Author Topic: What the F**k do I do with all this money?  (Read 14054 times)

Retire-Canada

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What the F**k do I do with all this money?
« on: February 13, 2015, 09:55:51 AM »
My first new MMM post. Something that has been on my mind is that if I follow my plan and shit doesn't go too far sideways in the markets I will be taking out less than I'm earning in my investments and they will grow to some silly number over the course of my life.

I have no kids. My partner has equal $$ and doesn't need any of mine if I die first.

What the heck am I going to do with multiple millions of dollars?

A few notes:

- this is theoretical as I don't have money to burn at the moment
- I figure when I am 71...decades from now I'll know if this has come true as I'll be getting $15K/yr in Gov't $$ and my investments will either be far more than I will ever need or not
- I plan to give away $1K-$3K here and there as my investments allow to support friends and their kids over the years so I'm not waiting to help people until the end
- it's possible my models for investment growth and income needed are totally wrong

So far what I am thinking:

- wait until I am 71 to decide
- start identifying what I want to change in the world
- look for a mechanism that uses investment income only so the benefit can continue for as long as the current society/economic model survives
- put that money to work funding scholarships and/or research or charity/development in the area of the world I want to help

The two keys are that I want to make the world better and that given my view on money I want the benefit to go on for as long as possible as my legacy.

I figure I can't be the only one who has an ER plan that will result in silly amounts of money if the major risks I am planning for don't come to pass.

If that's you what are you going to do with your excess money?

-- Vik

« Last Edit: February 13, 2015, 10:00:55 AM by Vikb »

zolotiyeruki

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Re: What the F**k do I do with all this money?
« Reply #1 on: February 13, 2015, 10:10:37 AM »
That's a very interesting problem to have.  Here are a couple thoughts that occurred to me as I read your post:

1)  If you'll have silly amounts of money, couldn't you retire earlier?
2)  If you have no (human) beneficiaries, is there a cause or charity you could get involved with?
3)  If you're not using the money, can I have it? :P

MoneyCat

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Re: What the F**k do I do with all this money?
« Reply #2 on: February 13, 2015, 10:12:58 AM »
I love humble-bragging posts like this.  This is one of those instances where this forum really makes me laugh.

Avidconsumer

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Re: What the F**k do I do with all this money?
« Reply #3 on: February 13, 2015, 10:20:59 AM »
GOLD coffin

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #4 on: February 13, 2015, 10:26:51 AM »
As far as humble bragging goes I am so far behind most ER people due to the age I started the process that I have nothing to brag about. If you take less money out of investments that compound than they earn adjusted for inflation I would think most people will end up with excess money.

As for hitting FI earlier it's possible, but here is the issue. When you are at the start of a decades long plan you have to build in a bunch of risk mitigation safety margins. At least you do if you are rationale. How do I know today if things will go well and I'll have excess at 71??  I can't so I need to save enough extra to cover what I see as likely risks. However, those risks may not materialize if I am lucky.

As a contrast my GF thinks my plan is risky because I am not waiting even long for FI/ER.

So let's look at 3 scenarios:

#1 - shit goes bad

- several negative return years on the stock market just as you were going to be FI
- major health or legal problems that require far more income than you planned for
- you aren't able to go back to work

Suddenly the problem isn't excess money it's how to stay alive comfortably with the reality of your situation.

#2 - average

- returns on investments aren't as good as you expected, but they are okay
- you have a few unplanned setbacks, but you have the ability to recover from them

You'll probably end up having extra cash, but it's not something that's going to need its own plan to find use for it.

#3 - things go well

- returns are better than expected
- you need no more income from investment than planned
- you pick up some extra work you love and invest it
- you partner makes good choices and has excess as well

This is the scenario I am talking about and it sounds a lot like MMM's situation and any professional who had good income during their working years yet lives frugally. Is MMM bragging on his blog??? I don't read it that way. The problem remains what do you do with the large excess of capital when you die?

-- Vik
« Last Edit: February 13, 2015, 10:31:11 AM by Vikb »

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ioseftavi

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Re: What the F**k do I do with all this money?
« Reply #6 on: February 13, 2015, 10:41:49 AM »
This question comes down to your personal stance on inheritance and multi-generational wealth.

I am strongly, strongly of the opinion that dynastic wealth is extremely harmful to both your heirs and to a society at large - at least in America, where - if you raised your kid in a middle class or higher functional household - they probably do not need an extra leg up in the form of hundreds of thousands, or millions, of dollars.  I plan on giving my kids a great upbringing, help with college, and likely nothing else.  Perhaps this will change, but I suspect not.

There are some people who feel, understandably - just the opposite.  Those people want to figure how they can shift moneys to family or loved ones with a minimum of wealth transfer taxes.

