4 ms·

Unsurprisingly lots of people have been in similar situations, so there is a Wiki article on one of the Internet's best personal finance and investing websites:

Unsurprisingly lots of people have been in similar situations, so there is a Wiki article on one of the Internet's best personal finance and investing websites: "Managing a windfall" https://www.bogleheads.org/wiki/Managing_a_windfall https://www.bogleheads.org/wiki/Managing_a_windfall "Do nothing rash. Set aside one year's living expenses[note 2] and place the rest of the windfall into low risk investments (FDIC insured accounts, money market funds, treasury bills) for one year. As it may take as long as five years for the windfall recipient to adjust to a new life, this pause provides a chance for emotions to cool, helps avoid impulsive behavior, and, if warranted, allows the recipient time to put together a team of professional advisers."

lukego 8y ago
You should also be able to find plenty of discussion threads in the Bogleheads forum started by other people who have found themselves in this position over the years.
- masklinn 8y ago
  IIRC Reddit also has a bunch such threads, I want to say in /r/personalfinance https://np.reddit.com/r/AskReddit/comments/24vo34/whats_the_happiest_5word_sentence_you_could_hear/chb4v05/ https://np.reddit.com/r/AskReddit/comments/24vo34/whats_the_... is a pretty famous series of comments.
thehnguy 8y ago
Agreed with the bogleheads suggestion. I’m a lawyer who does some consulting to people in similar situations, and the mistake that everyone makes is thinking that because it’s a lot of money somehow it has to be treated differently. This is just plain wrong. Resist the urge to hire a fancy money manager or do anything different beyond a celebratory dinner with your family. Don’t tell anyone beyond your wife and very trustworthy family about this. Otherwise,you will quickly have lots of “friends” and family members who “love” you. Going forward with work is a personal decision. Obviously, you don’t need to. A tried-and-true conservative investment approach will pay you sufficient income for the rest of your life (and our kids through college, and everything else). But it’s tough to stop working. Anecdotally, I’m about half retired (on a lot less money) and it’s a big challenge. I’m getting long winded. For now, resist the urge to do anything special, anything too different.
- pmart123 8y ago
  "Don’t tell anyone beyond your wife and very trustworthy family about this. Otherwise,you will quickly have lots of 'friends' and family members who “love” you." I completely agree with this if he had won the lottery. Money found is different than money earned. In this situation though, the OP picked the right startup, put work and effort into making it successful, and was financially compensated for the risk and effort he took. I would say he should own his success; the money is rightfully his.
  - b_tterc_p 8y ago
    It’s not really about owning anything. It’s thieving friends of family who will hold it against you if the wealth is not shared on account of your apparently deep social bond, if not trying to wrings it out of your wallet outright.
    - pmart123 8y ago
      I think in practice though, if you act that you "earned it", it is much harder for people to assume they can ask you for it. You here a lot about lottery winners going broke, but you don't hear as much as startup employees on exit eventually going broke. This may be just a result of education and income levels, but I also believe that people don't mind asking you for money if it seems like it came to you through luck and not effort.
      - ansy 8y ago
        The justification isn't that OP came by the money unfairly, it's that because he has so much he doesn't need it as much as his friends and family need it. "Oh, can I get $20,000 for my business idea? Will you help send your niece to private school instead of state school? I'm paying 25% interest on this credit card debt, can you give me the money to pay it off?" etc etc. Everyone from his parents to that one guy he knew in college will want to solve their "small" money problems with OP's windfall, because to them he'll still be a millionaire and never have to work again. What eventually happens is OP will have to start saying NO to people then they will resent him and it will change the dynamic of their relationship. Or he could just keep his finances to himself and not bring this on himself. I'm not saying he shouldn't be able to help anyone who really needs it. It's just in his best interest to not advertise how much he really has to other people.
phkahler 8y ago
>> ...allows the recipient time to put together a team of professional advisers... Yeah, because it takes a TEAM of people getting paid to figure out what to do with money. I could accept one financial advisor though I don't know how to select one, but a team sounds a bit like vultures ;-)
- kgwgk 8y ago
  Apart from investment advice you'll also need legal advice to know how to comply with your fiscal obligations and structure things in the best possible way (including estate planning). So you need at least an accountant and a lawyer. The investment part is much less urgent.
- freddie_mercury 8y ago
  Estate attorney, tax attorney, CPA, and possibly a financial advisor. Doesn't sound crazy for someone who just got $100 million from selling their business.
- toastermoster 8y ago
  I agree. A financial guru I've listened to off and on for many years is Clark Howard and he suggests always using a financial advisor that you pay outright with fiduciary responsibility. His favorite recommendation is to talk to someone from the Garrett Planning Network. If you aren't paying upfront you are paying far more in bad investment advice that isn't designed to make you money. Think bad investments that offer kickbacks to your "advisor."
  - zip1234 8y ago
    Yes, if they get a commission from what they sell you, they do not have fiduciary.
  - lukehack 8y ago
    For those who don't know, a fiduciary is legally obligated to work in your best financial interests, so it's pretty important that your financial advisor is one.
zawerf 8y ago
> Unsurprisingly lots of people have been in similar situations According to this article[1], you need $8.4 million to be in the top 1% of net worth so 1 out of 100 HN lurkers can probably also give useful first hand advice! (assuming being rich doesn't make you less likely to visit HN) [1] https://economix.blogs.nytimes.com/2012/01/17/measuring-the-top-1-by-wealth-not-income/ https://economix.blogs.nytimes.com/2012/01/17/measuring-the-...
- shaklee3 8y ago
  Judging by the already pre-selected crowd here, it's likely more than 1/100.
- georgeecollins 8y ago
  That is across all ages and I would guess that few here are seniors. At 35 the top 1% is $2.3m. So many here may be more wealthy than you realize. https://www.financialsamurai.com/the-top-one-percent-net-worth-levels-by-age-group/ https://www.financialsamurai.com/the-top-one-percent-net-wor...
ziont 8y ago
seems like a great problem to have a source of depression for some.

