
Ask HN: Just cashed out for 2M. What now? - newseller
I'm posting this from an anonymous account, for obvious reasons. I just sold my company and have 2 million dollars in the bank. What now? I basically have nobody to consult. It's a business I bought for 90k that just kind of swelled up really fast, and I'm really not set up to manage this kind of money. I'm canadian, the economy seems to be going to hell down south and I'm sure it's gonna hit here soon and I have no idea who to take advice from.<p>My bank is trying to get me to put all my money into money market mutual funds while I wait, my accountant tells me I should diversify, get some cashable GICs while I wait, and start looking into stocks, as well as investing in insurance companies since they usually guarantee your investment (so long as they don't go bankrupt). I used to just put all my money into a high interest savings account at ING and collect the 3% (which is good enough for me to live on at this point).<p>Any advice to offer? Any good reading (canadian-specific would be good)? Any good software for mac to manage all this? :)
======
bullseye
Congratulations!

I had a loosely similar experience, and here are a few things I would
recommend based on what I did, and wish I had done:

Tell as few people as possible, preferably just your immediate family. Resist
the urge to talk about it with friends and associates. This includes offering
to buy every acquaintance drinks or dinner. Pretend nothing has changed.

Designate a percentage as money you will not touch... ever. Find a financial
planner, which you trust, and have them help you identify low risk
investments. Then, forget about this portion.

I don't know how old you are, but assuming you are not at retirement age,
begin considering your next move. Consider options that don't require 2mil to
get started. ;)

This doesn't mean you can't take a well-deserved break, but don't talk
yourself into early retirement. This may be more difficult than it seems, so
seek motivation in this area wherever you can find it. The fact is, 2mil is
certainly nice, but if you stop now, you'll go through it quicker than you
think. Treat it as a cushion, not a windfall.

Good luck!

~~~
jrockway
Keep in mind that $2M will generate over $100,000 a year in interest. So it
_is_ definitely possible to retire forever on this amount of money.

~~~
ggruschow
Uh, how? That's a 5% rate of interest.

The only way to get that is by taking significant principal risk ("junk" bonds
or equity investments). 30 year US treasury bonds are only yielding 3.54%, and
everything less than 3 years is <1% [1]. The highest yielding US$ CD I could
find [2] was 4.3%, and the highest CDN$ GIC looks to be 4.3% [3].

Also, remember inflation - it really eats into it.. Let's say you're 30 and
expect to live to 75. Even with a modest 2.5% inflation rate, your effective
income will be <1/3 of what you started with by the end.

[1][http://www.ustreas.gov/offices/domestic-finance/debt-
managem...](http://www.ustreas.gov/offices/domestic-finance/debt-
management/interest-rate/yield.shtml) [2][http://beta.bankrate.com/funnel/cd-
investments/cd-investment...](http://beta.bankrate.com/funnel/cd-
investments/cd-investment-results.aspx?local=false&tab=cds&prods=19)
[3]<http://money.canoe.ca/rates/gics_5.html>

~~~
delano
You can negotiate your own rate when you have a large sum.

------
cperciva
The $1M-$10M range is difficult -- it's more than most people know how to
manage themselves, but it's not enough to allow you to hire someone to be your
full-time money manager.

Based on what you've said and not said, I'm presuming that you (a) have set
aside money to handle any income taxes which you'll have to pay, and (b) don't
have any immediate plans for how to spend your windfall; and your main concern
at the moment is simply where to park the money so that you'll have it
available once you figure out what to do with it.

If I'm right about that, your primary concern should be to hedge risks -- that
is, to eliminate as many possible ways that your money might vanish. Given
that the biggest risks are (a) an asset price crash, and (b) hyperinflation,
I'd suggest a diversified portfolio: Keep some money in cash or near-cash
assets (bank accounts and cashable GICs), but split most of the money between
bonds (or, equivalently, GICs) and stocks. That way, if the stock market
collapses you'll have some losses but you'll still hold on to the money you
put into bonds/GICs; and if inflation spikes you'll still have they money you
put into stocks (since inflation makes fixed-income bonds worthless but
proportionally increases the value of stocks).

If you're feeling really paranoid, you might want to split your money between
Canadian, US, and European bonds and stocks, just in case something weird
happens and the Canadian economy falls apart while the US or European
economies don't -- but my impression right now is that the Canadian economy is
doing better than the US or EU economies, so I'm not sure that I'd bother with
this myself.

Of course, I'm not a real financial advisor, and it's quite likely that there
are factors specific to you that I haven't considered -- so really you ought
to be talking to an independent financial advisor. Do your own research first,
and don't feel that you have to follow their advice -- but listen to what they
recommend and the reasons they provide for their advice. Make sure that you're
talking to an _independent_ advisor, too, and not just a shill for your bank's
funds -- if you need help finding one, I'm sure your lawyer can point you in
the right direction (and unlike your bank, your lawyer can be trusted to
provide a fair recommendation).

I hope that gives you some starting points for figuring out what to do -- I'd
be happy to talk more if you want to send me an email (google me for my email
address, and put HN into the subject line so that I know it's someone from
here).

~~~
tjmc
This is good advice. Also:

1\. Eliminate any outstanding debt. Mortgage, credit cards, car loans etc

2\. Consider buying a place to live outright. Saving rent or mortgage interest
is better than earning the equivalent in interest because it's tax free.

It's a very good time to have spare cash as there are a lot of bargains
around. Take plenty of time and do your research.

~~~
tjic
If you're looking at $2k/month for a mortgage vs. $2k/month for an apartment,
then the tax savings (at a hypothetical 33% tax rate) are MAYBE $8k per year.

This is one half of a percent of his net worth. ...which is to say, absolutely
trivial.

Right now, the housing market is declining, and this individual may decide
that he wants to relocate to a new area.

I am a homeowner. I am HAPPY to be a home owner.

However, I don't think the "buy instead of renting" advice makes a ton of
sense for all people.

