
Ask HN: What would you do with $2.5M? - bsvalley
Let&#x27;s say you were to earn $2.5 million net (after tax) tomorrow. What would you personally do with that money? How would you setup yourself? Where would you live? Would you buy a house? Would you invest in something specific? Curious to hear about everyone&#x27;s thoughts.
======
hoodoof
How old are you?

I'd try not to spend it.

I made good money when young and as a result did not appreciate how hard it is
to get. So I spent it, assuming (reasonably, but incorrectly I think), more
would come.

I wish I'd hung onto it.

------
quietthrow
So you work at Dropbox huh?? :) sorry couldn’t help myself lol.

Invest your money in a way that secures your financial freedom till the day
you die at 4-7% yearly withdrawal rate. Assume you live till 100.

If anything is left build a school in a poor country and bring whoever you can
out of abject poverty. Cos only people like you can help them. They can’t
solve these large problems when they are focused on just surviving day to day.
You can be doing well while doing good.

------
paulcole
Nothing.

I hate working and would do nothing except read books, exercise, and watch tv
until I died. I took 2 years off in my 20s to do this and it was heaven.

Now I have a chronic illness and have to work for the insurance. At some point
I’ll be fed up with it, take whatever money I’ve saved up and just live until
it runs out.

------
scarface74
I would pay off our house and all of our debts, give my parents enough to pay
off the little debt they had and for them to go on some nice trips.

Buy a house for my older son and set some aside for my younger son.

I would put the rest in diversified investments and keep working and keep
putting money out of my paycheck aside for retirement.

I am a developer and like what I do for a living. My wife would probably still
work for the health benefits but she already doesn't work during the summer,
she might go half time.

We would probably take nicer vacations and have a little bit better cars but I
don't see our lifestyle changing drastically.

And no, we are by no means "rich" but we earn a decent enough income that more
money wouldn't affect our lifestyle too much.

------
psyc
Without any doubt, I would buy a small house in the midwest, put the rest in
index funds, and live comfortably for the rest of my days, working on exactly
what I want to.

------
johnnyRose
I would pay someone to diversify and invest it for me. Assuming a 6% return
rate (on average), the principal would generate approximately $150,000/year in
interest. Obviously more if you reinvest some of it.

Eventually I would probably dip into the principal to afford a nice home with
some land somewhere. I haven't settled on the details yet.

Honestly, the most valuable part of this would be that my time is freed up to
work on things I'm passionate about.

------
jotjotzzz
I think I would do the following:

1\. If you have debt (aside from mortgage) -- pay it off, this includes
student loans, credit card debt, car loans, etc.

2\. Do you own a home? If yes, consider if paying off the loan makes sense,
note that it is better to own your home outright. If no, set aside money for a
down payment on a house. Rule of thumb for rent vs. buy -- you are thinking of
living in the house for 5+ years. Rent otherwise (see #5).

3\. Do you have a will or an irrevocable trust? Consider setting one up.

4\. Are you ready to retire or not? Create a diversified portfolio to ensure
you keep the money you have based on your retirement goals.

5\. Continue with the same comfortable standard of living you always have.
Don't upgrade your lifestyle too much and don't accumulate liabilities/debt.
Invest your money in assets.

6\. Do not advertise your wealth. Practice stealth wealth (wrote about this on
my blog).

------
cimmanom
I'd consider it a head start on my retirement fund - a chance to retire a few
years early - and invest at least 90% of it accordingly.

I'd use the rule of thumb for windfalls: allow yourself to spend 5-10% of it
to celebrate. That said, there isn't much right now that I'm interested in
spending money on all at once. Buy that laptop I've been holding out on. Maybe
take nicer vacations than usual for a few years. Maybe help my parents pay for
some renovations they weren't sure how they'd afford.

I wouldn't change anything else about my life. Increasing ongoing expenses
defeats the point of investing it towards retirement; and there aren't many
areas in which a modest increase in expenditures would create a corresponding
increase in happiness.

Whereas retiring at 60 instead of 65; having more of my life in good health
without having to work... that's the best thing I can imagine.

~~~
deanmoriarty
I seriously hope you're joking and you're just being provocative right? In
what world or lifestyle $2.5M after-tax is just a "head start" or "a chance to
retire at 60 vs 65"? By investing it in traditional index funds, at a
relatively safe withdrawal rate of 4% it would allow you to pull $100k a year
in perpetuity (adjusting from inflation each onward year), most of which taxed
at a ridiculously low rate, or none at all.

