalty and taxes.  It would be likely 25% in federal tax.  I'd like to be in the 15% bracket and they would tack on an extra 10%. If someone knows a way around the penalty I'm all ears.

You can withdraw without penalty via SEPP.  http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Substantially-Equal-Periodic-Payments

[kpd905]

I can't stomach paying 10% penalty and taxes.  It would be likely 25% in federal tax.  I'd like to be in the 15% bracket and they would tack on an extra 10%. If someone knows a way around the penalty I'm all ears.

Are you married or single?  A single person would need to withdraw $68,000 a year to hit 15% federal tax before a penalty.  A married couple would need to withdraw $135,000.

And as someone else mentioned, you can use 72t or SEPP to withdraw without penalty.  You just can't choose exactly how much to withdraw with this method like you can with Roth conversions.

[Axecleaver]

Here's a calculator for the SEPP payments. It's based on three factors: your stash, your life expectancy (ie, your age) and your beneficiary's age.

http://www.dinkytown.net/java/Retire72T.html

I ran the numbers for you using age 46, $1.6m stash, and assumed single, or beneficiary equal to or older than you. $61k a year maximum, which brings you pretty close to the 15% rate cap. You did it, dude! You can retire!

With a SEPP, you can also opt to set up a withdrawal plan that is less than the maximum distribution. You just can't go over it, and once you set it up it's complex to change it. The SEPP requirements go away when you hit 59.5.

[Bateaux]

Here's a calculator for the SEPP payments. It's based on three factors: your stash, your life expectancy (ie, your age) and your beneficiary's age.

http://www.dinkytown.net/java/Retire72T.html

I ran the numbers for you using age 46, $1.6m stash, and assumed single, or beneficiary equal to or older than you. $61k a year maximum, which brings you pretty close to the 15% rate cap. You did it, dude! You can retire!

With a SEPP, you can also opt to set up a withdrawal plan that is less than the maximum distribution. You just can't go over it, and once you set it up it's complex to change it. The SEPP requirements go away when you hit 59.5.

Wow thanks.  I'm actually married.  I hope to live on about 50k and use the ACA for health insurance.  Big decision to make now.  Thanks for the information.  I may look at FIRE 2016 instead of 2018.

[patrickza]

I'd get rid of my damn alarm clock! Also I'd leave my job, but offer to do the fun bits that I'm best at for free (I work for an NGO). the rest of the time I'd work on the projects I never find enough time in the evenings to do, spent more time with my son after school and go to gym every day. Basically it's exactly what I plan to do post fire.

[MrsPete]

I am rich.

I'm pretty sure every person posting on this board is rich too.  In so many ways, we are all better off than the vast majority of people who have lived on this planet. 

[Dicey]

I am rich.

I'm pretty sure every person posting on this board is rich too.  In so many ways, we are all better off than the vast majority of people who have lived on this planet.

What she said.

[Bateaux]

This thread has changed my life.  It's amazing what I don't know.  You guys are great.  What do I know now?  I know I can FIRE anytime I want.

[soccerluvof4]

All the money would do for me is lessen some uncertainties. Probably by some insurances Just to protect somethings. Getting my kids through college and living my days out as healthy as possible is all i really care about and some extra funds might help that but just fine without.  Other than that I don't need anything more than I have. I would probably help others more than myself with the money that are close to me.

[2Birds1Stone]

I am very rich.

I choose where I work.

I live a very fun and fulfilling life on a mere 40% of my after tax earnings.

My income potential in my career is double what I make.

[Arktinkerer]

I am rich.  Go visit Mexico (or Central or South America or Africa) to see what poor is.  We live very well in this country--even the folks that we consider "poor".  Its a very relative term for most of us.

If I had a few millions to spare there are a couple older buildings I'd love to rehabilitate.  Pay for workers to do some parts while I work on site on some of the cabinetry.

[justajane]

I have a passion for old houses and buildings, so if I were very very rich (like Powerball rich), I would either buy up endangered homes in the Midwest and fix them up to sell at cost or below or I would created a foundation that gave grants for people to improve their historic homes. Or both.

Or conversely, I would make a few huge, endangered buildings my pet project to save. This would be extremely expensive, so I wouldn't be able to save as many. I live in a city that tears  down historic schools and structures all the time, and it makes me sick. If I had had 300K a few years back I could have saved an 1850s stone church built by slaves, but I didn't. No one else stepped up and now its a behemoth of an ugly gas station. 

[Arktinkerer]

I have a passion for old houses and buildings, so if I were very very rich (like Powerball rich), I would either buy up endangered homes in the Midwest and fix them up to sell at cost or below or I would created a foundation that gave grants for people to improve their historic homes. Or both.

Or conversely, I would make a few huge, endangered buildings my pet project to save. This would be extremely expensive, so I wouldn't be able to save as many. I live in a city that tears  down historic schools and structures all the time, and it makes me sick. If I had had 300K a few years back I could have saved an 1850s stone church built by slaves, but I didn't. No one else stepped up and now its a behemoth of an ugly gas station.

I relate to this.  I did have an interesting discussion with someone from England about our attitudes though.  Their history is much longer and they think very little of something from the 1800's.  I guess as a "young" country our sense of history is much more immediate.

[Axecleaver]

This thread has changed my life.  It's amazing what I don't know.  You guys are great.  What do I know now?  I know I can FIRE anytime I want.

It's a great feeling, right? Congrats!

[cjottawa]

Check this out:

http://www.globalrichlist.com/

Enter your salary - and have your mind blown.

If you're reading this, you most certainly speak/type/understand English, have a computer, likely have a job and a roof over your head.

In a global context, you're part of the 1%.

I try to remind myself of that every day.