For people who do have an excess of capital, and don't want to give it to family or loved ones, now you have a new job.  Your goal is to figure out how to give your money back to society in a way where your social impact is maximized, per dollar spent, on causes that you feel are worthwhile.

MayDay

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Re: What the F**k do I do with all this money?
« Reply #7 on: February 13, 2015, 10:47:22 AM »
Well, whatever you do, definitely don't wait until age 71 to put it all in writing.  Lots of people die before 71. 

Unless you are my uncle in which case, never mind, please die without a will and leave it all to me by default. 

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #8 on: February 13, 2015, 10:47:58 AM »
For people who do have an excess of capital, and don't want to give it to family or loved ones, now you have a new job.  Your goal is to figure out how to give your money back to society in a way where your social impact is maximized, per dollar spent, on causes that you feel are worthwhile.

I agree with your post 100%. Everyone I know who inherited a lot of $$ young has been ruined by it.

If I had kids I'd pay for their education and give them a solid down payment on a house. After that I'd act like an advisor and in the worst case would bail them out if it was merited.

But, I have no kids and will never have kids....so my question is what are people doing with that extra money if you aren't just throwing it at the kids?

I'm a little shocked at the negative responses given that this possible outcome can't be that uncommon in the ER crowd since they seem to invest well and use plans that don't eat up capital due to the need for decades of income.

I'm pretty sure MMM has posed the same question about how he is going to get rid of his excess millions when he dies.

-- Vik

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #9 on: February 13, 2015, 10:50:16 AM »
Well, whatever you do, definitely don't wait until age 71 to put it all in writing.  Lots of people die before 71. 

Unless you are my uncle in which case, never mind, please die without a will and leave it all to me by default.

I figure when I am FI my "job" is to manage my investments so I get the income I need from them and to start working on this plan in earnest. That will be long before I am 71. When I am 71 I'll know for sure that I do have extra money to give away.

I have no family to give the $$ to. At the moment my GF would get everything I own until I create a will as she is the beneficiary of every investment plan I hold.

-- Vik

epipenguin

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Re: What the F**k do I do with all this money?
« Reply #10 on: February 13, 2015, 10:53:13 AM »
It is an interesting question to ponder. When I was playing around with firecalc (or whatever it was) about a year or so ago, I was surprised at the number of simulations that ended up with a massive portfolio at the end of life. [This was with a normal retirement age, and what started me thinking that I might actually be able to retire early!]. There are still too many scenarios that end with me running out of money, though!

Anyway, I have no kids either, and don't even have any nieces or nephews, although my partner has a couple of nephews. I do remember when I was younger getting a couple of small bequests from random great aunts/uncles and even from cousins of my grandparents who also never had kids. Those were awesome to receive, and in one case I got enough money to enable me to buy a car for cash - I firmly believe this set me on the path towards FI as I have been able to save up cash for new cars in lieu of a car payment ever since. So I suppose I'll do the same if I ever get around to writing a will - a couple of my cousins have kids so they may get a few thousand if there's enough money for that.

Other than that, it's not LIKELY to happen for me, as I'll retire early if I can. But if it does, I'll definitely start looking to give more away to charity once I hit 70.

mxt0133

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Re: What the F**k do I do with all this money?
« Reply #11 on: February 13, 2015, 10:53:58 AM »
MMM has already stated that the majority of his blog income will be going to charities.

Eric

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Re: What the F**k do I do with all this money?
« Reply #12 on: February 13, 2015, 10:56:28 AM »
I love humble-bragging posts like this.  This is one of those instances where this forum really makes me laugh.

Have you run cFIREsim and looked at the results?  The results after 40 years run the gamut.  Depending on market returns after your retirement, a 4% WR could have you end up with $12MM, or zero, or anywhere in between  (based on $1MM portfolio, without even accounting for SS).  This is hardly a humblebrag.  The chances are that most of us who live modestly will end up with ridiculous sums of money and will have to make real decisions about what to do with it.  If you have kids, maybe you've never thought about it, but it's a real thing for those of us who don't.


Vikb -- Good luck with your decision.  I'll (hopefully) also be facing the same situation.  I really have no idea how I'll feel about it in 50 years, or what causes I'd like to contribute to either.  However, I do recommend reading this post:

http://jlcollinsnh.com/2012/02/08/how-to-give-like-a-billionaire/

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #13 on: February 13, 2015, 10:57:11 AM »

Other than that, it's not LIKELY to happen for me, as I'll retire early if I can. But if it does, I'll definitely start looking to give more away to charity once I hit 70.

Thanks for the constructive reply.

Question - so you plan to retire early and you feel ending up with excess money is not likely....so your ER plan involves spending your capital as income unless you get really lucky on returns?

BTW - in terms of helping people out I do want to do that each year assuming I have the income to do so. I agree that $1K here and $3K can change a young person's life and you should do that when you can.

