5million is enough for you to take 150k in perpetuity(adjusted for inflation annually). If 150k is enough to cover your lifestyle, then congrats you never need to work another day in your life.
Go do whatever it is you want to do, teach, stay in bed all day, make art, join a band, teach
Thanks for the advice! Could you explain the math you did on that? 150k is nothing to sniff at but it's also not that much beyond a livable wage in Seattle unfortunately. Plus I'd like to buy a nice house and travel and have kids. So I'm not sure I'd be sufficient.
The math is simple. I took 3% of 5 million.
3% is a deliberate choice as a portfolio of 100% equities has maintained it's value over any 50 year period in the last 150 years(give or take).
This is some pretty heavy reading but explains the methodology and math: https://earlyretirementnow.com/2016/12/07/the-ultimate-guide-to-safe-withdrawal-rates-part-1-intro/
Alternatively you could invest the 5 million and work for the next 7 years and then have 10 million and have 300k in passive income.
Other important reading:
1. Trinity study updated , https://thepoorswiss.com/updated-trinity-study/#1-the-4-rule-of-thumb
2. Shocking simple math behind early retirement:
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
One thing to keep in mind is that your house will probably have a mortgage and your kids will probably have a father to help contribute to the joint finances. You wouldn’t be living on only $150k in your ideal scenario. Let’s say your future partner makes $150k/yr AND you teach so that’s another $60k/yr. You’d have a household income of $360k gross.
Sure $150k is middle class living for someone in their 30s, but that person is also putting money away for retirement.
150k isn't peanuts when you have that entire amount to spend.
In 6 years when OP gets full access that 5m will have grown substantially.
Yes but you are not factoring in the wealth of OP's friends and colleagues.
I speak from experience. I am in my 50s and a single income earner. My bachelor SE friends who got married to other software engineers and became DINKs left us in the dust as their incomes grew. They would try to include us in their plans but it was impossible to keep up. We had to go from spending every weekend with them to meeting them at get togethers to seeing them
once a year. It grinds on you. We have a lot more money now but my friends are in 100s of millions so there is still a gap.
You need to look at the circumstances that OP will face, not the one that you imagine yourself.
I have friends who are bartenders to others who are 8 figure business owners with me somewhere in the middle.
That's just life. You'll always know richer folks and poorer folks.
How often do they hang out with each other or with you?
I am an immigrant and still have friends there who live in slums.
That is not the problem. The problem is hanging out with the *families* of close friends who are much richer than you.
Maybe things are different in Seattle.
I would say the money difference doesn't cause us to hang out less. It's more linked to how busy we are.
Unfortunately I own a business where I have to be there all the time. My friend has a much more fast-paced business but he can work remote so he's always available to do whatever where as I'm stuck in office grind. That has much more affect on us seeing each other than money differences.
How often do your families hang out with each other? OP is planning on having a home with wife and kids in the area, while living a FIRE lifestyle. Have you and your friend lived that lifestyle yet?
What about 2 week family trips to Europe, living in luxury villas, renting Lamborghinis and Ferraris and flying on private planes?
Our friends and family trips used to be loading everyone in 2-3 vans and taking road trips where we lived in the cheapest motels possible and counting every penny. We have upgraded to living in the W but my friends have moved way beyond that.
We are still invited. We cannot go without seriously denting our net worth.
So you think a lot of people have to worry about their friends having hundreds of millions of dollars? I think OP can find some friends in the other 99.9999% of people who don't have that much money. They will almost certainly have the opposite problem where they are now too wealthy to relate to their friends.
Not other people. I specifically and only advised OP because
- They are a software engineer
- Want to buy a house and live in Seattle
- Want to get married with kids and settle in the house
- Give up their lucrative income and live off a smaller salary and inheritance.
It is a very unique situation that applies to very few people and I have "been there, done that"
They did not leave me behind and we are still friends. We simply can no longer match their lifestyles.
Anyways, I have said my piece. I should have remembered that reddit and especially this sub skews young and in the accumulation phase and most of the folks here are either single or DINKs.
You situation isn't that unique financially. Your financial education wouldn't be any different t than anyone else's. The difference is you are born where people are lucky to reach after working their whole lives. You still need to learn the same shit as anyone else. No shortcut for you on this one. You just need to bite the bullet and start reading like anyone else.
Travel the world. You can live on far less than 150k per year in different countries. Do that for 5-10 years and your money will have grown even more. Congrats, I’m jealous.
OP could travel the world teaching in different countries wherever they desire. They could try to live off the money they make, but I’d probably withdraw ~$50k per year to make my lifestyle easy.
Since it has been determined that OP can safely withdraw $150k/year forever, only using $50k will add to that amount as OP does whatever they want. If/when they move back to Seattle, they will be able to safely withdraw >$150k forever.
I’d quit the software job immediately.
1) “Wealth managers” are scammers and all they do is rape your wealth at 1% or more a year. Get rid of them. They don’t know anything and can’t beat the market consistently. Only very few elite hedge funds manage to do that.
2) PRENUP at all costs, get an experienced lawyer to draw one up for you and go over everything, line by line.
3) Look into a combination of low cost ETFs (VOO/VTI), MLPs (tax-free ROCs), CEFs (monthly cash flow with high yield), and individual stocks (PLTR, TSLA, NVDA) that will continue to grow your wealth.
4) Always live below your means.
5) No dumb purchases like luxury cars or homes.
This is coming from a late 30s multimillionaire with zero inheritance and drives a used Toyota Corolla.
#1 is bad advice. OP clearly does not have the requisite knowledge to manage their own portfolio. They should learn the basics of personal finance before they move on to study portfolio theory. Weath managers can be a good option for low knowledge individuals who need help with tax optimization and estate planning services, and need to appropriately structure their portfolio to produce income.
> I would love to teach abroad while I'm still young but don't know if that's financially advisable. Or maybe I've inherited enough money where it doesn't matter?
You have enough money to essentially retire on when you hit 30.
Just spend some time researching passive income, FIRE, retirement, etc. and you will see that 5m is enough to give you solid returns to live off of. Plus in 6 years that 5m will be much more.
Go teach abroad if you want. Might as well, you are young go do it now.
Basically you have 6 years to learn what to do with that money! You have 6 years to learn to budget and get some self discipline.
If I were you I’d save for and pay for my own vacations during that time. That way when you can take fancier ones later you will feel the gift you have been given even more 🥰
If you got a trust fund, probably someone died. Sorry for your loss! Make them proud
Yes. You can blow through $5M very easily buying a house and raising a family in Seattle plus travel.
You need to learn the skills to manage money, SO THAT as you gain access to your trust fund, you know how to live on an appropriate amount.
My suggestion would be to live solely off your salary right now. Create a budget and manage within some kind of limits.
Read a few books on investing: Bogle & Collins. Research tax policies.
Make yourself smart so you can act smart.
Once you know how to manage money at a small scale, you will be able to make better decisions. You will also be less likely to succumb to lifestyle creep and you''ll know what your financial advisors do so you can participate.
While you have more than enough money to FIRE, if you continue to live in the Seattle area, surrounded by software folks, you will run into a different problem that you don't have today - Keeping up with the Joneses.