~~~
time_management
In the long-term, you can expect the tax advantages of ownership to be priced
into the housing market. This is one of the reasons (rampant speculation is
another) price/rent ratios are so absurdly high. Fair value, without the tax
benefits, would be a ratio of 9-12, given the costs of ownership and the
illiquid nature of an owner's position. With the tax breaks, the fair value's
higher, but it still doesn't make sense to buy at a P/R ratio of 20+,
especially since rents are also likely to drop across much of the country.

In New York, price/rent ratios are above 40. A $2500/month apartment will sell
for over a million. It only makes sense to buy at such a P/R ratio if you
expect rents to skyrocket in the near future, and Manhattan rents are already
starting to turn back.

~~~
andreyf
How do you calculate rent, there? $2500 * 40 = $100,000 ...

~~~
papercrane
$2500 * 12 * 40 = $1,200,000

~~~
andreyf
But grandparent said:

 _In New York, price/rent ratios are above 40. A $2500/month apartment will
sell for over a million._

And $1,200,000 > $1,000,000! The first sentence implies the second, but not
vice versa... am I the only one to stumble on this?

To me, it sounds like saying "I have over 20 cats. I have more than a dozen
cats!".

~~~
time_management
Price/rent ratio almost certainly varies by neighborhood and general price
level. What I meant to say, and should have said, is that price/rent ratios
are _mostly_ over 40. The specific data point that followed was one case of
that.

The data points I actually know about are in the $2000-3000 range. One of my
friends tried to buy his $2800/month apartment and got a quote around $1.5
million.

------
pg
Here's the conventional advice. Start with it all in cash, in some form you
feel is sufficiently safe from disasters. Gradually over a couple years bleed
it into some combination of stocks (by default in a low-cost index fund) and
bonds. The usual rule of thumb is to put your age percentage in bonds. I.e. at
age 30 you should have 30% bonds.

~~~
afri-silicon
This is a little un-related, but the more I read HN and actively listen the
more I think of a y-combinator like org in Nairobi Kenya. Ideas are many but
angels scarce.

Suggestions kindly

------
fnazeeri
Brilliant! My advice is to stay in cash (or equivalent). Have patience. Wait
2-4 years and see what happens with the economy. Forget about the cash in the
bank (I'm assuming you're well below normal retirement age). Set aside an
amount of "play" money. Go play golf or hike Kilimanjaro or whatever works for
you. Ignore "advisors" who tell you that you should invest in such-and-such.
After some time, you will find things that interest you and that is what you
should work on / fund. Invest in / spend time on things you love.

BTW, contrats. Nice job!

~~~
tc
_My advice is to stay in cash_

Which would be fine as long as you aren't at all concerned about the very real
possibly of hyperinflation. Be sure to pick your currency wisely.

~~~
mikkom
Surviving hyperinflation is easy, just hedge against all majors.

~~~
kirubakaran
Could you explain in noob terms please?

~~~
Daniel_Newby
One way is to buy long-dated call options on a broad range of issues: indices,
index funds, precious metal funds, commodity funds, etc.

For instance, the SPY index fund currently trades at $80. Suppose you want
inflation protection for it going above $100 by December 2010, and you want to
protect $250k of your money.

You could buy SPY calls at a strike price of $100 expiring in December 2010.
The cost of those call options would be about $8 per share. To hedge $250k,
you'd need 3100 options, which would cost $25k. If the price rises into the
$100-$108 range, you'd start recovering that cost. If the price exceeds $108,
you'd start turning a profit. If the price popped to $175 due to
hyperinflation, your profit would be ($175-$100-$8)*3100 = $208k. (BTW,
options are sold in contracts of 100, so for 3100 shares you'd buy 31
contracts.)

Honestly, though, I don't see this as a good idea right at the moment. The
market has been volatile lately, which drives up the price of options. IMHO,
inflation is not likely to pick up in North America for at least 1.5 years, so
you would need to buy 2011 options, which raises the price even more. If I
were going to hedge inflation, I would wait until the current stage of the
collapse had reached a lower plateau, some time had elapsed for volatility to
decrease and option prices to go down, then buy before inflation expectations
build and drive up the cost of call options.

Whatever you do, never use the various "ultralong" funds for buy-and-hold
hedging. They are strictly for short-term trading. (Well, you can do buy-and-
hold, but you have to wait for the price to bottom out, and pray that the fund
manager doesn't burn up all the money with failed trading strategies.)

Warning: I am not a professional options trader. This is not investment
advice.

~~~
eru
Why consider active investing at all? Just buy and hold an index fund if you
want exposure to stocks.

~~~
kirubakaran
So that all your money won't be locked in.

That is, for his ($175-$100-$8) * 3100 equation, you are only leaving 8 * 3100
on the table, as opposed to 100 * 3100 if you were to buy and hold.

~~~
eru
Oh, my comment was more directed at the fear expressed in:

"(Well, you can do buy-and-hold, but you have to wait for the price to bottom
out, and pray that the fund manager doesn't burn up all the money with failed
trading strategies.)"

With index investing at least you won't have to rely on a fund manager too
much.

------
smanek
I'm a fan of the Taleb approach to investing. Put most of your money (~90%, I
would say )into bulletproof stuff (Savings Account, CDs, etc), and put a
little into risky things. You should be able to get at least 5% ROI on the
safe stuff (in the long run, obviously considerably less than that right now),
which should guarantee that you'll never fall below middle class, come what
may.

To counteract the current market insanity, I would strongly consider buying
some inflation indexed government bonds (called TIPS bonds, in the US) with my
'safe' money. In case of inflation they could help, with no real risk (short
of the collapse of the government). I know most people are worried about
deflation, but I still have nagging inflation worries.