~~~
cimmanom
Expecting reliable 7% returns seems extremely optimistic to me (I'm fairly
certain our 100-year growth rate cannot and will not be sustained). Certainly
the market hasn't returned that much during my lifetime.

If the stock market returns 4% instead of 7%, you'd need $10M in the bank to
keep up with 3% inflation and return $100K/yr. $5M for $50K/yr. And one
typically moves one's assets into lower-risk/lower-return investments as one
approaches retirement.

Given my family's longevity, I need to plan for survival till about 100 y/o.
With increasing costs over time due to aging-related costs (even if I spend
$50K/yr now, paying for assisted living or home aides plus of course medical
care could easily bring that up past $100K). And an assumption that social
security will not exist in any meaningful form by the time I reach retirement
age.

Yes, 60 vs. 65 was an enormous exaggeration, but right now I intend to save
nearly $100K for every year of planned retirement. $2.5M would cover 25 years
of retirement. At $50k/yr in savings, that leaves me with 2 years of work for
every year before 75 I want to retire. So: I still need to work another (2/3 *
(75 - $current_age)) years (minus savings too date, of course). Without the
$2.5M, the equation would be (2/3 * (100 - $current_age)). So it allows for
retirement ~17 years earlier than originally planned.

And yes, saving that much is unrealistic for the vast majority of Americans. I
suspect we're headed for an enormous retirement-related social/economic crisis
in the next few decades.

------
newman8r
I'd buy more property with a nice ranch house on 20-30 acres in the California
desert (max $300k), invest the rest and pull out small amounts to fund my
startups as needed.

Basically I'd be doing the same thing, but nicer.

------
GoldenMonkey
What you do with $2.5M. The position of FU (John Goodman, The Gambler).

[https://youtu.be/xdfeXqHFmPI](https://youtu.be/xdfeXqHFmPI)

~~~
bsvalley
haha! good one

------
slipwalker
( hire a finance advisory firm )

but, in broad strokes: 1/3 on fixed interest rates investments ( bonds,
probably ) 1/3 on real state ( preferably on low income areas, small condos,
easy to rent ) 1/6 on high risk ( crypto currency, penny stocks ) 1/6 on high
liquidity ( savings account on variable but low interest rate ) for some quick
opportunity that might arise.

don´t touch the principal, EVER ! live out of interest.

~~~
bsvalley
Looks like I'd need a few down payments to invest in rental properties as well
as raising my debts. Unless I'd pay these rental properties cash. Which means
I have to touch the principal in that scenario. I'd pay income tax on those
gains so I better nail that one down.

Investing in crypto means converting some of that principal into money I could
afford to lose. So 'technically' speaking there would be no income from that.

Savings account don't give much, we're talking pennies here.

Seems that bonds is the most stable, reliable source of lazy/passive income,
but it's very small compared to the average cost of living in the US. So,
ultimately I'd go back to my principal to cover some expenses...

------
allwein
I would invest half of it in low risk mutual funds and then take the other
half over to my friend Asadullah who works in securities...

------
malux85
I would invest it in growing my startup. I have got a sales pipeline of > 750K
USD in the works that I am having trouble servicing, having self funded so far
it's difficult to do an exponential jump without funding, even with an
exceptionally high amount of automation. I might need to make some phone calls
soon to investors, but 2.5M tomorrow would help a lot!

------
DoreenMichele
I would invest in real estate.

I would become a (for profit) provider of affordable housing and get my name
dragged through the mud as a _slumlord_ instead of being lauded as a friend to
the poor and someone reducing homelessness. Cuz that's the lovely way the
world works.

I would also pay cash for a small house for myself.

------
kstenerud
Step 1: Put it into diversified investments designed to beat inflation + a
good yearly income. Technically I'd only actually need 40-50k/y for everything
I want, so 2.5M is on the high side.

Step 2: Work full time on my open source projects that I haven't been able to
devote enough brain power to.

------
gigatexal
Send it all to me ;)

------
DanBC
I'd assume I'm going to live another 35 years. That means I'd dump most of it
into a variety of savings, and live off $70k a year.

------
msie
Pay off my debts. Rent. Work on my own projects. Sell off as many as my things
as I can. Travel.

------
ha-shine
I would buy a cheap condo here in Singapore. Rent it out and become a digital
nomad.

------
siquick
Clear debts and travel.

------
SirLJ
stock trading robots and turn the money into billions :-)