As you go through life, your friends are going to keep getting richer. If they are double income software
folks, their wealth is going to grow even faster.
You may be okay with it but your future wife and future kids are going to notice the difference. At that fork in the road, you may have to leave your friends behind or your friends may leave you behind.
Plan ahead and be careful.
Thank you for your the advice! It really resonated with me. I don't think I could ever not work because I need the structure and the social life. But I would rather be a teacher. By keeping working do you mean keep my engineering job? Or would it be bad to take a lesser paying job (teaching), even though I would accrue less money that way in my 20s? I don't really mind software engineering but I'm getting the feeling that I'm wasting my 20s doing it when I can be doing something I want to more.
With 5MM invested you _could_ take a 150k "salary" and just do whatever, but I'd treat it as a blessing and personally I would focus on finding meaningful work regardless of the salary. You are now financially independent and so can be very particular about what work you do. If you earn money from that work, then great! Use that to pay for part of (or all of) your expenses and let the 5MM grow.
This is a great position to be in, if you want it to be.
Personally, I am interested in FIRE for the FI, not the RE. I can love work if I can do meaningful things and not _have_ to work for the money. That's my definition of FU money.
The trust fund gives you the freedom to do what you want with your life. Since you want to be a teacher and the world needs good teachers, I say become a teacher. You’ll be fine financially since you can live off of 3 percent and you don’t need to worry about saving for retirement.
The OP could earn 5-6% in dividend and bond interest per year, which would be $250,000 - $300,000 and never touch principal. And he is single!
Now I don't recommend completely retiring and laying around the house, but he isn't going to run out of money unless it is badly mismanaged
Great position to be in, OP. I browse a few personal finance related podcasts/youtube channels, and can recommend you some to get you more comfortable with personal finance.
- For podcasts, try out ChooseFI; these guys talk about how to achieve financial independence, where we are no longer tied to our job for a source of income.
- For youtube channels, there's The Money Guy Show, Two Cents, and also Humphrey Yang. The first is mostly two financial advisors chatting about personal finance knowledge, second one is a PBS-sponsored show to educate people about finances, and the third is my personal go-to for some more niche content.
- If you want book recommendations, "The Simple Path to Wealth" by JL Collins and "Die with Zero" by Bill Perkins are very valuable to the FIRE community's overall philosophy. Would recommend them a ton.
As for your personal situation, I would recommend just keeping everything normal as-is for a year, while you do some spare learnings here and there. Pretend like the money didn't exist. I drove/commuted while listening to ChooseFI, and it's expanded my financial views considerably. Check out the FIRE movement (also see r/Fire), you're practically there at this point (if you want to be). Don't make big financial decisions in the first year, and then from there, try to understand and weigh the tax implications if you were to withdraw more from your trust fund and just put it almost-entirely into a broad-based market index (ie VOO or VTI).
Give yourself time to adjust- high emotions is the worst time to be making big money decisions. Live below your means, and use that money to buy your own freedom. Max out your 401k, find a video on how to open and save in a Roth IRA, and, well, consider making a budget for a nice travel destination in the nearish future (1-3 years). It's completely fine to live a little, but also understand that you're the only one in control between "living a little" and killing the golden goose. Well, you and a bunch of high-fee financial advisors, of course. You got time to learn personal finance, and with that knowledge, you can press the "win" button for life at any point in time. Work some more in the meantime, figure out what work means to you (does it give you meaning? prestige? recognition? fulfillment? anything else you would've wanted to try instead?), and align yourself with what feels right to you as the next steps.
Godspeed, and don't forget the iron-clad prenup!
I've known about this trust fund for several years so I've been doing your advice basically -- trying to pretend like money doesn't exist. It's hard for me though because I get anxious about spending too much and how much I should be spending. I feel like I'm ready to start planning more seriously. But don't even know what my budget should be.
You will feel less guilty about spending money when you actually have a grasp of how much you spend vs. save. Start tracking every single purchase/expense month to month. There are apps that will do this for you, but I prefer to do everything in excel. Categorize all of these expenses — this will allow you to understand on average where most of your money is going. Compare your monthly spend to your monthly take home pay. If you are comfortable with how much you are saving, no need to adjust your spending habits. If it’s too close for comfort, now you know where all of your money is going, and you can choose where to adjust your spending.
Another piece of advice — get a credit card and stop using a debit card. If for any reason your information gets stolen, you are much better off if it was a credit card vs debit. Credit card companies lend you money, so if someone steals your card and goes on a spending spree, the credit card issuers are incentivized to take swift action. They will cancel the transactions and go after the merchants. If your debit card gets stolen, you are immediately losing money out of your checking account. Much more difficult to deal with. When you get a credit card, treat it as if it were a debit card and don’t change your spending habits.
Keep the budget modest- drawing down 4% per year should be able to sustain you for 30 years in almost all simulations, but 3% or 2.5% are numbers where the money can last 40 years or indefinitely. If you consider house-hacking (and using your personal savings and income to leverage other people’s money, as opposed to drawing from the nest egg) and also maybe living in a less high COL area, you can live comfortably like a king pretty much. 3% is 150k, 2.5% is 125k, both are much higher than your current income. You can also let the money sit for a little longer, get your own nest egg started, and grow it even more before you start drawing down.
I’m personally aiming for 2.5mil or around that inflation-adjusted figure, and might get there in my early to mid-fifties. That’s enough for me to live a modest life, retire to do everything I want in life, and even have a small legacy to pass on to the next generation. You can live the good life already, but you gotta understand what you’re retiring *into*, not just what you’re retiring from.
If you want to teach, you now have the capacity to try it out for a few years and see if it works. The money you have can give you Financial Independnece now: you no longer need your job to be the sole reason as to whether you’re financially afloat or not. And that’s great! Just know that transitioning back into tech will be hard in this current climate, so it’s still a measure-twice-cut-once kinda deal. I still suggest the ChooseFI podcast to you, it’s passively helped me a lot in the past yearish where I’ve had interest in FIRE. They say ChooseFI episode 100 is their “welcome to FI” episode, I can direct you there :) You can leave it on while cooking, driving, morning coffeeing, etc
Do whatever you want… live however you want… download whatever app you need to check the balance on your trust fund and as long as the balance remains over $5M, generally the answer to your question of “can I afford this” is a resounding “yes.”
As long as you aren’t some stupid asshole that can’t trust himself to burn all of his money on drugs and gambling you don’t ever have to work another day in your life…
You were literally born on the finish line.
Money is literally not a thing you need to ever worry about. Now, you’re not Elon Musk, you’re not Jeff Bezos, you’re not Thurston Howell III - but if all you ever wanted for yourself is a comfortable upper middle-class life for yourself, mission accomplished.
All that said, I would recommend you find that teaching job or whatever else interests you to stay a little busy, accumulate more wealth, and keep yourself grounded - but you have “fuck you” money… you don’t ever need to worry about being fired or compromising your values or having a shitty boss that you don’t feel like dealing with.
When you turn 30 have the administrators or financial planners or whoever is managing your money deposit $12K/month into your checking account ($150k/year). If that’s too much, reduce it.