As for the risky stuff, I think Detroit real estate, corporate bonds, and some
dividend issuing stocks are seriously undervalued right now. I personally put
a little into NRF, which is issuing ~30% dividends per year (at its current
stock price). Detroit real estate isn't likely to recover soon, but I think
over the next two decades or so you could potentially make a killing.

~~~
nandemo
I don't think that's Taleb's approach. His point is not simply to put a little
into things like dividend issuing stocks. These might have a very good
historical long-term return, but we cannot assume this will still be true
tomorrow.

The point is to be exposed to good "black swans": far out-of-the-money
options, or biotech and YC companies, for instance. These could potentially
give you a very large return. In theory this would be already priced in, but
too many people assume models which don't allow for very large returns.

That said, his main message is not so much how to make money, but rather how
not to lose it all.

~~~
smanek
Under normal circumstances, I'd agree with you. But given the economic
craziness right now, I'd say that (some) dividend paying stocks qualify at
black swans. At least the market thinks so, because they value the shares so
that annual dividends are 30+% of the share price. The market wouldn't allow
30% ROI per year into perpetuity on a non risky investment.

In fact, assuming that the risk free interest rate is at 2%, the Net Present
Value of a $1 30% annuity is $15. Which means that the market expects that
there is, approximately, a 90% chance of that company going bankrupt in the
near future. (Having looked over NRFs books myself, I think that the chance is
considerably less than 90%. Which means, I think NRF is undervalued by the
market, and hence is a bargain).

------
sak84
I am confused. Why are you asking people what to do with your money when we
know nothing about you?

Do you want to just hold on to this money and live off the interest?

Do you want to make more money by working?

Would you like to invest in the stock market?

Are you risk-averse?

Are you willing to move?

Are you charitable?

etc.

Basically, I'm not sure this is the right type of place to ask this question
if you are going to tell nothing about yourself and what you aspire to be in
life.

------
smanek
I would highly recommend Philip Greenspun's investing and early retirement
articles, which explain how he dealt with a similar situation.

<http://philip.greenspun.com/materialism/money>

<http://philip.greenspun.com/materialism/early-retirement/>

------
inerte
Here's what I would do if I got 2 millions reais (I am brazilian ;)

\- Pay some debt close family members have (parents, brothers)

\- Buy an apartment, in the same price range I've been looking for in the last
couple months (150k tops). Would not buy something more expensive, "just
because I can";

\- Put everything else in the bank. 80% in the most conservative investment
the bank has. 15% on middle stuff;

\- Travel the world for several months, maybe a year;

Then come back, and look at the money again.

I think one of the most important things you should do, is simply to not spend
much money in the near term. 2m is lot, but it's not enough to live like James
Bond. You can't sustain a lifestyle of champagne with hookers while cruising
the Mediterranean on yatches. Not for more than 6 months anyway.

Going for a 600k house also looks dumb to me. Or anything else too expensive
that you wouldn't buy if you didn't had the 2m. Like a Ferrari.

You've gotta give time to adapt to your new richness ;) You've gotta
understand that you simply aren't used to have a lot of money. Not that I am
personally... but I have read stories about lottery winners going to Vegas or
blowing all the money on frivolities just because they now can do it. It's the
last thing I want to happen to you!

And congratulations :)

~~~
anatoli
Since he's in Canada, 600k would get him an OK house in a good neighbourhood
or a good house in a decent/undervalued neighbourhood, not anything great...
besides, he would most likely get a mortgage, so he could afford to go even
higher than that. 150k would get him hardly anything, unless he lives
somewhere in the middle of Saskatchewan.

(I speak from personal experience, I own a loft in Vancouver.)

I agree with your overall point though.

~~~
thenduks
I mostly agree, you don't want to spend less than 500K on a house if you live
anywhere near a major city.

But if you live outwards a bit (say, an hour from Toronto or similar) then
400K gets you a massive 3 story house in a quiet neighborhood.

Depends on what you're into.

------
vaksel
You should avoid telling the people you know about this, since everyone will
hound you for a handout if they find out. At the minimum under value the
thing,

2 mil = you can afford to buy the person a car and you are an asshole for not
doing it.

500K = you can tell them no, since you "need" the money to buy a house.

~~~
fnazeeri
Check this article on HN about the same issue (Ariba founder dealing with $1BB
exit):

[http://www.rediff.com/money/2009/feb/18having-too-much-
money...](http://www.rediff.com/money/2009/feb/18having-too-much-money-can-be-
a-problem.htm)

~~~
nradov
Wow. It seems somehow both sad and funny that people are now making a living
as professional "wealth therapists". I guess it's just another example of how
decadent and wasteful our society has become.

------
maximumwage
My advice: don't listen to suggestions from random people on the internet
(though I like a lot of the suggestions in this thread). Talk to other
successful sellers and a diverse selection of wealthy people and find out what
they did with their money. Also, Gurbaksh Chahal's book "The Dream" has a good
overview of the emotions involved in becoming rich, from the perspective of
someone who sold his companies for millions of dollars.

------
gojomo
Go to AngelConf!

<http://angelconf.com/>

~~~
cperciva
I don't think this is really answering the submitter's question, but once he
moves past "how do I manage this pile of cash" and on to "what do I do with
all this money", I entirely agree with the sentiment -- Canada needs more
angels (and VCs, and really everybody else, too). It would be nice if some day
the question for Canadian companies was _if_ they would go South instead of
_when_...

~~~
afri-silicon
the question for Canadian companies was if they would go South instead of
when...

And talking of South, real South, I and a few friends have been thinking of a
y-combinator like in Nairobi Kenya. Good ideas are many but investors quite
scarce

------
hedgehog
1\. Congratulations!

2\. Ignore financial advice from random people on the internet (feel free to
include me in this category). Also beware advice on complex schemes that will
eat you alive with management fees.

3\. Spend your time doing what makes you happy.

4\. If you need time to think about life and the next project, I recommend
heading to Guatemala to check out Tikal and the ATM caves across the border.
After that you can head out to the Cayes and drink beer in a hammock until you
feel like doing something else.

Misc thoughts:

For everyone besides this guy, #3 doesn't actually require that much money.
$20k - $30k buys you time to travel, work on your own projects, and wait for
the right opportunity. I spent 2008 doing this and I'm pretty satisfied with
that decision.