-- Vik

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #14 on: February 13, 2015, 11:00:48 AM »
I love humble-bragging posts like this.  This is one of those instances where this forum really makes me laugh.

Have you run cFIREsim and looked at the results?  The results after 40 years run the gamut.  Depending on market returns after your retirement, a 4% WR could have you end up with $12MM, or zero, or anywhere in between  (based on $1MM portfolio, without even accounting for SS).  This is hardly a humblebrag.  The chances are that most of us who live modestly will end up with ridiculous sums of money and will have to make real decisions about what to do with it.  If you have kids, maybe you've never thought about it, but it's a real thing for those of us who don't.


Vikb -- Good luck with your decision.  I'll (hopefully) also be facing the same situation.  I really have no idea how I'll feel about it in 50 years, or what causes I'd like to contribute to either.  However, I do recommend reading this post:

http://jlcollinsnh.com/2012/02/08/how-to-give-like-a-billionaire/

Thanks for another constructive reply. My faith has been restored in the MMM crowd. ;)

Question - Does Firecalc work for Canadians? I've assumed not so I've been using a spreadsheet and modest return estimates assuming that I'll do well enough in good years to overcome the bad ones with some adjustment to my withdrawal rate and some inevitable side income. That's not as robust a test as a good monte carlo simulation, but I haven't found a Canadian ER simulator....yet.

-- Vik

Spudd

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Re: What the F**k do I do with all this money?
« Reply #15 on: February 13, 2015, 11:16:30 AM »
Question - Does Firecalc work for Canadians? I've assumed not so I've been using a spreadsheet and modest return estimates assuming that I'll do well enough in good years to overcome the bad ones with some adjustment to my withdrawal rate and some inevitable side income. That's not as robust a test as a good monte carlo simulation, but I haven't found a Canadian ER simulator....yet.

-- Vik

It's not perfect because it only simulates American investments, but I figure it's good enough to give you an idea.

neil

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Re: What the F**k do I do with all this money?
« Reply #16 on: February 13, 2015, 11:39:08 AM »
I would agree with the idea that you should take care of yourself first (so if that means FIRE earlier, great) and when you hit an age where your path is more clear (71 being a good indicator) you can take monetary action.  In the meantime you can figure out what you would really like to do in a way that fits your personality.

If philanthropy interests you, one way to spend your time after FIRE is donating your time.  If this is something that also interests you, you can give back in another way by hitting FIRE sooner, using the money to sustain your lifestyle and donating yourself instead.


http://www3.grips.ac.jp/~pinc/data/10-12.pdf

Canada SWR = 4.4%

However, as you say, using historical rather than monte carlo is a bit more aggressive.  But you still have to put inputs into a monte carlo simulation.

Still, if things are bad you can be more intelligent and tailor WR for the lean years.  Any simulation is presuming you are not adapting to the environment.  So in some respects these numbers are conservative. 

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #17 on: February 13, 2015, 11:54:54 AM »
MMM has already stated that the majority of his blog income will be going to charities.

I can say the same thing. That's not actually an answer as the real challenge is how you work out the details.

Do you give them $2M lump sum? Do you setup a trust and give them the income after inflation to preserve the capital? How does that get managed.

I can only recall MMM saying he's giving it away not specifically how....which is the question I posed.

-- Vik

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #18 on: February 13, 2015, 12:02:27 PM »
If philanthropy interests you, one way to spend your time after FIRE is donating your time.  If this is something that also interests you, you can give back in another way by hitting FIRE sooner, using the money to sustain your lifestyle and donating yourself instead.


http://www3.grips.ac.jp/~pinc/data/10-12.pdf

Canada SWR = 4.4%

However, as you say, using historical rather than monte carlo is a bit more aggressive.  But you still have to put inputs into a monte carlo simulation.

Still, if things are bad you can be more intelligent and tailor WR for the lean years.  Any simulation is presuming you are not adapting to the environment.  So in some respects these numbers are conservative.

Good points. I donate time to 2 organizations currently and that will definitely increase. I'm one of those people that has so many interests and connections that I can fill a 80hr week with non-income generating stuff - if I want to.

I'm new to financial/investment projections/simulations, but I've done lots of risk management work so I think I am going about it in a reasonable fashion. But as you know testing your assumptions as many different ways as you can is valuable for finding weaknesses in a plan so you can address them.

Flexibility is key and something I don't see in the reports and simulations I have come across. A variable SWR within a constrained range seems so logical that I'm surprised that isn't a more common simulation.

Thanks for the feedback.

-- Vik
« Last Edit: February 13, 2015, 12:07:31 PM by Vikb »

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #19 on: February 13, 2015, 12:19:14 PM »
It's not perfect because it only simulates American investments, but I figure it's good enough to give you an idea.

Thanks Spud. Using Firecalc...