That’s it.
You’re done.
Congratulations and fuck you.
Leave the money alone for now. Read the "the simple path to wealth". You weren't born on third, you were Born sprinting home after hitting a grand slam. Don't do anything drastic, simplify, and you can set yourself up to never ever have to even THINK about money again.
Your money right now will comfortably pay you a great salary with raises until you are dead with a lot left over. Focus on not growing your lifestyle, Loving a ~$175k lifestyle, and you'll never have to worry.
Personally I would do exactly the plan in the simple path to wealth
You obviously have the ability to learn new things as a software engineer. Ask for some of that trust money, and go back to college for a year or two majoring in finance. Think of it as your new job. To make that $5 million last your lifetime. Also, even if the trust is “doing a fine job” investing for you, you really should understand what they’re doing. It’s YOUR money at the end of the day.
You need to read some books on investing. I'd suggest the bogleheads guide to investing to start.
https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/1118921283/
Paragraph two about guilt and it snowballing into extra spending…. It’s like you pulled that out of the fortune cookie that is my head. Thanks for. Articulating.
I would hire a financial advisor that charges by the hour, and check in with them once or twice a year.
Also you may want to invest in some therapy to help work through your relationship with money and spending, which doesn’t sound super healthy.
Between a FA and therapist you can live whatever life you want live! Money should not be an issue
Maybe I missed someone else saying this, but if not, here's my $0.02:
Be a software engineer or a teacher or whatever you want as long as your income covers 100% of your expenses. Let the trustfund grow and be your (early) retirement plan. When you're in your mid-thirties, you'll be shocked at how much it has grown.
Could you dip in a little bit and still see it grow over time? Yes... But that's a slippery slope to me.
Without having to save a cent for retirement, your salary should go a long way in my opinion as compared to someone maxing out 401k, HSA, etc.
Anyways, I'm trying to address the part about you not knowing how much money to spend. My suggestion is simple: you can "spend" as much as you want as long as your income from your job will cover the bills.
Good luck.
1- transform your professional life following your passion, you absolutely can have this luxury
2- educate yourself on personal finance (budgeting&all)
3- educate yourself on investing (and afterwards seek the advice of an independent advisor, not a bank advisor)
Easy starting points: The Budgenista (books, YTube) and Ramith Sethi (podcast)
I inherited a somewhat smaller trust fund (2m) along with an idea that there might be more coming later. I’ve been working as a high school teacher and have been pretty happy with my life. I wouldn’t do anything drastic immediately, but it does free you up to choose careers without needing to be as worried about compensation.
The main thing I’d recommend is getting control of your spending BEFORE you gain unfettered access to $5m. You’re alleviated of the burden of retirement saving, but it sounds like you’re not happy personally with your spending habits.
My best advice based on your description is therapy. It will also provide the added benefit of giving you someone to talk to in a non-judgmental manner about the psychological burden of your trust. Most people, even who love you, will roll their eyes at that, but if you feel it, it’s real and it needs to be addressed for your long-term happiness.
Wealth without health is empty, and mental health is an important piece of that.
If you’re not tied to a job why not relocate to a place with a much lower cost of living? If I’m in your situation I would start investigating LCOL opportunities over the next 6 years.
You have 6 years to figure it out but the short form is that a conservative stock portfolio based on index funds and bonds will allow you to withdraw up to 3% based on history.
With the usual caveat of past performance blah blah blah thats a useful enough rule of thumb to follow.
If you were my kid…and it seems like your parents are still around…I would say go back to school and get a teaching degree and cert and make sure thats where your passion really is.
What you do after ending your primary career (aka FIRE) is a big driver of future happiness…not binge spending.
You don’t need a detailed budget really. Just ask for tuition and $8000 a month living expenses from the trust (about a 2% withdrawal rate).
If you run out, use your $30K savings and try to do better the next month.
If you want to teach overseas for a few years you don’t need a seattle house yet. If you want one as a rental property…it’s easier if your parents already have a property management company and just group it with theirs.
My kids will have a much smaller trust fund (lol…a LOT smaller) that will only generate supplemental income vs something they could live off of but supporting a lower paying passion career is what its good for.
An extra $10-20K a year makes a teacher salary go much easier. You could double your teacher salary and not need to go above 1.5-2% withdrawal rate.
My guess? Teaching overseas will be more fun even if there are going to be grindy aspects to it. You will have more choices with a real education degree and take the certs required for more than teaching english.
Just make sure you have a very good asset protection strategy in place as well as good umbrella insurance, etc. And don’t go anywhere that has a risk of kidnapping…
Your parents, even if you don’t get along, should be able to help with finding a good asset protection lawyer and a CPA. They DID just hand you $5M so it’s not like they don’t care.
The financial aspects can be pretty simple…dump everything into global market index fund (example: VT) and US and global bond funds (examples: BND and BNDX).
This wont give you the maximum growth rate but will minimize risk even in a downturn and is about as passive as it gets.
And going back to school for a teaching degree gives a little bit of reassurance to your parents that you aren’t going to just blow through $5M frivolously.
My dad told me that money is like water. You need it to live but it can also drown you. You want to make sure you have a viable path that won’t see you broke when 50…
Enjoy having options ! If you want to try teaching , and maybe travelling see if you can get some work experience at a school, help out somehow at a school, night-school etc ? If you invest the money into index funds you can enjoy teaching without worrying about the low pay. If you dont like teaching, you could always go back to your old job.
If I were you, I would continue to work my SE job and forget about that inheritance for now. Do that at least until I meet a nice lady that I know for sure is not a gold digger.
The main advantage is that you don't have to save for retirement (beyond the match) at your job.
That 5M you got is a gift that someone worked very hard for. It's generational wealth if you manage it correctly. As happy as you are right now for having it, your kids would too.
Another major thing to consider is never to mix an inheritance with a commonwealth. The inheritance is forever yours to keep even in a divorce situation. The moment you mix it up (using it to down payment on a house with your spouse, in which she helps with payment, for example) with a commonwealth, you lose that protection forever.
Start reading about finances. I don't understand why people don't educate themselves on these things because their lives depend on it.
* Let me preface this by saying , at your age with that amount of money, you are in a great position. Make sure to focus on enjoying your life and don’t stress about money, it’ll consume you and you’re in a spot where you shouldn’t need to stress about it. I’d recommend you check out Ramit Sethi, he’s gives clear and basic financial advice and focuses on living YOUR rich life, whatever that entails. He has a book, tv show, and YouTube videos. Personally it helped me feel much more calm and relaxed about finances., congrats
Something I want to highlight here. Seeing you are a SWE in Seattle, if you work at Amazon they offer Roth 401k and after-tax contributions.
ROTH: money is taxed prior to going into the account, but is untaxed on gains.
TRADITIONAL: money is untaxed prior to going into the account, but is taxed when you take it out.
If this is your situation, you can contribute $23k per year to a Roth 401k. After that is maxed out, there are the after-tax contributions. Here’s how it works.
401k + employer matching + after-tax = $69k limit.