Also: About six or eight years ago I sat next to the CEO of a successful chain
of auto shops on a flight somewhere (I forget where I was going but it was
Mark Carr of Christian Brothers Automotive). His advice for this situation:
take some of the money and buy a house because you'll always need somewhere to
live and bankruptcy laws typically protect the home you live. This helps you
get the next thing started and, should it go awry, keeps you off the streets
and protects some of your assets.

~~~
alecco

      > For everyone besides this guy, #3 doesn't actually require that much
      > money. $20k - $30k buys you time to travel, work on your own projects,
      > and wait for the right opportunity. I spent 2008 doing this and
      > I'm pretty satisfied with that decision.
    

Yes, and there are many nice places out there in the world where you can live
on even less than that for temporary rentals. A 4 continent around the world
ticket costs about $2000 and be sure to pick a good airlines network for the
destinations you want. Or just pick two or three places and stay there 4 to 6
months at a time, or longer.

You can definitely spend time on your future projects while traveling, many
places have free wireless internet. We used to hack on BBS systems, so even
512k Internet can let you do a lot of stuff. If connection stops working, go
hiking or canoeing or off to meet a pretty girl/guy/whatever you like.

Oh, I second that other advise by inerte:

    
    
      > - Pay some debt close family members have (parents, brothers)
    

Try to minimize the potential emergencies of close ones, you don't need to pay
them off completely but get them in a path where they can restore themselves
to financial freedom. This is happening a lot already. Beware, don't bail out
anybody on mortgage, specially if highly leveraged, they have negative equity,
or have interest-only mortgages! There are laws to protect them and your money
will get wasted for nothing. Perhaps help them _after_ they file bankruptcy
(IANAL.)

Whatever you do, have a good time! :)

------
jwb119
"Be fearful when others are greedy, and be greedy when others are fearful."
-Warren Buffett

I dare you to find many greedy opinions out there today.. Everything I read is
decidedly fearful. Full text of the article is at
<http://www.nytimes.com/2008/10/17/opinion/17buffett.html> (I realize its
slightly less applicable to Canadians)

~~~
agotterer
I was looking for this exact link for but couldn't remember where it was. I
can lay my search to sleep now. Thanks!

------
nazgulnarsil
a lot of people are talking about "taking time off to think" but not really
being more specific than that. This is not just a vacation, this is a vitally
important step. Assuming you can make 3-5% off the 2M you are set for life.
Now comes something that few people have ever been able to do: actually decide
(with a huge degree of freedom) what your time on this earth means to you. It
may sound silly now, but you have just been reborn. You are no longer subject
to the same rules of life that most are. You are literally a different person,
though you may not know it yet. Take things slow, like a baby taking first
steps. And don't think that this all involves naval gazing. Look at the other
people in your life and what their relationships means to you. _They_ have to
start all over with a new You as well. It can be rough on people.

Not taking this seriously is the prime reason new wealth often loses it.
Everything else is details.

------
cwb
Congratulations! Invest a little in yourself:

1\. Get a good doctor and dentist; commit to yearly full check-ups.

2\. Develop a life-long exercise _habit_ that you can perform anywhere. No
weights, minimum props. Get help from (i.e. pay) army/special-forces trainer
initially.

Now is probably a good time to do this, if you haven't already.

------
mattmaroon
Well, avoiding the deeper money management issue and addressing your savings
comment, I don't know what sort of depositor's insurance you have up there, or
much about Canadian banks at all (other than that BMO owes me $100) but if
it's anything like the US right now, I'd spread it out. I think our FDIC limit
now is $250k for individuals, it shouldn't be too hard to find 8 banks. If
your banks up there have no government-backed depositor's insurance, I'd take
a trip stateside (if that's legal and it extends to foreigners, which again I
don't really know).

Putting all of your eggs in one very shaky basket would seem to be a bad plan
at this point.

Also, I would float me $200k to help me jump start this Ponzi scheme I have an
idea for. I'll give you back $300k in a month.

~~~
dkokelley
Something to note, while in the US the FDIC coverage is $250k, that is a
temporary limit to help stabilize banking and reassure depositors. Also, for
whatever portion you decide to keep in a bank, have the banker talk to you
about titling. An account for John Smith is covered up to $250k, but an
account for John and Jane Smith is covered up to $500k, and a trust for John
and Jane Smith with 3 children is even more.

What I would do is put $1 million away and use the remaining $1 million to buy
11 more $90,000 businesses.

------
stuntgoat
If you ever want to help the most people per dollar spent, take a look at
micro-nutrient need in developing countries. Several smart economists ran the
numbers and found this is the most cost effective way to help the most people.
Check it out:

<http://www.copenhagenconsensus.com/>

------
oldgregg
1) Stay liquid (ING or loonies-in-a-shoe-box) 2) Wait until the markets
bottoms 3) Buy Minnesota

A year or two from now people with cash reserves are going to clean up.

~~~
icefox
Bank Of America is going around like a kid in a candy shop picking up banks
left and right at prices that a year ago couldn't be imagined. Wasn't it
Minnesota that 1/3 of the income was from the government? Not very high
growth. :)

------
pj
Do absolutely nothing for a year. Assume your life is just as it was.

$2M can really mess with your mind. It's not really enough to live forever.
But it is enough to live on for a long time. If you are careful, you could
invest it and live on the interest. If you aren't careful, you could invest it
and lose it.

But remember, you don't know what is going to happen. It's cash for now. I
would suggest you just sit on it for a year. Think. What do you want your
future life to be like?

How do you want to live the next 5 to 10 years.

And be prepared to get bored. If you aren't working and learning and doing
things, you get bored. Save the money for your next startup. In the meantime,
live on the interest and stay liquid until you /know/ what you should do with
the money.

------
dylanz
1) Buy property in a location you could see yourself growing old in. 2) Take a
Permaculture Design Course. 3) Live happily and take trips to places that
happily meet your vices.