If I retire today:

- success rate = 35%
- avg end result = -$1M

If I retire in 5yrs:

- success rate = 77%
- avg end result = +$2.8M
- top end = +$14M

I realize that's not a true simulation of Canadian results, but it agrees with my spreadsheet projections well enough. I'll keep plugging away for a few more years. If returns are better than 7% after inflation that will knock down the remaining 5yrs into 2-3yrs before FI.

Just being in single digits is exciting.

-- Vik
« Last Edit: February 13, 2015, 12:21:51 PM by Vikb »

KD

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Re: What the F**k do I do with all this money?
« Reply #20 on: February 13, 2015, 12:20:14 PM »
Perhaps a Charitable Trust could be set up at some point that you direct what withdrawal rate is pulled out to be donated each year to the charities you wish to fund.  They get some money, your legacy is prolonged.

dude

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Re: What the F**k do I do with all this money?
« Reply #21 on: February 13, 2015, 12:21:49 PM »
I love humble-bragging posts like this.  This is one of those instances where this forum really makes me laugh.

Not really humble bragging -- many here using the 4% SWR stand to potentially leave a SHITLOAD of cash behind.  Run the FireCalc sims and you can see that in many of the Monte Carlo outcomes, you end up with a LOT of money at plan end.  Of course, it assumes the future looks something like the past re: market returns, and we hear every day from experts (Robert Shiller chief among them) saying future returns will not be like past returns, but hey, nobody really knows, right?  Seriously, just go run a FireCalc sim with a reasonable starting balance, like say, $750K.

whoops -- having now read the rest of the thread, I see my reply was redundant of others'!
« Last Edit: February 13, 2015, 12:23:51 PM by dude »

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #22 on: February 13, 2015, 12:26:56 PM »
I love humble-bragging posts like this.  This is one of those instances where this forum really makes me laugh.

Not really humble bragging -- many here using the 4% SWR stand to potentially leave a SHITLOAD of cash behind.  Run the FireCalc sims and you can see that in many of the Monte Carlo outcomes, you end up with a LOT of money at plan end.  Of course, it assumes the future looks something like the past re: market returns, and we hear every day from experts (Robert Shiller chief among them) saying future returns will not be like past returns, but hey, nobody really knows, right?  Seriously, just go run a FireCalc sim with a reasonable starting balance, like say, $750K.

whoops -- having now read the rest of the thread, I see my reply was redundant of others'!

Yes. This is what got me thinking if you take a MMM approach to life you value the opportunity cost of money so you have a responsibility to the planet that let you [potentially] amass a shit ton of it to do something constructive with it. $2M-$14M [avg to max from Firecalc] can do a lot of good and it could do a lot of bad if it was spent on frivolous luxuries by someone I leave the money to.

-- Vik

FarmerPete

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Re: What the F**k do I do with all this money?
« Reply #23 on: February 13, 2015, 12:30:39 PM »
The best advice is to meet with a lawyer and get a trust written up.  Create clear instructions for the trustee(s).  For me, if I had 1 million in today's dollars saved up, I would create a scholarship trust for my descendants.  Basically, they could get 4 years of school paid for.  I figure that 1m earning 4% should be able to pay for two kids going to school concurrently for ever.  Maybe set a cap on the trust so that if it ever goes above $X (indexed to inflation) the excess would be donated to charity Y.  Perhaps set it to pay 75% of college expenses if the fund is below $Z dollars, 50% if below $B dollars, etc.  The idea being to create a self sustaining fund to help generations of kids.  Would my money turn my great great great grandkid into a spoiled brat?  Maybe, but I think I like my odds better by just paying for school vs giving cash to my kids/grandkids.

lostamonkey

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Re: What the F**k do I do with all this money?
« Reply #24 on: February 13, 2015, 12:32:01 PM »
For me it's easy, if I die my money would go to:

-My hypothetical future spouse, if I don't get married or she dies first my money would go to:

-My hypothetical future children, if I don't have children my money would go to:

-My closest living relative

NoraLenderbee

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Re: What the F**k do I do with all this money?
« Reply #25 on: February 13, 2015, 12:34:00 PM »
Perhaps a Charitable Trust could be set up at some point that you direct what withdrawal rate is pulled out to be donated each year to the charities you wish to fund.  They get some money, your legacy is prolonged.

This is what I plan to do, if I end up having this situation. I have no kids, my niece and nephew have plenty of $, and I'll probably outlive my husband (statistically speaking).

You can set up scholarships for just about anything. At UC Berkeley, someone left money to be used for a scholarship specifically for a Jewish orphan studying astrophysics. When such a student finally appeared in the 1980s or 90s, it made the newspaper.

My high school gives a small monetary award in the name of a teacher who was murdered in 1968. It's not a lot, but it's still going . . . and that poor woman's name is still remembered.