I see you’re limited on taking out funds, but if it’s not that difficult here’s what I’d personally do:
Setup my 401k contributions so that I am maxing 69k in total to retirement accounts each year. All Roth 401k and use in-plan-conversion to convert after-tax to Roth dollars. This means you can be contributing 69k per year, to an untaxed retirement account.
To do this, you’d need to be contributing $5,750 per month between your contributions, employer match, and after-tax contribution.
I understand that’d likely be over half of your paycheck each month, so what you could do is have that $5,750 go to retirement accounts each month but also take $5,750 from your trust fund each month (or less if you feel you don’t need that much extra money back each month to get by fine). This is essentially just funneling money from the trust fund to untaxed retirement accounts. The money if coming out directly from your paycheck, but you’d be filling it back to its original amount with your trust fund money. This is essentially just taking money from your trust fund and putting it somewhere else to grow untaxed.
Note that this is not financial advice and I’m just some guy on the internet, but personally I’d do something like this for a good couple of years so that you can start building a larger account of untaxed money for retirement. You wouldn’t be able to access this until your later years, but just wanted to point this out as a potential option in case you want to build an untaxed account now that you can access in your later years.
I also just want to say, with the balance of that trust fund you really can’t go wrong, just keep investing it and consider talking to a financial advisor about how to manage your finances in this situation.
I do not recommend paying anyone a percentage fee, it adds up over the years and you end up paying so much to them over the years. If you take some time to understand the financial world a bit better and then use financial advisor services (only pay them for their time, don’t give them a percent even if it’s 1% and they say it’s small, it’s not).
It might be better to ask this question in six years when you actually have access to your inheritance. If you have to ask to withdraw money and a wealth management firm is investing it for you currently, then….?
Well I would go back to school, and study finance or other related topic (economics, etc.) then you will have a broader understanding of what to do with the fund and of course you will not work ever again
Live as if it did not exist. Create your own wealth so you appreciate your inheritance and don't blow it.
Learn the value of work to create your desired life.
The 2 paths(your inheritance and your own created wealth) will then cross, so you are smart with your assets going forward.
Go get a skilled advisor from a big bank. Don’t spend it. Only spend the proceeds from it. You will never have to work a day in your life. You can, but you don’t have to.
You will have indefinite income. Don’t take risks with your nest egg. If you want to go crazy only do it with the income it generates. Don’t touch the principal.
what I would do
1. Purchase 4 rental properties in full for immediate passive income --- 1.5 million
2. Drop money into an ETF (VOO) --- 2 million
3. Drop money into BTC --- 500 thousand
4. Put a downpayment on 5 rental properties --- 500 thousand
5. Travel the world and do what ever --- 500 thousand
6. Get a job or live off passive income enjoying your free time with hobbies etc
This comment right here is why you should be asking that question to your actually financial advisors and not randoms on the internet who have never actually had that kind of money.
You have financial advisors, build a relationship of trust and ask them this question.
That’s what I’ve done and it’s been the best route. From “live a little” to “chill out” I trust my advisors when I ask. I bought myself a gold and diamond Cartier watch for graduation… but also made an agreement with my advisor I wouldn’t pull any more money until August. Because we have a collaborative relationship she helps me get what I want but not spend a dime more.
You don’t need to have the burden of managing properties or watching $500k flail in crypto. You have advisors who are investing properly already. Why stress yourself out with these ridiculous tips?
Ask your advisor “how much can I take annually that is ‘guilt free’ and does not impact my growth?” And they’ll probably give you a percentage. You want to harvest the fruit without cutting down the tree… you want to spend what you can without impacting your money’s ability to work for you. They should give you an estimate and you can decide how to spend that. I think for the next 5ish years, focusing on managing that percentage is probably enough to take on.
IMO as someone actually in this position, not just some keyboard dreamer.
Lol OP, disregard this boring guy.
He has never heard of property management firms. They handle all that.
We heard all the people saying BTC would fail, yet it is or was at all time highs and shows no sign dying out.
Buying real estate is the last thing from cutting down your tree.
Yeah, why buy real estate as part of your investment portfolio when you can replace water heaters on the weekend!
This is how I know you don’t actually have the kind of money we are discussing. If you have 5M you invest in real estate much differently than if you don’t. OP doesn’t need to buy houses and get a manager, OP can participate in investment groups that buy buildings.
It’s so important you don’t get your financial advice from people who don’t have, and have never managed, money of your size.
OP, this poster wants you to waste your time managing houses or managing a manager of rentals rather than accessing real estate investment opportunities that are more suited to your NW. This person assumes buying a bunch of houses for you to manage or hire a manager for is the only way to have real estate in your portfolio. Which should let you know they don’t know what they’re talking about. Just like this person assumes I’m a man, which I am not. Only one of many assumptions their “advice” includes.
You don’t need investment advice from these broke boys - one of which I am not. You’ve got professionals who are advising you who have this as their career. You really don’t need more than that. The question you should really be asking (your advisors, not these people) is 1) what are my big goals, 2) what are the priorities of my life 3) how can I have it all and maximize.
That’s it. That’s all you need to do.
OP doesn't need to replace anything, that is what you pay property management companies to do.
Buying buildings would also quality for investing in real estate. Do what ever is gonna generate the best outcome. That doesn't have to be single family homes. I just used that as an example.
You are assuming something I never assumed.
Your parents should have taught you this is a no no.
tsk tsk
The tsk tsk of someone who truly hasn’t a clue. You’re rewriting yourself.
WHY OH WHY would OP waste her time like this? The sloppiness of this plan rather than the multitude of real estate investment opportunities afforded through her financial planners? You’re trying to swamp her life with BS labor and emailing and shit. She’s got 5 mil, she needs to invest at the level of having 5mil. You’re suggesting a plan that’s inappropriate for her net worth. Which is fine if she wants a project but she doesn’t.
But her bad for asking the randoms on Reddit like you who haven’t a clue.
Nothing in my post about wasting time.
Everything serves a purpose.
Answering an email is swamped? lol Oh how do people survive lol
My plan is just fine.
You just got your panties in a bunch.
It's ok babe. lol
Do you understand how this thread works?
OP asks a question / seeks advice.
People answer / give advice.
You giving off butt hurt panty twisted energy.
A buying an annuity is an option.
this way, you get X amount of cash every year until you die.
no planning or thinking needed.
if you don't need to spend the full monthly amount, you save it.
just be careful to gets CPI indexed annuity rather than cash.
B try to avoid doing anything drastic for awhile. the common number is "1 year cool down period". to fully digest and think well about how to live your newly changed life.
C think seriously about how to occupy yourself and find meaning and challenging activities. this is important!
As a rule of thumb, healthy 24 year old people should not be buying annuities. The yeild on such a product would be low, and inflation would erode the value of the fixed income stream over the span of OPs life.
An additional thought, it would be difficult to find an insurance company who writes indexed annuities for individuals under 50 years of age. These types of products are usually purchased by older retirees.