------
Fuca
Any hint on how you made it?

Congratulations anyway

------
mrtron
Being Canadian...I recommend PC Financial. Their high interest savings is
great, and no fees!

With 2 mil, I would personally:

-Buy a place to live in the 400k range. Housing is probably overpriced right now, but generally speaking the Canadian housing market is not too badly bubbled. I really don't see a Canadian crash coming, but there may be a slight price reduction.

-Put 200k into a high interest account. Easy to access, guaranteed return, etc.

-Put 200k into a new business. But that is because it is what I enjoy doing, if you want to learn to paint, go to school, etc throw the money there.

-Put 200k in the stock market. Canadian financial institutions are amazingly underpriced currently, and so are several commodity based companies.

The remaining million I would use for stability/hedging. Hedge against the
Canadian dollar, inflation, etc. I would probably get some professional help
from investment banking friends, but this would probably be a combination of
US bonds, CDN bonds, gold, etc.

The Canadian economy is currently almost untouched by the current recession.
There will be a bad 2-3 years at a minimum coming up so plan for that. I would
plan on shifting into the stock market cautiously over a period of time and
not throw it all in at once, we could easily see another 50% decline over a
few months.

Lastly, I would take a month and travel around before doing anything at all.

~~~
JabavuAdams
ING is effectively the same as PC Financial.

If the OP feels he has enough money now, why would he consider the stock
market at all? His only concern would be keeping up with inflation. I'd also
suggest reading "Fooled by Randomness" before talking to any investment
bankers.

Never risk something you actually need for something you don't need. Also,
don't convince yourself that you don't really need something you actually do
need.

One might be better off buying supplies so that one could survive for a week-
long power-outage, say, than playing the market, right now.

A few months ago, an apartment building near me had one of its electrical
transformers blow up. The residents had to evacuate that day, and were not
allowed back into their building for a few weeks. Some suites were looted.

It made me realize that I was completely unprepared for that kind of scenario.
How many people who pride themselves on their retirement plans are equally
unprepared for this kind of rare event?

------
JabavuAdams
Take a cooling-off period of a few months to relax, and research. During this
time, do not buy a home, or any other large purchase (> $4k ?) that you
wouldn't have before your windfall. Stay out of the stock, market, except for
GICs.

Think about what you would need to be permanently semi-retired. I.e. you don't
_have_ to work for anyone else, but you don't upscale your lifestyle. You now
have 24/7 sweat equity, independent of your other capital.

The problem with this particular time is that we're in some kind of
transitional period. I have no confidence in my ability to predict what the
Canadian and US economies will look like in 10-20 years.

I've been very aggressive in paying down my house and contributing to my RRSP.
OTOH, I now wish that some percentage of the funds I put into my RRSP had been
devoted to disaster preparation. Nothing too extreme -- just another form of
insurance.

I.e. an RRSP is preparation that makes sense within our current model of
society. I currently have few hedges for scenarios outside that model.

I guess the main thing is to take small steps. It's very hard to scale back
your lifestyle once you've scaled it up. If you are mostly content now, then
be very careful about up-scaling.

You may have different goals, but for me the greatest luxury is free time to
pursue my ideas wherever they take me.

------
kul
Firstly, congratulations! I was in similar position once I sold Auctomatic and
moved to Vancouver (but with much less cash). I'm now doing property in the
states. My advice would be, convert as much as possible of your money into
assets that generate passive income (i.e. through rental property). You will
then have financial independence for the rest of your life, and basically
freedom to do what you want.

If you want any help getting started on property, give me a shout.

~~~
slance
I saw you on Channel 4 a few years ago when you started Boso at Oxford...
Congrats on the Auctomatic sale!

------
known
Have you considered setting up YCombinator in Canada?

~~~
potatolicious
That's a great idea, and I'm not being sarcastic. IMHO startups around here
really don't get enough love from anyone. Family look at you like you're crazy
not wanting to be a wage slave, so you can afford a tiny apartment in the
tenements out by the edges of Scarborough. Lots of government programs will
cheer you on for taking the plunge, but few are actually there to help you...

------
JabavuAdams
Take the Canadian Securities Course, if you're at all interested in money. I
did. It's easy if you prepare. I crammed it over a weekend, and just squeaked
by. I've heard of a lot of people failing after cramming, though, so YMMV.

After reading Fooled By Randomness, I don't trust anyone else to manage my
money. It helps that my wife and I are somewhat interested in finance. I would
definitely go to others for ideas, but not for decision-making.

It's the same kind of "Ah ha" experience that PG tries to create in young
techies. You really can run your own business. Well, you really can manage
your own money (assuming some minimal interest in the subject).

NOTE: about the CSC: the material is a bit boring for someone coming from an
engineering background. I.e. you're supposed to repeat what they want to hear
(including some dogma), rather than actually give a nuanced confidenced
answer. There are quite a few calculation questions, though.

------
vaksel
Go take a vacation and start thinking about your next startup

~~~
tptacek
DO NOT go plow all your money into your next startup. A life mistake.

~~~
mechanical_fish
I cannot upmod this enough.

$2m is enough to retire if your costs are low enough -- even earning a measly
1% a year you'll make 20k per year, which is enough to live on if you live in
the right town with the right diet. So put the money in a diversified
collection of very safe assets that return a few percent, write yourself a
check for the interest you've earned every quarter or so, and then forget all
about it.

Meantime, depending on your lifestyle, your time may now be entirely your own.
Or you may need little more than a small part-time job to be happy. That
_time_ is the resource you should plow into your next venture in life. The
only part of your own money you should spend on a startup is the money to hire
the lawyer who will construct the corporation that will ensure that your
startup cannot touch your _personal_ money even if it is sued into dust.

~~~
petercooper
_$2m is enough to retire if your costs are low enough -- even earning a measly
1% a year you'll make 20k per year_

Sure, but this makes no sense as a strategy. You could make 20K on the side
pretty easily doing whatever it is you'd probably want to be doing anyway
(painting, hiking, sailing, playing golf).