lukego 8y ago

You should also be able to find plenty of discussion threads in the Bogleheads forum started by other people who have found themselves in this position over the years.

masklinn 8y ago
IIRC Reddit also has a bunch such threads, I want to say in /r/personalfinance https://np.reddit.com/r/AskReddit/comments/24vo34/whats_the_happiest_5word_sentence_you_could_hear/chb4v05/ https://np.reddit.com/r/AskReddit/comments/24vo34/whats_the_... is a pretty famous series of comments.

thehnguy 8y ago

Agreed with the bogleheads suggestion. I’m a lawyer who does some consulting to people in similar situations, and the mistake that everyone makes is thinking that because it’s a lot of money somehow it has to be treated differently. This is just plain wrong. Resist the urge to hire a fancy money manager or do anything different beyond a celebratory dinner with your family. Don’t tell anyone beyond your wife and very trustworthy family about this. Otherwise,you will quickly have lots of “friends” and family members who “love” you. Going forward with work is a personal decision. Obviously, you don’t need to. A tried-and-true conservative investment approach will pay you sufficient income for the rest of your life (and our kids through college, and everything else). But it’s tough to stop working. Anecdotally, I’m about half retired (on a lot less money) and it’s a big challenge. I’m getting long winded. For now, resist the urge to do anything special, anything too different.

pmart123 8y ago
"Don’t tell anyone beyond your wife and very trustworthy family about this. Otherwise,you will quickly have lots of 'friends' and family members who “love” you." I completely agree with this if he had won the lottery. Money found is different than money earned. In this situation though, the OP picked the right startup, put work and effort into making it successful, and was financially compensated for the risk and effort he took. I would say he should own his success; the money is rightfully his.
- b_tterc_p 8y ago
  It’s not really about owning anything. It’s thieving friends of family who will hold it against you if the wealth is not shared on account of your apparently deep social bond, if not trying to wrings it out of your wallet outright.
  - pmart123 8y ago
    I think in practice though, if you act that you "earned it", it is much harder for people to assume they can ask you for it. You here a lot about lottery winners going broke, but you don't hear as much as startup employees on exit eventually going broke. This may be just a result of education and income levels, but I also believe that people don't mind asking you for money if it seems like it came to you through luck and not effort.
    - ansy 8y ago
      The justification isn't that OP came by the money unfairly, it's that because he has so much he doesn't need it as much as his friends and family need it. "Oh, can I get $20,000 for my business idea? Will you help send your niece to private school instead of state school? I'm paying 25% interest on this credit card debt, can you give me the money to pay it off?" etc etc. Everyone from his parents to that one guy he knew in college will want to solve their "small" money problems with OP's windfall, because to them he'll still be a millionaire and never have to work again. What eventually happens is OP will have to start saying NO to people then they will resent him and it will change the dynamic of their relationship. Or he could just keep his finances to himself and not bring this on himself. I'm not saying he shouldn't be able to help anyone who really needs it. It's just in his best interest to not advertise how much he really has to other people.

phkahler 8y ago

>> ...allows the recipient time to put together a team of professional advisers... Yeah, because it takes a TEAM of people getting paid to figure out what to do with money. I could accept one financial advisor though I don't know how to select one, but a team sounds a bit like vultures ;-)

kgwgk 8y ago
Apart from investment advice you'll also need legal advice to know how to comply with your fiscal obligations and structure things in the best possible way (including estate planning). So you need at least an accountant and a lawyer. The investment part is much less urgent.
freddie_mercury 8y ago
Estate attorney, tax attorney, CPA, and possibly a financial advisor. Doesn't sound crazy for someone who just got $100 million from selling their business.
toastermoster 8y ago
I agree. A financial guru I've listened to off and on for many years is Clark Howard and he suggests always using a financial advisor that you pay outright with fiduciary responsibility. His favorite recommendation is to talk to someone from the Garrett Planning Network. If you aren't paying upfront you are paying far more in bad investment advice that isn't designed to make you money. Think bad investments that offer kickbacks to your "advisor."
- zip1234 8y ago
  Yes, if they get a commission from what they sell you, they do not have fiduciary.
- lukehack 8y ago
  For those who don't know, a fiduciary is legally obligated to work in your best financial interests, so it's pretty important that your financial advisor is one.

zawerf 8y ago

> Unsurprisingly lots of people have been in similar situations According to this article[1], you need $8.4 million to be in the top 1% of net worth so 1 out of 100 HN lurkers can probably also give useful first hand advice! (assuming being rich doesn't make you less likely to visit HN) [1] https://economix.blogs.nytimes.com/2012/01/17/measuring-the-top-1-by-wealth-not-income/ https://economix.blogs.nytimes.com/2012/01/17/measuring-the-...

shaklee3 8y ago
Judging by the already pre-selected crowd here, it's likely more than 1/100.
georgeecollins 8y ago
That is across all ages and I would guess that few here are seniors. At 35 the top 1% is $2.3m. So many here may be more wealthy than you realize. https://www.financialsamurai.com/the-top-one-percent-net-worth-levels-by-age-group/ https://www.financialsamurai.com/the-top-one-percent-net-wor...

ziont 8y ago

seems like a great problem to have a source of depression for some.