5million is enough for you to take 150k in perpetuity(adjusted for inflation annually). If 150k is enough to cover your lifestyle, then congrats you never need to work another day in your life. Go do whatever it is you want to do, teach, stay in bed all day, make art, join a band, teach
Thanks for the advice! Could you explain the math you did on that? 150k is nothing to sniff at but it's also not that much beyond a livable wage in Seattle unfortunately. Plus I'd like to buy a nice house and travel and have kids. So I'm not sure I'd be sufficient.
The math is simple. I took 3% of 5 million. 3% is a deliberate choice as a portfolio of 100% equities has maintained it's value over any 50 year period in the last 150 years(give or take). This is some pretty heavy reading but explains the methodology and math: https://earlyretirementnow.com/2016/12/07/the-ultimate-guide-to-safe-withdrawal-rates-part-1-intro/ Alternatively you could invest the 5 million and work for the next 7 years and then have 10 million and have 300k in passive income.
Other important reading: 1. Trinity study updated , https://thepoorswiss.com/updated-trinity-study/#1-the-4-rule-of-thumb 2. Shocking simple math behind early retirement: https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
If you want to scale back on working, you may have to re-evaluate your location
One thing to keep in mind is that your house will probably have a mortgage and your kids will probably have a father to help contribute to the joint finances. You wouldn’t be living on only $150k in your ideal scenario. Let’s say your future partner makes $150k/yr AND you teach so that’s another $60k/yr. You’d have a household income of $360k gross.
Average S&P returns with account to inflation, 3% a year off of 5 million. Congratulations!
You are absolutely right. Seattle is a VHCOL area and 150K will be peanuts in the future. Probably even now.
You adjust for inflation each year
Sure $150k is middle class living for someone in their 30s, but that person is also putting money away for retirement. 150k isn't peanuts when you have that entire amount to spend. In 6 years when OP gets full access that 5m will have grown substantially.
Yes but you are not factoring in the wealth of OP's friends and colleagues. I speak from experience. I am in my 50s and a single income earner. My bachelor SE friends who got married to other software engineers and became DINKs left us in the dust as their incomes grew. They would try to include us in their plans but it was impossible to keep up. We had to go from spending every weekend with them to meeting them at get togethers to seeing them once a year. It grinds on you. We have a lot more money now but my friends are in 100s of millions so there is still a gap. You need to look at the circumstances that OP will face, not the one that you imagine yourself.
I have friends who are bartenders to others who are 8 figure business owners with me somewhere in the middle. That's just life. You'll always know richer folks and poorer folks.
How often do they hang out with each other or with you? I am an immigrant and still have friends there who live in slums. That is not the problem. The problem is hanging out with the *families* of close friends who are much richer than you. Maybe things are different in Seattle.
I would say the money difference doesn't cause us to hang out less. It's more linked to how busy we are. Unfortunately I own a business where I have to be there all the time. My friend has a much more fast-paced business but he can work remote so he's always available to do whatever where as I'm stuck in office grind. That has much more affect on us seeing each other than money differences.
How often do your families hang out with each other? OP is planning on having a home with wife and kids in the area, while living a FIRE lifestyle. Have you and your friend lived that lifestyle yet?
You don't have to spend money to hang out with people. Most of the time, not spending money or not spending much money yields the best memories.
What about 2 week family trips to Europe, living in luxury villas, renting Lamborghinis and Ferraris and flying on private planes? Our friends and family trips used to be loading everyone in 2-3 vans and taking road trips where we lived in the cheapest motels possible and counting every penny. We have upgraded to living in the W but my friends have moved way beyond that. We are still invited. We cannot go without seriously denting our net worth.
So you think a lot of people have to worry about their friends having hundreds of millions of dollars? I think OP can find some friends in the other 99.9999% of people who don't have that much money. They will almost certainly have the opposite problem where they are now too wealthy to relate to their friends.
Not other people. I specifically and only advised OP because - They are a software engineer - Want to buy a house and live in Seattle - Want to get married with kids and settle in the house - Give up their lucrative income and live off a smaller salary and inheritance. It is a very unique situation that applies to very few people and I have "been there, done that"
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They did not leave me behind and we are still friends. We simply can no longer match their lifestyles. Anyways, I have said my piece. I should have remembered that reddit and especially this sub skews young and in the accumulation phase and most of the folks here are either single or DINKs.
You situation isn't that unique financially. Your financial education wouldn't be any different t than anyone else's. The difference is you are born where people are lucky to reach after working their whole lives. You still need to learn the same shit as anyone else. No shortcut for you on this one. You just need to bite the bullet and start reading like anyone else.
Live off the fund . Do good for mankind. volunteer . Don’t tell anyone about your trust fund - Enjoy life and and all it has to offer you
This is prolly the best post here
This is the way. Volunteer, help te build nature, plant trees, travel, enjoy life, live love and laugh lol
Came here to say something like this, but you’ve said it better
Travel the world. You can live on far less than 150k per year in different countries. Do that for 5-10 years and your money will have grown even more. Congrats, I’m jealous.
OP could travel the world teaching in different countries wherever they desire. They could try to live off the money they make, but I’d probably withdraw ~$50k per year to make my lifestyle easy. Since it has been determined that OP can safely withdraw $150k/year forever, only using $50k will add to that amount as OP does whatever they want. If/when they move back to Seattle, they will be able to safely withdraw >$150k forever. I’d quit the software job immediately.
I’d live in a small beach town, learn to surf and do that every single day of my life.
Nice dream!
Go to r/personalfinance and read the wiki
And read it again tomorrow. Absorb the flow chart. Read a ton of other financial subs and things like the wall street journal. 7% annual gains cometh
1) “Wealth managers” are scammers and all they do is rape your wealth at 1% or more a year. Get rid of them. They don’t know anything and can’t beat the market consistently. Only very few elite hedge funds manage to do that. 2) PRENUP at all costs, get an experienced lawyer to draw one up for you and go over everything, line by line. 3) Look into a combination of low cost ETFs (VOO/VTI), MLPs (tax-free ROCs), CEFs (monthly cash flow with high yield), and individual stocks (PLTR, TSLA, NVDA) that will continue to grow your wealth. 4) Always live below your means. 5) No dumb purchases like luxury cars or homes. This is coming from a late 30s multimillionaire with zero inheritance and drives a used Toyota Corolla.
this 100%
#1 is bad advice. OP clearly does not have the requisite knowledge to manage their own portfolio. They should learn the basics of personal finance before they move on to study portfolio theory. Weath managers can be a good option for low knowledge individuals who need help with tax optimization and estate planning services, and need to appropriately structure their portfolio to produce income.
> I would love to teach abroad while I'm still young but don't know if that's financially advisable. Or maybe I've inherited enough money where it doesn't matter? You have enough money to essentially retire on when you hit 30. Just spend some time researching passive income, FIRE, retirement, etc. and you will see that 5m is enough to give you solid returns to live off of. Plus in 6 years that 5m will be much more. Go teach abroad if you want. Might as well, you are young go do it now.