Having $2m in cash sitting in the bank might feel awesome but jeez, you need
to use it somehow rather than for paying yourself a tiny stipend to live a
life you could have lived anyway if you weren't so scared to face some risk.

~~~
mechanical_fish
_you need to use it somehow_

But you _are_ using it! You're using it to solve your cash flow problems _for
good_. You've given yourself the freedom to do whatever you'd want to be doing
anyway, no matter how risky it is, no matter how long it takes for the money
to roll in, secure in the knowledge that no matter how unprofitable your next
venture is, your worst-case fallback position is "Damn, I'm retired again. How
I hate the prospect of sitting on this beach, reading whatever I want, writing
whatever I want, until I die of old age!"

The thing about making money on the side is that it's work. It's distracting
and requires continuous effort if you have to keep the money rolling in
smoothly. How did tptacek put it the other day, in response to the question
"How many billable hours are lost on HN every day?"

 _As someone who often bills hourly, I'll go with $0. Your time isn't
fungible; it only commands a bill rate if you can commit to a start time,
milestones, and a delivery date. Very few businesses want to pay for your
spare cycles._

(<http://news.ycombinator.com/item?id=467900>)

Now, I realize that there is a class of personalities that cannot possibly
follow my advice. They will find themselves unable to motivate themselves when
they have the option to sit around playing WoW all day, and yet all that WoW
makes them miserable and unfulfilled. So they will be compelled to blow some
or all of their $2m at the craps table so that they can feel alive again. Las
Vegas was built around such people. I can't possibly dissuade them with my
feeble arguments (and blowing the money is surely preferable to being
miserable) but I would encourage them to _try_ my plan first.

------
giardini
If you don't own a home then buy one. Buy it as a home, not as an investment,
so the smaller the better. If possible, buy a home in an area that has no
homeowners' association and associated fees. If you don't, you will eventually
regret it. You could buy a "fee simple townhome", which means it's small
(condo-size) and has no association fees.

The reason I say buy not as an investment is because the real estate market
hasn't nearly hit bottom yet and won't for another two years. Until then
investing significantly in real estate would be a mistake. So buy something
modest that you like in an area that you like.

Cash is king right now. Being in Canadian currency is good. Read Nassim Taleb,
who presciently suggested years ago that we avoid investing heavily in the
stock markets; they're too risky. Instead put ~90% into absolutely safe
investments and then bet the remaining 5-10% in long-shot positive "black
swans" (e.g, high technology and biotech ventures with long odds but
incredible payoffs). Most often you'll lose but, when you win you'll win huge,
more than enough to cover your losses. To understand his suggestions, you'd
best read his excellent book, "The Black Swan".

And I assume you've split your money into various accounts so that you are
insured against any losses should your bank go out of business.

------
tlb
Don't over-think it. Put half in cash and half in 3-5 stocks you think don't
suck. You would have to spend a huge amount of time on money management to get
better results than that.

When I cashed out, I gave away 10%. Mostly to family, and some to local
charitable projects I personally cared about. It can feel good.

Spend your time thinking about what to do next, now that you're not
constrained to make an income. Start a new business? Become an international
playboy? Go back to school? Up to you.

------
micks56
I would put my money into Federally insured bank accounts until I figured out
what to do.

While it may be unlikely that ING will fail as a bank, there is no reason to
take that risk. Divide your money among banks to stay below the maximum
Federally insured limits.

Once you 1) learn what you want to do with the money, 2) get some advice that
you can check and challenge, and 3) feel the time is right, move the money to
wherever your analysis takes you.

Dividing the money into the savings accounts just buys you time.

ps. Congrats!

------
newseller
Just wanted to chime in to thank everyone for the great and diverse advice. I
definitely can't respond to all the overwhelming feedback, so I'll keep it at
thanks. This is a great community, and I appreciate all of you. Seems nobody
has any good financial software other than quicken for mac, but that's ok.
Maybe that'll be my next project. :)

You've definitely given me a lot to research and think about as I approach my
retirement. Thanks again!

------
lazyant
since nobody mentioned it: make a last will.

As for opinions I'd put maybe 5% in stock indexes (Dow,S&P) as 'risk' and the
rest partitioned in bonds and cash in high interest account after talking with
a tax specialist. I'd forget about money managers.

------
jacquesm
Take your time, don't spend what you don't have to, stay away from people
giving you 'good advice' (including this one), everything comes to those who
wait.

The only concrete advice I'd have for you is spread your money around
different banks and currencies so that if something takes a hit you don't lose
it all in one go. 2M is way above the usual insured amount.

Oh, and keep quiet about it!

------
timcederman
Certainly diversify. It's still an easy amount to handle yourself which is
good. My biggest mistake was not diversifying enough. Happily I did get strong
advice which I half-heartedly followed, for which I am forever grateful.

By the way, there are plenty of stocks out there paying very handsome
dividends. I recently bought some bank stock paying ~ 11% last year, forecast
to pay the same again this year. It's up to you though -- investing should be
both for profit and personal satisfaction (I tend to invest in companies I'm
rooting for, or are doing good in the world).

If I were you, I would simply use something like mint.com (I use the
bankofamerica.com aggregator) to keep track of everything, put your money away
and enjoy the safety net. In the meantime, get hungry, and try to do it twice.

...and do make sure you treat yourself with something. If it were me, it'd be
travelling for a while, but each to their own.

------
goat
Staggered CDs and Dollar cost averaging.

<http://en.wikipedia.org/wiki/Certificate_of_deposit>

<http://en.wikipedia.org/wiki/Dollar_cost_averaging>

Eventually you want to be diversified, but right now, you don't know if you
want to put all your money in the market.

So divide your money into 8ths (or whatever, by 8ths right now the US
government will insure each $250k in your CDs)

put 1/8 into the market now.

1/8 into a 1 month CD

1/8 into a 2 month CD

1/8 into a 3 month CD

1/8 into a 6 month CD ....

When each CD matures buy more of the market. That way if we haven't hit
bottom, yet, you will still be buying on the way down and up.

