What Would You Do With a One Million Dollar Windfall?

From the Recaps Archives originally posted on 4/30/2019

What Would You Do With a One Million Dollar Windfall?

Post From  Financial Pilgrimage  April 29, 2019

How many of us have thought to ourselves, “If I only had a million dollars all of my financial troubles would go away…”?

I know I have.

A million dollars is a tricky amount of money to think about. While it can be life changing money, it’s probably not life changing enough to live off for the rest of our lives without some work. 

The reality is that if most people received one million dollars, half of the money would be gone to taxes, a few hundred thousand dollars to paying off debt, and the rest spent on expensive cars, vacations, etc.

I remember being five-years-old and even $5 seemed like one million dollars at the time. As little as $1,000 seemed like a million dollars when I was a teenager. Now that I’m older, one million dollars doesn’t quite seem like one million dollars (if that makes sense).

For the sake of simplicity, we’re going to assume this one million dollar windfall is tax-free. Now the question: What should we do with the money? The easy and boring answer is put the money in a brokerage account, invest it in something safe, and apply the four percent rule.

The four percent rule is a rule of thumb used to determine the amount of funds to withdraw from a retirement account each year, while limiting the chances of running out of money (thanks, investopedia). This would provide you with $40,000 of income per year without lifting a finger.

For the purpose of this article, let’s think through the options a little more. Instead of dropping the money in a low risk index fund, let’s invest in something more interesting such as buy and hold real estate.

Our One Million Dollar Windfall
One Million Dollars Remaining…

First, 10% of the one million dollar windfall would go to charitable causes, so there goes $100,000 right off the top. It’s easy to give away six figures of virtual money, and I hope we’d have the discipline to do the same if this situation ever occurred.

The majority of this money would go to causes and organizations where we already contribute. However, we’d use a good chunk of it to give freely when the occasion called for it.

We could pay for the meal of the table next to us at dinner, buy groceries for the family behind us at the store, or make a donation to the gofundme page of someone who is truly in need.

I personally get a lot of satisfaction from helping others and we would have fun with giving away this money. In fact, I think the financial independence community could make a huge impact on the world with a bit more generosity.

To continue reading, please go to the original article here:

https://financialpilgrimage.com/if-i-received-a-1-million-dollar-windfall-i-would/