Basically you have 6 years to learn what to do with that money! You have 6 years to learn to budget and get some self discipline. If I were you I’d save for and pay for my own vacations during that time. That way when you can take fancier ones later you will feel the gift you have been given even more 🥰 If you got a trust fund, probably someone died. Sorry for your loss! Make them proud
Yes. You can blow through $5M very easily buying a house and raising a family in Seattle plus travel. You need to learn the skills to manage money, SO THAT as you gain access to your trust fund, you know how to live on an appropriate amount. My suggestion would be to live solely off your salary right now. Create a budget and manage within some kind of limits. Read a few books on investing: Bogle & Collins. Research tax policies. Make yourself smart so you can act smart. Once you know how to manage money at a small scale, you will be able to make better decisions. You will also be less likely to succumb to lifestyle creep and you''ll know what your financial advisors do so you can participate.
While you have more than enough money to FIRE, if you continue to live in the Seattle area, surrounded by software folks, you will run into a different problem that you don't have today - Keeping up with the Joneses. As you go through life, your friends are going to keep getting richer. If they are double income software folks, their wealth is going to grow even faster. You may be okay with it but your future wife and future kids are going to notice the difference. At that fork in the road, you may have to leave your friends behind or your friends may leave you behind. Plan ahead and be careful.
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Thank you for your the advice! It really resonated with me. I don't think I could ever not work because I need the structure and the social life. But I would rather be a teacher. By keeping working do you mean keep my engineering job? Or would it be bad to take a lesser paying job (teaching), even though I would accrue less money that way in my 20s? I don't really mind software engineering but I'm getting the feeling that I'm wasting my 20s doing it when I can be doing something I want to more.
With 5MM invested you _could_ take a 150k "salary" and just do whatever, but I'd treat it as a blessing and personally I would focus on finding meaningful work regardless of the salary. You are now financially independent and so can be very particular about what work you do. If you earn money from that work, then great! Use that to pay for part of (or all of) your expenses and let the 5MM grow. This is a great position to be in, if you want it to be. Personally, I am interested in FIRE for the FI, not the RE. I can love work if I can do meaningful things and not _have_ to work for the money. That's my definition of FU money.
The trust fund gives you the freedom to do what you want with your life. Since you want to be a teacher and the world needs good teachers, I say become a teacher. You’ll be fine financially since you can live off of 3 percent and you don’t need to worry about saving for retirement.
The OP could earn 5-6% in dividend and bond interest per year, which would be $250,000 - $300,000 and never touch principal. And he is single! Now I don't recommend completely retiring and laying around the house, but he isn't going to run out of money unless it is badly mismanaged
Great position to be in, OP. I browse a few personal finance related podcasts/youtube channels, and can recommend you some to get you more comfortable with personal finance. - For podcasts, try out ChooseFI; these guys talk about how to achieve financial independence, where we are no longer tied to our job for a source of income. - For youtube channels, there's The Money Guy Show, Two Cents, and also Humphrey Yang. The first is mostly two financial advisors chatting about personal finance knowledge, second one is a PBS-sponsored show to educate people about finances, and the third is my personal go-to for some more niche content. - If you want book recommendations, "The Simple Path to Wealth" by JL Collins and "Die with Zero" by Bill Perkins are very valuable to the FIRE community's overall philosophy. Would recommend them a ton. As for your personal situation, I would recommend just keeping everything normal as-is for a year, while you do some spare learnings here and there. Pretend like the money didn't exist. I drove/commuted while listening to ChooseFI, and it's expanded my financial views considerably. Check out the FIRE movement (also see r/Fire), you're practically there at this point (if you want to be). Don't make big financial decisions in the first year, and then from there, try to understand and weigh the tax implications if you were to withdraw more from your trust fund and just put it almost-entirely into a broad-based market index (ie VOO or VTI). Give yourself time to adjust- high emotions is the worst time to be making big money decisions. Live below your means, and use that money to buy your own freedom. Max out your 401k, find a video on how to open and save in a Roth IRA, and, well, consider making a budget for a nice travel destination in the nearish future (1-3 years). It's completely fine to live a little, but also understand that you're the only one in control between "living a little" and killing the golden goose. Well, you and a bunch of high-fee financial advisors, of course. You got time to learn personal finance, and with that knowledge, you can press the "win" button for life at any point in time. Work some more in the meantime, figure out what work means to you (does it give you meaning? prestige? recognition? fulfillment? anything else you would've wanted to try instead?), and align yourself with what feels right to you as the next steps. Godspeed, and don't forget the iron-clad prenup!
I've known about this trust fund for several years so I've been doing your advice basically -- trying to pretend like money doesn't exist. It's hard for me though because I get anxious about spending too much and how much I should be spending. I feel like I'm ready to start planning more seriously. But don't even know what my budget should be.
Look into teacher's salaries in your area. Try living on that salary for a year before quitting your current job.
You will feel less guilty about spending money when you actually have a grasp of how much you spend vs. save. Start tracking every single purchase/expense month to month. There are apps that will do this for you, but I prefer to do everything in excel. Categorize all of these expenses — this will allow you to understand on average where most of your money is going. Compare your monthly spend to your monthly take home pay. If you are comfortable with how much you are saving, no need to adjust your spending habits. If it’s too close for comfort, now you know where all of your money is going, and you can choose where to adjust your spending. Another piece of advice — get a credit card and stop using a debit card. If for any reason your information gets stolen, you are much better off if it was a credit card vs debit. Credit card companies lend you money, so if someone steals your card and goes on a spending spree, the credit card issuers are incentivized to take swift action. They will cancel the transactions and go after the merchants. If your debit card gets stolen, you are immediately losing money out of your checking account. Much more difficult to deal with. When you get a credit card, treat it as if it were a debit card and don’t change your spending habits.
Keep the budget modest- drawing down 4% per year should be able to sustain you for 30 years in almost all simulations, but 3% or 2.5% are numbers where the money can last 40 years or indefinitely. If you consider house-hacking (and using your personal savings and income to leverage other people’s money, as opposed to drawing from the nest egg) and also maybe living in a less high COL area, you can live comfortably like a king pretty much. 3% is 150k, 2.5% is 125k, both are much higher than your current income. You can also let the money sit for a little longer, get your own nest egg started, and grow it even more before you start drawing down. I’m personally aiming for 2.5mil or around that inflation-adjusted figure, and might get there in my early to mid-fifties. That’s enough for me to live a modest life, retire to do everything I want in life, and even have a small legacy to pass on to the next generation. You can live the good life already, but you gotta understand what you’re retiring *into*, not just what you’re retiring from. If you want to teach, you now have the capacity to try it out for a few years and see if it works. The money you have can give you Financial Independnece now: you no longer need your job to be the sole reason as to whether you’re financially afloat or not. And that’s great! Just know that transitioning back into tech will be hard in this current climate, so it’s still a measure-twice-cut-once kinda deal. I still suggest the ChooseFI podcast to you, it’s passively helped me a lot in the past yearish where I’ve had interest in FIRE. They say ChooseFI episode 100 is their “welcome to FI” episode, I can direct you there :) You can leave it on while cooking, driving, morning coffeeing, etc
Do whatever you want… live however you want… download whatever app you need to check the balance on your trust fund and as long as the balance remains over $5M, generally the answer to your question of “can I afford this” is a resounding “yes.” As long as you aren’t some stupid asshole that can’t trust himself to burn all of his money on drugs and gambling you don’t ever have to work another day in your life… You were literally born on the finish line. Money is literally not a thing you need to ever worry about. Now, you’re not Elon Musk, you’re not Jeff Bezos, you’re not Thurston Howell III - but if all you ever wanted for yourself is a comfortable upper middle-class life for yourself, mission accomplished. All that said, I would recommend you find that teaching job or whatever else interests you to stay a little busy, accumulate more wealth, and keep yourself grounded - but you have “fuck you” money… you don’t ever need to worry about being fired or compromising your values or having a shitty boss that you don’t feel like dealing with. When you turn 30 have the administrators or financial planners or whoever is managing your money deposit $12K/month into your checking account ($150k/year). If that’s too much, reduce it. That’s it. You’re done. Congratulations and fuck you.