Unless you are going to spend time studying industries put it all in index
funds/etfs. Your market allocations depend on when you need the money, but I
have something like

45% Russell 1000

20% EAFE

12% Russell 2000

10% Morgan Stanley bond index

5% REIT index

5% Nat Resources/Commodities

3% emerging markets

This should be translatable into Canadian assets, just not by me.

------
auston
Invest in startups?

------
tomsaffell
Any advice would really need to based on an understanding of what you want to
get from the money, and more broadly from life.

I slightly get the impression from the wording of your question that you don't
quite know what you want to get from it, but you _feel that you ought to do
something_ (there are plenty of people who's job it is to tell you that you
_ought to_ ).

I think that unless you know what you want from it, you'll never be able to
answer this question. Some options to consider: seeding your next company,
angel funding, charity, friends & family, financial stimulus of your local
area, etc. - these are all _investments of sorts_.

If you're just looking for somewhere to park it whilst you decide then make
sure you're within FDIC limits on each account...

------
sammcd
It seems to me you are asking the wrong people. My father works at an
investment company (<http://www.hilliard.com/>), and usually the people that
give you investment advice at banks are the people that couldn't make it at
real investment companies.

You need someone whose job is to find out what kind of person you are (risky ,
etc) and help manage your money for you. There are many people who do this
very well, and the good news is that many of the corrupt ones have been washed
away in the cleansing fire that is the recent economic situation.

Anyway don't take my advice I'm a college student that doesn't know crap about
money. But find someone that has done it for a living.

------
lallysingh
Mac software: quicken's worked for me. Not fancy, not pretty, but effective.

Talk to a professional about investing & protecting your assets. As you can
live on the interest, perhaps the free time is more important than the money
for now?

Sounds like a good time to invest in yourself. First: a small vacation (a few
weeks, ~$2-5k) to really relax. Next: maybe some school if there were other
things that piqued your interest before, but never had a chance to study. If
not school, maybe not a bad time to just pick up some books and hedonistically
blowing weeks on whatever you want to study :-) If anyone asks, call it market
research.

Congrats!

------
cellis
Trip around the world.

------
gasull
I like Eric Janzsen's advise on investing, despite his so bad-looking website
<http://itulip.com/> . His view:

\- No investment is gonna make you rich while we are in recession. \- Gold
will appreciate in dollars, but just because dollars will actually depreciate.

So, for the following years, if you buy gold and hold it, you won't loose
purchasing power, but you won't get rich.

After the recession, Janzsen recommends to buy green energy stocks:
<http://www.harpers.org/archive/2008/02/0081908>

------
ggruschow
There's plenty of good advice here to think about.. but just think about it
for a year. (Software recommendation: none for now)

There's no hurry, but there's plenty of mistakes to be made. Carry on as usual
for a while and see if any of the ideas really resonates with you after your
mind has settled.

Definitely don't get into a contract with someone to "manage" your money -
they typically want 2% annually for it, and it's highly likely they've
underperformed money market accounts over the past decade. Many (most?) have
lost money over the past decade, at least after expenses.

------
mistermann
1\. Get a good accountant 2\. Be very careful in the stock market right now.

------
anaphoric
No offense, but I don't believe you. I think you are spoofing HN.

On the very small chance you are telling the truth, I would say diversify your
investments and keep your mouth shut. And then start ramblin'

------
brentr
I recommend seeing someone at a bank about setting up a trust. If you are
concerned with making sure that the corpus of the trust remains intact,
explicitly tell the bank that as there are investment opportunities that are
completely appropriate for that. The benefits of a trust are numerous. When I
worked as a trust analyst I saw many people who set up a trust solely to
protect their money from themselves. It's something you might want to look
into if you are concerned with blowing through the money.

------
klahnako
I am in Ontario. My advice is:

1) Stay in real cash (not equivelents) until this market turmoil is done. 2)
Figure out what you want your next "career" to be. You are in a position to
take some risks, but 2million is not that much. You want to give yourself
purpose and continue making some money. 3) Do not travel unless you are one to
learn other languages: Travel is addictive but does nothing to improve you.
Like all drugs, travel should be a reward to yourself, not the purpose.

------
seanc
There is a whole class of financial planners who only work for rich people.
They typically want you to have 500k net worth before they'll talk to you.
They provide better advice for much less money that the retail mutual fund
pushers at banks.

Google Baskin Financial and Doherty and Associates, and ask around for
somebody like that local to you. Take meetings with them and discuss their
investment strategy and philosophy until you find a good match with someone
you can trust.

------
drsnyder
Pay off any debts you have and set aside some for taxes. Consider some
diversification, but keep as much of it as you can (or stomach) as liquid as
possible (high interest savings accounts, CDs, or treasuries). There may be
some great opportunities in another year or so for those who are still solvent
and have a lot of cash-- housing will probably be a lot lower, and so will
stocks. Wait until then and you may pickup some of the deals of the century.

------
sown
I'm reminded of a rotten.com article

<http://www.rotten.com/library/culture/lottery-winners/>

------
Flemlord
You need an investment advisor, not recommendations from your accountant or
hacker news. ;-) Find somebody with a Certified Financial Planner (CFP)
designation. A good CFP may charge you $1k-$3k up front for a comprehensive
financial plan, then around 1% of your total portfolio annually if you want
him to actively manage your assets. I work in finance and can give you some
recommendations if you'd like.

------
smanek
I like mint.com to manage all my accounts, and keep track of my spending (I do
all my spending on my credit card, so it's great for budgeting since it can
automatically categorize expenditures).

You have a few orders of magnitude more then me, but I imagine it should scale
fairly well ;-)

------
xenophanes
buy some government fixed interest rate, fixed duration bonds (say 1-2 year
duration) if they give you a better interest rate than ING.

don't change your lifestyle too quickly. make sure all changes pass _two_
tests: 1) it feels comfortable 2) you think its rational.