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #26 on: February 13, 2015, 12:34:14 PM »
The best advice is to meet with a lawyer and get a trust written up.  Create clear instructions for the trustee(s).  For me, if I had 1 million in today's dollars saved up, I would create a scholarship trust for my descendants.  Basically, they could get 4 years of school paid for.  I figure that 1m earning 4% should be able to pay for two kids going to school concurrently for ever.  Maybe set a cap on the trust so that if it ever goes above $X (indexed to inflation) the excess would be donated to charity Y.  Perhaps set it to pay 75% of college expenses if the fund is below $Z dollars, 50% if below $B dollars, etc.  The idea being to create a self sustaining fund to help generations of kids.  Would my money turn my great great great grandkid into a spoiled brat?  Maybe, but I think I like my odds better by just paying for school vs giving cash to my kids/grandkids.

I like the idea of scholarships. I have no family to give that money to, but I'm hoping that if I can setup the financial end of things I can work with a university to have them do the selecting of candidates.

If I had my own kids I'd do what you are suggesting. I think supporting education is a worthy goal for your life's work.

-- Vik


Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #27 on: February 13, 2015, 12:37:06 PM »
Perhaps a Charitable Trust could be set up at some point that you direct what withdrawal rate is pulled out to be donated each year to the charities you wish to fund.  They get some money, your legacy is prolonged.

This is what I plan to do, if I end up having this situation. I have no kids, my niece and nephew have plenty of $, and I'll probably outlive my husband (statistically speaking).

You can set up scholarships for just about anything. At UC Berkeley, someone left money to be used for a scholarship specifically for a Jewish orphan studying astrophysics. When such a student finally appeared in the 1980s or 90s, it made the newspaper.

My high school gives a small monetary award in the name of a teacher who was murdered in 1968. It's not a lot, but it's still going . . . and that poor woman's name is still remembered.

Great suggestions. I'm not looking to have anything named after me. I just want to know that what I did in this life will continue to impact the world positively. Although I did work for all my $$ and never relied on my parents after I was 15 I'm not kidding myself in thinking it's really "my" money. It's money I earned by the efforts of many other people in the world.

-- Vik

KD

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Re: What the F**k do I do with all this money?
« Reply #28 on: February 13, 2015, 12:53:43 PM »
Vik, I'd check into it further - it's been a long time since I read about those things...there MAY be some tax advantage to set one up now and to fund it as you go thru life.  5-10 thousand or so dollars now might eek out a few small scholarships while you are still young enough to enjoy watching who gets it and give you some tax advantage as well.  I am not sure.  PlUS hopefully you'd get to watch it grow and see how it might play out in the future.  If you watch any PBS television you'll likely see some shows are funded by trusts, some of which might just be Charitable Trusts, and not just a family trust making a donation. 

Admirable thing you are trying to do.

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Re: What the F**k do I do with all this money?
« Reply #29 on: February 13, 2015, 12:59:30 PM »
Agree with KD.  Once you are at the point where you feel like you can create charity/scholarship funds, do it.  People need help both now and in the future.  Also keep your ears open to people around you.  It's amazing how many opportunities arise if you pay attention.  Someone on a tight income is taking care of family members and makes a random comment regarding their car tires getting worn down = opportunity to help someone get safe tires. 

MillenialMustache

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Re: What the F**k do I do with all this money?
« Reply #30 on: February 13, 2015, 01:02:46 PM »
I get where you are coming from and I think about this. I am not sure I will have kids - so this is what I have thought if I don't. If I haven't had kids by 50 or so and I have a lot of capital, I might get rolling on some of these then.

-Leave some money to nieces and nephews
-Try to get a building named after me at the community college I used to work at (and attended school at)
-If that fails because I don't have enough money, start a scholarship for Career & Tech students
-Go on a couple of really awesome vacations (world cruise on luxury line, African safari)
-Go to the fancy parties that are for charity at least a couple of times

clifp

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Re: What the F**k do I do with all this money?
« Reply #31 on: February 13, 2015, 01:09:27 PM »
As somebody who is closer to facing the #firstworldproblem, than you, I have a couple of thoughts.

First, I wouldn't spend very much time worrying about the problem until you have $2 million (2015 dollars).  I think most anybody can figure out away of spending $80K year in ways that will improve their quality of life. Now when you have $2 million at 80+, you'll want to spend it on nicer retirement/nursing home, and prettier sweeter nurses :D.

I personally want to die with an estate that is not subject to Federal estate tax (currently $5.47 million).  I am only 55, and recession/bear markets will happen, but in most scenarios I'm going to need to up my spending and charitable giving to stay under that figure.  So last year I spent some time with local Salvation Army person in charge of fundraising and now I going to be increasing my giving to them and probably change my will.

The nice thing about retiring early is you have a chance to to dig further into worthy organizations.