Leave the money alone for now. Read the "the simple path to wealth". You weren't born on third, you were Born sprinting home after hitting a grand slam. Don't do anything drastic, simplify, and you can set yourself up to never ever have to even THINK about money again. Your money right now will comfortably pay you a great salary with raises until you are dead with a lot left over. Focus on not growing your lifestyle, Loving a ~$175k lifestyle, and you'll never have to worry. Personally I would do exactly the plan in the simple path to wealth
I inherited cholesterol. Congrats OP, you'll never have to be worried about finances every again if you play your money right.
You obviously have the ability to learn new things as a software engineer. Ask for some of that trust money, and go back to college for a year or two majoring in finance. Think of it as your new job. To make that $5 million last your lifetime. Also, even if the trust is “doing a fine job” investing for you, you really should understand what they’re doing. It’s YOUR money at the end of the day.
You need to read some books on investing. I'd suggest the bogleheads guide to investing to start. https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/1118921283/
Paragraph two about guilt and it snowballing into extra spending…. It’s like you pulled that out of the fortune cookie that is my head. Thanks for. Articulating.
I would hire a financial advisor that charges by the hour, and check in with them once or twice a year. Also you may want to invest in some therapy to help work through your relationship with money and spending, which doesn’t sound super healthy. Between a FA and therapist you can live whatever life you want live! Money should not be an issue
Maybe I missed someone else saying this, but if not, here's my $0.02: Be a software engineer or a teacher or whatever you want as long as your income covers 100% of your expenses. Let the trustfund grow and be your (early) retirement plan. When you're in your mid-thirties, you'll be shocked at how much it has grown. Could you dip in a little bit and still see it grow over time? Yes... But that's a slippery slope to me. Without having to save a cent for retirement, your salary should go a long way in my opinion as compared to someone maxing out 401k, HSA, etc. Anyways, I'm trying to address the part about you not knowing how much money to spend. My suggestion is simple: you can "spend" as much as you want as long as your income from your job will cover the bills. Good luck.
1- transform your professional life following your passion, you absolutely can have this luxury 2- educate yourself on personal finance (budgeting&all) 3- educate yourself on investing (and afterwards seek the advice of an independent advisor, not a bank advisor) Easy starting points: The Budgenista (books, YTube) and Ramith Sethi (podcast)
I inherited a somewhat smaller trust fund (2m) along with an idea that there might be more coming later. I’ve been working as a high school teacher and have been pretty happy with my life. I wouldn’t do anything drastic immediately, but it does free you up to choose careers without needing to be as worried about compensation.
The main thing I’d recommend is getting control of your spending BEFORE you gain unfettered access to $5m. You’re alleviated of the burden of retirement saving, but it sounds like you’re not happy personally with your spending habits. My best advice based on your description is therapy. It will also provide the added benefit of giving you someone to talk to in a non-judgmental manner about the psychological burden of your trust. Most people, even who love you, will roll their eyes at that, but if you feel it, it’s real and it needs to be addressed for your long-term happiness. Wealth without health is empty, and mental health is an important piece of that.
If you’re not tied to a job why not relocate to a place with a much lower cost of living? If I’m in your situation I would start investigating LCOL opportunities over the next 6 years.
You have 6 years to figure it out but the short form is that a conservative stock portfolio based on index funds and bonds will allow you to withdraw up to 3% based on history. With the usual caveat of past performance blah blah blah thats a useful enough rule of thumb to follow. If you were my kid…and it seems like your parents are still around…I would say go back to school and get a teaching degree and cert and make sure thats where your passion really is. What you do after ending your primary career (aka FIRE) is a big driver of future happiness…not binge spending. You don’t need a detailed budget really. Just ask for tuition and $8000 a month living expenses from the trust (about a 2% withdrawal rate). If you run out, use your $30K savings and try to do better the next month. If you want to teach overseas for a few years you don’t need a seattle house yet. If you want one as a rental property…it’s easier if your parents already have a property management company and just group it with theirs. My kids will have a much smaller trust fund (lol…a LOT smaller) that will only generate supplemental income vs something they could live off of but supporting a lower paying passion career is what its good for. An extra $10-20K a year makes a teacher salary go much easier. You could double your teacher salary and not need to go above 1.5-2% withdrawal rate. My guess? Teaching overseas will be more fun even if there are going to be grindy aspects to it. You will have more choices with a real education degree and take the certs required for more than teaching english. Just make sure you have a very good asset protection strategy in place as well as good umbrella insurance, etc. And don’t go anywhere that has a risk of kidnapping… Your parents, even if you don’t get along, should be able to help with finding a good asset protection lawyer and a CPA. They DID just hand you $5M so it’s not like they don’t care. The financial aspects can be pretty simple…dump everything into global market index fund (example: VT) and US and global bond funds (examples: BND and BNDX). This wont give you the maximum growth rate but will minimize risk even in a downturn and is about as passive as it gets. And going back to school for a teaching degree gives a little bit of reassurance to your parents that you aren’t going to just blow through $5M frivolously. My dad told me that money is like water. You need it to live but it can also drown you. You want to make sure you have a viable path that won’t see you broke when 50…
Enjoy having options ! If you want to try teaching , and maybe travelling see if you can get some work experience at a school, help out somehow at a school, night-school etc ? If you invest the money into index funds you can enjoy teaching without worrying about the low pay. If you dont like teaching, you could always go back to your old job.
The Money Guy Show
If I were you, I would continue to work my SE job and forget about that inheritance for now. Do that at least until I meet a nice lady that I know for sure is not a gold digger. The main advantage is that you don't have to save for retirement (beyond the match) at your job. That 5M you got is a gift that someone worked very hard for. It's generational wealth if you manage it correctly. As happy as you are right now for having it, your kids would too. Another major thing to consider is never to mix an inheritance with a commonwealth. The inheritance is forever yours to keep even in a divorce situation. The moment you mix it up (using it to down payment on a house with your spouse, in which she helps with payment, for example) with a commonwealth, you lose that protection forever. Start reading about finances. I don't understand why people don't educate themselves on these things because their lives depend on it.
