What would I do with $259.9 million?
In my daily perusal of news, I stumbled across the South Carolina Powerball results. The question posed in the article is definitely thought provoking, and I decided to share my results here. This is basically my plan for pretty much any windfall, but includes a few more details on specifically what I would buy.
- 40% ($103 million) - reserved for the tax man’s inevitable visit in a savings account. Any surplus after the visit gets dumped into the next category
- 30% ($103 million) - held until I can determine the best means of investment. With a smaller sum, it would likely start in a savings account, and then invested in index funds over the course of 6-12 months (to take advantage of dollar-cost averaging). With something this size, I’m not really sure where to begin, and would likely retain the services of a professional financial planner, at least until I have a better grasp on the magnitude of my holdings. In this specific case, I’d consider building some sort of education endowment or scholarship fund or contributing , without touching the principal.
- 10% ($26 million) - donated to a worthy charity. Specifically, I’d probably give to the Children’s Scholarship Fund, though I’d probably also consider breaking it up into smaller pieces and donating to multiple charities.
- 5% ($13 million) - invested for the long term using my current plans. In my case that means beefing up my Roth IRA and index fund portfolio
- 1% ($2.6 million) - spent on friends and family - in order, paying off any outstanding debts, financing education, providing for basic necessities, start-up capital for a small business. Specifically, right now I’d first finance my brother’s nursing education, then help my sister and her husband pay off their mortgage, then invest whatever remains in a home-automation start-up my friends and I have been working on.
- 1% ($2.6 million) - to be spent more or less on whatever want. Right now with this level of funds, I’d buy a Mini Cooper ($30k), some land in the mountains, start designing/building my dream home (a super-green 1500-2000 sq ft underground house). I’d almost certainly have plenty leftover, which would probably end up dumped into investments.
In the case of smaller windfalls (<$1000) I’d probably roll up all of the non-tax items into a single investment item.