EscapeVelocity2020

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Re: What the F**k do I do with all this money?
« Reply #32 on: February 13, 2015, 01:37:08 PM »
Agreeing with clifp, but to add - I think you are getting confused between simulations and reality.  In my humble experience, most people spend a lot of time getting to what they think is their number.  Then they spend 1 - 5 more years 'making sure'.  Assuming the market treats them reasonably, they have plenty and pull the plug (or become so tired of office politics, they say enough, etc.).  Given a few years in retirement to discover this stuff all works, and again if the market treats them reasonably well, they loosen up on the SWR to do a few nice things for themselves or for others, but ultimately try to stay above a certain number.  Once they get a ways ahead of that number, even in retirement, they spend or donate more, which is why normal people who retire and live for a long time don't end up with those crazy double digit million dollar portfolios, although theoretically they should. 

Every once in a long while, there is a shocking story of a janitor that dies with 8 million (http://www.cnbc.com/id/102404530), but that seems to be more because his life-long hobby was growing his net worth and he genuinely enjoyed living a 'normal life' unencumbered by people knowing he was loaded.  And even if that is the ultimate outcome, it didn't sound like that made him or anyone else unhappy.
« Last Edit: February 13, 2015, 01:39:01 PM by EscapeVelocity2020 »

coffeehound

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Re: What the F**k do I do with all this money?
« Reply #33 on: February 13, 2015, 01:48:17 PM »
Hi Vikb -

Fundraiser here - U.S.-based.  If I were looking at potentially giving money to ANY charity, here are the steps I would take:
1.  Research, research, research.  I don't know the rules for Canadian charities, but U.S. non-profits are required to make public their tax returns.  Not always easy to find, but they're out there.
2.  Volunteer.  Since you already do this, you can always ask someone at the charity how many people give, what they give, how gifts are managed, etc........ 
3.  Listen to the charity's messages.  They'll tell you what their priorities are, what they'd like you to fund, but, ultimately, it's up to you - it's your money, so you can tell the charity how you'd like your gift used, be it scholarship, money for lab supplies, hell, money can be designated for landscaping.......
4.  talk to a lawyer/charity advisor (yes, they're out there) about what you'd like to do, and how you'd like to give the funds.
5.  When you're ready, contact the charity, and tell them - I'd like to make a gift.  What are your short and long-term needs?  what are your goals?  How's the payout rate on your endowment?  What's the size of the endowment (insert Butthead-like laugh here)?  Can you send me information?

Making this sort of gift is a long-term process, and, ideally, the charity will want to build a relationship with you.  You can always start with a small gift, see if the charity thanks you, updates you, asks for more, etc.  before making any more decisions.

If you're interested in giving for scholarships, you can give annually, then think about a lump-sum after you see how the school manages your gift. 

Good luck - and thank you for giving to charity.  There are lots of good ones out there.

« Last Edit: February 13, 2015, 01:53:48 PM by coffeehound »

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Re: What the F**k do I do with all this money?
« Reply #34 on: February 13, 2015, 01:53:36 PM »
For me it's easy, if I die my money would go to:

-My hypothetical future spouse, if I don't get married or she dies first my money would go to:

-My hypothetical future children, if I don't have children my money would go to:

-My closest living relative

I plan to leave all my money to my cats with an agreement with the local animal shelter to take care of them for the rest of their lives.  Screw my relatives.  What have they ever done for me?

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #35 on: February 13, 2015, 02:03:31 PM »
Hi Vikb -

Fundraiser here - U.S.-based.  If I were looking at potentially giving money to ANY charity, here are the steps I would take:
1.  Research, research, research.  I don't know the rules for Canadian charities, but U.S. non-profits are required to make public their tax returns.  Not always easy to find, but they're out there.
2.  Volunteer.  Since you already do this, you can always ask someone at the charity how many people give, what they give, how gifts are managed, etc........ 
3.  Listen to the charity's messages.  They'll tell you what their priorities are, what they'd like you to fund, but, ultimately, it's up to you - it's your money, so you can tell the charity how you'd like your gift used, be it scholarship, money for lab supplies, hell, money can be designated for landscaping.......
4.  talk to a lawyer/charity advisor (yes, they're out there) about what you'd like to do, and how you'd like to give the funds.
5.  When you're ready, contact the charity, and tell them - I'd like to make a gift.  What are your short and long-term needs?  what are your goals?  How's the payout rate on your endowment?  What's the size of the endowment (insert Butthead-like laugh here)?  Can you send me information?

Making this sort of gift is a long-term process, and, ideally, the charity will want to build a relationship with you.  You can always start with a small gift, see if the charity thanks you, updates you, asks for more, etc.  before making any more decisions.

If you're interested in giving for scholarships, you can give annually, then think about a lump-sum after you see how the school manages your gift. 

Good luck - and thank you for giving to charity.  There are lots of good ones out there.