~~~
icefox
There is a cool website (don't remember the url) where you can be part of bank
CD auctions. Usually the majority of winners are banks with 500KCD's, but
there is often a few people who win the final scraps with only 10K CD's. Rates
were 7+% when I was looking v.s. ing's 4% For a quick safe way to put money in
USD it seemed like a very interesting way to go.

------
Dauntless
Buy shares in companies from which you use and plan to buy products in future
and that have good ROE. Be an angel investor. Travel around to every continent
on earth once. Start a new company, where you can invest the money again.

------
jaspertheghost
If you're not actively managing your portfolio, the biggest thing you can make
sure to do is asset allocation a la David F. Swensen. I'd recommend
Unconventional Success: A Fundamental Approach to Personal Investment.

------
brianobush
actually insurance companies have many rules put in place by the states that
will assign the accounts to a different servicing company. but that is US, I
am sure Canada has similar rules.

check out coffee house investment strategy, I have been doing this for years
(10+) and have fared well in this recession. Less worry and excellent gains.
Make sure you always bleed a large sum of money slowly into the market, so you
will not be caught at a specific point price-wise.

See: <http://kd7yhr.org/bushbo/coffeehouse_investing.md> for pointers

------
jonursenbach
Start over.

------
jyothi
Buy gold.

~~~
releasedatez
Ya, you see a lot of advertisement about buying gold because it goes in
opposite direction with the stock market. Maybe that can be a portion of your
diversification.

~~~
vaksel
actually that "we buy gold" company is nothing but a huge scam, they give you
less money than you would get from a pawn shop

~~~
releasedatez
what I meant was for @newseller to look into the possibility of investing into
gold.

Typical "buy low (super low) sell high" strategy is probably making "we buy
gold" company a lot of money. They even have the money to buy Super Bowl ads.

------
tigerthink
<http://singinst.org/>

------
alexandermimran
You should read some good books and make your own decision. Worst thing that
could happen is you are hurt by inflation which can't happen nearly as fast as
a stock crash...

------
nihilocrat
As everyone else says, save the lion's share of the money, and act like
nothing happened. Ensure that you will never have to work at a job if you
don't like it.

------
nickfox
I haven't made that much at once before but I have made a considerable amount
and I have this one bit of advice. Make sure you don't lose your work ethic.

------
mkuhn
Invest against the trend. And don't invest everything into one thing,
diversify. As a last piece of advice I would suggest to keep some liquidity.

------
len
buy gold. bullion if you can instead of futures.

no currency is stable at this point. hyperinflation will wipe out a lot of
wealth.

~~~
rscott
Not to be a bastard, but hyperinflation is a very rare and distinct
phenomenon, not just to be thrown around when the economy turns sour. Real
hyperinflation is occurring in Zimbabwe, not Canada or the US.

~~~
jacquesm
It occured in Poland not that long ago, and there is a chance it will happen
in other countries, if oil transactions would switch to another currency I
wouldn't be surprised to see such a thing happen to the US dollar. There are
some people out there that say that the Iraq war was to stop the US dollar
from crashing because Saddam was going to switch to the euro for his oil
transactions.

I know that's typical conspiracy nut fodder, but it may have a kernel of
truth.

------
dag
1\. Get in great shape. 2\. Help the poor.

------
gcheong
Try having a look at the Motley Fool website.

www.fool.com

------
lr
Buy lots of gold and silver! But yes, diversify (savings, CDs, stocks, bonds,
etc.).

------
teyc
Set aside some money in Kiva.com, it'll be the happiest investment you ever
made.

------
kbob
Four chicks at once.

~~~
akkartik
I want bans for everyone who voted parent up (+18 at time of writing).

~~~
kirubakaran
Or just disenfranchise them.

------
seshagiric
Talk to Randy Komisar and ask what to do.

------
look_lookatme
Two chicks at once.

------
gorillak
Give it to me. I will put it to good use. Promise.

------
spassky1
blow it back into another startup

------
judegomila
invest in heyzap.com (haha)

------
access_denied
I'd say being a land-owner is a good move for various reasons. Seriously, do
you think the situation in terms of foods and water supply is going to get
better in the next decade? [http://www.kottke.org/09/02/fruits-and-vegetables-
getting-le...](http://www.kottke.org/09/02/fruits-and-vegetables-getting-less-
healthy) (I don't say, put all your eggs in one basket.)

------
kingkongrevenge
Many eggs, many baskets.

Make sure some of your wealth is out of the reach of your government. Bullion
stored in switzererland or the channel islands is good for this.

Learn how to hedge with options. Puts were quite cheap before the crash.
People who had insured their positions are doing fine. This occurs to
remarkably few.

------
c00p3r
You can invest in development of a family hotel somewhere in Hymalayan
trekking areas, like Nepal, Sikkim or West Bengal. Actually you can build two
or three of them. =)

------
UsNThem
Invest in Madoff :D

------
abhishekdesai
invest in my startup <http://rivals4ever.com> ;)

------
mikeyur
First off, send me some cash. If you don't know what to do with it, give it to
me (I'm a fellow canadian, eh).

Next thing would probably be to spread it around in some high-interest bank
accounts and make sure you don't go over the insured amount. But I'm not an
expert.

Congrats on the sale and good luck figuring out what you're going to do with
all that cash.

------
mrtrosen
You could invest in a nice consulting company, <http://www.lab305.com>, a
couple guys trying to get things moving with some very good prospects in the
works :) Then we could all be cashing out for another 2 million next year?

~~~
fnazeeri
This is exactly what you should NOT do!

~~~
mrtrosen
ouch ;) Of course, i was being facetious. Listen to a wise man like Warren
Buffett. Take a certain amount of time, make sure you have a strong financial
advisor, and make the money grow. The first million is the hardest, right?