Thanks that's good info. I'm realizing it's not a simple process, but once I am FI I'll have time to make it happen. I like your suggestion for developing a relationship with the organization you are considering doing through several stages to validate you are happy with what's happening.

-- Vik

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #36 on: February 13, 2015, 02:05:40 PM »
For me it's easy, if I die my money would go to:

-My hypothetical future spouse, if I don't get married or she dies first my money would go to:

-My hypothetical future children, if I don't have children my money would go to:

-My closest living relative

I plan to leave all my money to my cats with an agreement with the local animal shelter to take care of them for the rest of their lives.  Screw my relatives.  What have they ever done for me?

Hahaha. I agree. Right now my deal is my GF gets all my $$ if I die young with the understanding that my cat lives the rest of her life in comfort.

I have a brother who I haven't spoken to in over 10yrs. He's a dick and not getting my $$.

-- Vik

Cookie78

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Re: What the F**k do I do with all this money?
« Reply #37 on: February 13, 2015, 02:08:16 PM »
I would agree with the idea that you should take care of yourself first (so if that means FIRE earlier, great) and when you hit an age where your path is more clear (71 being a good indicator) you can take monetary action.  In the meantime you can figure out what you would really like to do in a way that fits your personality.

If philanthropy interests you, one way to spend your time after FIRE is donating your time.  If this is something that also interests you, you can give back in another way by hitting FIRE sooner, using the money to sustain your lifestyle and donating yourself instead.


http://www3.grips.ac.jp/~pinc/data/10-12.pdf

Canada SWR = 4.4%

However, as you say, using historical rather than monte carlo is a bit more aggressive.  But you still have to put inputs into a monte carlo simulation.

Still, if things are bad you can be more intelligent and tailor WR for the lean years.  Any simulation is presuming you are not adapting to the environment.  So in some respects these numbers are conservative.

Thanks for that link. Using 4.4% instead of 4% gets me just a little bit closer to FIRE. :D
Tailoring WR and side income for lean years is a big factor in my plan too.

I'm really looking forward to donating my time after I reach FIRE, to both my extended family and various charity organizations. If I have money left over I'd like to leave some to family, but not too much, and the rest to charity. Like Vikb, I'm not yet sure what it the best way to do that.

epipenguin

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Re: What the F**k do I do with all this money?
« Reply #38 on: February 13, 2015, 04:14:11 PM »

Other than that, it's not LIKELY to happen for me, as I'll retire early if I can. But if it does, I'll definitely start looking to give more away to charity once I hit 70.

Thanks for the constructive reply.

Question - so you plan to retire early and you feel ending up with excess money is not likely....so your ER plan involves spending your capital as income unless you get really lucky on returns?

BTW - in terms of helping people out I do want to do that each year assuming I have the income to do so. I agree that $1K here and $3K can change a young person's life and you should do that when you can.

-- Vik

Well, it all depends on Social Security income. When I look now at my projected age 70 SS amount, it covers ALL my expenses. And is inflation adjusted. So there's a big part of me that thinks I can spend down my portfolio to zero by age 70 and then switch to SS on its own. But of course there's huge unknowns there - will SS be solvent by then? Will I end up working enough to have a similar benefit amount to that currently projected? Will I think it's all far too risky, and just go with a 4% withdrawal rate? Right now, I guess I will do some sort of hybrid - not spend SO much that my portfolio goes to zero at age 70 but possibly spend a bit more than 4%, especially if returns are good.

In other words, I don't really have a plan, just speculation at this point. I don't yet have enough to retire, even under the most risky scenario of spending down the portfolio to zero, let alone 4%. I need to ratchet down the spending a bit more and save a few more years to make that happen. But when I do think about doing a 4% withdrawal rate, and then adding in SS on top at age 70, there's a possibility that I could be sitting on a lot of cash at that point.

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Re: What the F**k do I do with all this money?
« Reply #39 on: February 13, 2015, 05:32:49 PM »

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Re: What the F**k do I do with all this money?
« Reply #40 on: February 13, 2015, 08:01:24 PM »
Just write a will and leave it in percentage terms.. I.e 50% to this cause, 25% to that etc.

That was as the amount varies you won't have to change your will.

Speaking of which we have to change ours.. the MIL cut my Wife out of her will in order to give her ex meth addict Son a place to live.. Fine reward to her Daughte to worked hard and didn't do anything stupid!

Needless to say there won't be any of that side of the family in our will.

FrugalSpendthrift

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Re: What the F**k do I do with all this money?
« Reply #41 on: February 13, 2015, 08:14:51 PM »
Just give it all to Bill Gates.

mozar

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Re: What the F**k do I do with all this money?
« Reply #42 on: February 13, 2015, 08:48:25 PM »
For my plans I'm concerned about lower market returns/ post- growth future. I look to Japan which has had a 2.6% return over the past 20 years. Certainly livable but not crazy enough growth to be concerned about what to do with it.
Assuming the future is like the past, once my (unborn) children are out of the house I intend to eat very expensive food, maybe hire a full time chef, and get really fat. Or maybe by then food won't make you fat anymore. There are always ways to spend money. Charity, yachts, services, I can't imagine someone saying they can't think of things to spend money on.

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Re: What the F**k do I do with all this money?
« Reply #43 on: February 13, 2015, 09:21:05 PM »
Since everyone here loves Vanguard, I'll throw out that Vanguard has a site dedicated to charitable giving and includes the word "legacy" so I presume you can set something up that will outlive you:   https://www.vanguardcharitable.org/

If this won't work because you are not in the US there ought to be something equivalent?

You've already been volunteering with/working for charities that you must like.   I suggest talking to them and, over time, set up some an ongoing trust to fund them or simply leave assets to them in your will.

lostamonkey

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Re: What the F**k do I do with all this money?
« Reply #44 on: February 13, 2015, 09:43:23 PM »
If I retire in 5yrs:

- success rate = 77%
- avg end result = +$2.8M
- top end = +$14M


These kind of results are annoying. Average amount of money at death is $3 million but you still have a 23% of going broke in your lifetime.

Bateaux

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Re: What the F**k do I do with all this money?
« Reply #45 on: February 13, 2015, 10:53:05 PM »
Currently at 1.25M investment/ retirement funds and 400K in paid off Real Estate.   I'm going to FIRE at 2M.  Its really close less than 5 years,  maybe 3.  Hope to keep spending to 50K or 60K.

Here are the results:

2,000,000 to 31,000,000 with 40 year retirement.   With 100% predicted sucess that it will not be negative. Using 114 different periods.

clifp

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Re: What the F**k do I do with all this money?
« Reply #46 on: February 13, 2015, 11:11:51 PM »
Since everyone here loves Vanguard, I'll throw out that Vanguard has a site dedicated to charitable giving and includes the word "legacy" so I presume you can set something up that will outlive you:   https://www.vanguardcharitable.org/

If this won't work because you are not in the US there ought to be something equivalent?

You've already been volunteering with/working for charities that you must like.   I suggest talking to them and, over time, set up some an ongoing trust to fund them or simply leave assets to them in your will.

Fido, Schwab, and Vanguard all have good charitable giving plans.  I am planning on setting one up with Schwab this year.  Last I looked as is typical, Vanguard has slightly (a couple of basis points) lower fees, while Fido and Schwab, give your more flexibility for making gifts.

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #47 on: February 14, 2015, 12:19:52 AM »
If I retire in 5yrs:

- success rate = 77%
- avg end result = +$2.8M
- top end = +$14M


These kind of results are annoying. Average amount of money at death is $3 million but you still have a 23% of going broke in your lifetime.

That's 77% with a constant withdrawal rate. If you aren't a dummy you'll cut back on spending if the market goes down or get some other income going. That will bump you up quite a bit in terms of likelihood of succeeding.

This also doesn't include home equity which is another layer of safety/risk management.

The trouble with shooting for 100% [which is only a 100% based on previous market behaviour not really a 100% promise of success] is that it either drives your savings goal way up or your SWR way down.

I think shooting for 75 - 80% in a simulation like this and having a few back up plans is a better option for a reasonable SWR and ER date.

I started this process older than a lot of folks so personally I have to weigh the benefit of working more vs. getting those precious extra years of time off compared to a standard retirement.

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Re: What the F**k do I do with all this money?
« Reply #48 on: February 14, 2015, 06:34:07 AM »
The time to worry about your multi-millions and what will happen to them upon your demise is if and when you have multi-millions.  At that time, if the amount is truly significant, you may want to consider engaging the services of BBH Trust Company or a similar reputable firm.  But I wouldn't concern myself now with something that may very well turn out to be a non-issue.

Retire-Canada

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Re: What the F**k do I do with all this money?
« Reply #49 on: February 14, 2015, 07:56:46 AM »
The time to worry about your multi-millions and what will happen to them upon your demise is if and when you have multi-millions.  At that time, if the amount is truly significant, you may want to consider engaging the services of BBH Trust Company or a similar reputable firm.  But I wouldn't concern myself now with something that may very well turn out to be a non-issue.



I think the planning and concern should be balanced with the likelihood of the outcome I die with $1M or more.

In the above simulation you can see the red $0 line and the black $1.2M above it. I think that demonstrates that it's likely enough to start asking people in this community what they are going to do in a similar situation.

I agree it would be premature to hire an architect to design the wing of the hospital they are going to name after me. ;)

Thanks to everyone with a constructive suggestion. You've given me a bunch of ideas to explore some more as I reach FI.

The two ideas that appeal to me so far are working with the local university to setup some scholarships or a trust for a charitable purpose. I'll put a little more effort in each year as investments grow and if they don't I'll stop worrying about it.