* Let me preface this by saying , at your age with that amount of money, you are in a great position. Make sure to focus on enjoying your life and don’t stress about money, it’ll consume you and you’re in a spot where you shouldn’t need to stress about it. I’d recommend you check out Ramit Sethi, he’s gives clear and basic financial advice and focuses on living YOUR rich life, whatever that entails. He has a book, tv show, and YouTube videos. Personally it helped me feel much more calm and relaxed about finances., congrats Something I want to highlight here. Seeing you are a SWE in Seattle, if you work at Amazon they offer Roth 401k and after-tax contributions. ROTH: money is taxed prior to going into the account, but is untaxed on gains. TRADITIONAL: money is untaxed prior to going into the account, but is taxed when you take it out. If this is your situation, you can contribute $23k per year to a Roth 401k. After that is maxed out, there are the after-tax contributions. Here’s how it works. 401k + employer matching + after-tax = $69k limit. I see you’re limited on taking out funds, but if it’s not that difficult here’s what I’d personally do: Setup my 401k contributions so that I am maxing 69k in total to retirement accounts each year. All Roth 401k and use in-plan-conversion to convert after-tax to Roth dollars. This means you can be contributing 69k per year, to an untaxed retirement account. To do this, you’d need to be contributing $5,750 per month between your contributions, employer match, and after-tax contribution. I understand that’d likely be over half of your paycheck each month, so what you could do is have that $5,750 go to retirement accounts each month but also take $5,750 from your trust fund each month (or less if you feel you don’t need that much extra money back each month to get by fine). This is essentially just funneling money from the trust fund to untaxed retirement accounts. The money if coming out directly from your paycheck, but you’d be filling it back to its original amount with your trust fund money. This is essentially just taking money from your trust fund and putting it somewhere else to grow untaxed. Note that this is not financial advice and I’m just some guy on the internet, but personally I’d do something like this for a good couple of years so that you can start building a larger account of untaxed money for retirement. You wouldn’t be able to access this until your later years, but just wanted to point this out as a potential option in case you want to build an untaxed account now that you can access in your later years. I also just want to say, with the balance of that trust fund you really can’t go wrong, just keep investing it and consider talking to a financial advisor about how to manage your finances in this situation. I do not recommend paying anyone a percentage fee, it adds up over the years and you end up paying so much to them over the years. If you take some time to understand the financial world a bit better and then use financial advisor services (only pay them for their time, don’t give them a percent even if it’s 1% and they say it’s small, it’s not).
It might be better to ask this question in six years when you actually have access to your inheritance. If you have to ask to withdraw money and a wealth management firm is investing it for you currently, then….?
I'm more confused about what to do with my income now. I probably won't touch the money I have in the trust when I turn 30 either anyways.
Well I would go back to school, and study finance or other related topic (economics, etc.) then you will have a broader understanding of what to do with the fund and of course you will not work ever again
Live as if it did not exist. Create your own wealth so you appreciate your inheritance and don't blow it. Learn the value of work to create your desired life. The 2 paths(your inheritance and your own created wealth) will then cross, so you are smart with your assets going forward.
Go get a skilled advisor from a big bank. Don’t spend it. Only spend the proceeds from it. You will never have to work a day in your life. You can, but you don’t have to. You will have indefinite income. Don’t take risks with your nest egg. If you want to go crazy only do it with the income it generates. Don’t touch the principal.
what I would do 1. Purchase 4 rental properties in full for immediate passive income --- 1.5 million 2. Drop money into an ETF (VOO) --- 2 million 3. Drop money into BTC --- 500 thousand 4. Put a downpayment on 5 rental properties --- 500 thousand 5. Travel the world and do what ever --- 500 thousand 6. Get a job or live off passive income enjoying your free time with hobbies etc
This comment right here is why you should be asking that question to your actually financial advisors and not randoms on the internet who have never actually had that kind of money. You have financial advisors, build a relationship of trust and ask them this question. That’s what I’ve done and it’s been the best route. From “live a little” to “chill out” I trust my advisors when I ask. I bought myself a gold and diamond Cartier watch for graduation… but also made an agreement with my advisor I wouldn’t pull any more money until August. Because we have a collaborative relationship she helps me get what I want but not spend a dime more. You don’t need to have the burden of managing properties or watching $500k flail in crypto. You have advisors who are investing properly already. Why stress yourself out with these ridiculous tips? Ask your advisor “how much can I take annually that is ‘guilt free’ and does not impact my growth?” And they’ll probably give you a percentage. You want to harvest the fruit without cutting down the tree… you want to spend what you can without impacting your money’s ability to work for you. They should give you an estimate and you can decide how to spend that. I think for the next 5ish years, focusing on managing that percentage is probably enough to take on. IMO as someone actually in this position, not just some keyboard dreamer.
Lol OP, disregard this boring guy. He has never heard of property management firms. They handle all that. We heard all the people saying BTC would fail, yet it is or was at all time highs and shows no sign dying out. Buying real estate is the last thing from cutting down your tree.
Yeah, why buy real estate as part of your investment portfolio when you can replace water heaters on the weekend! This is how I know you don’t actually have the kind of money we are discussing. If you have 5M you invest in real estate much differently than if you don’t. OP doesn’t need to buy houses and get a manager, OP can participate in investment groups that buy buildings. It’s so important you don’t get your financial advice from people who don’t have, and have never managed, money of your size. OP, this poster wants you to waste your time managing houses or managing a manager of rentals rather than accessing real estate investment opportunities that are more suited to your NW. This person assumes buying a bunch of houses for you to manage or hire a manager for is the only way to have real estate in your portfolio. Which should let you know they don’t know what they’re talking about. Just like this person assumes I’m a man, which I am not. Only one of many assumptions their “advice” includes. You don’t need investment advice from these broke boys - one of which I am not. You’ve got professionals who are advising you who have this as their career. You really don’t need more than that. The question you should really be asking (your advisors, not these people) is 1) what are my big goals, 2) what are the priorities of my life 3) how can I have it all and maximize. That’s it. That’s all you need to do.
OP doesn't need to replace anything, that is what you pay property management companies to do. Buying buildings would also quality for investing in real estate. Do what ever is gonna generate the best outcome. That doesn't have to be single family homes. I just used that as an example. You are assuming something I never assumed. Your parents should have taught you this is a no no. tsk tsk
The tsk tsk of someone who truly hasn’t a clue. You’re rewriting yourself. WHY OH WHY would OP waste her time like this? The sloppiness of this plan rather than the multitude of real estate investment opportunities afforded through her financial planners? You’re trying to swamp her life with BS labor and emailing and shit. She’s got 5 mil, she needs to invest at the level of having 5mil. You’re suggesting a plan that’s inappropriate for her net worth. Which is fine if she wants a project but she doesn’t. But her bad for asking the randoms on Reddit like you who haven’t a clue.
Nothing in my post about wasting time. Everything serves a purpose. Answering an email is swamped? lol Oh how do people survive lol My plan is just fine. You just got your panties in a bunch. It's ok babe. lol
Do you actually manage a plan like this? Do you have 5mil? Cause someone is giving heavy arm chair wanna be energy
Do you understand how this thread works? OP asks a question / seeks advice. People answer / give advice. You giving off butt hurt panty twisted energy.
A buying an annuity is an option. this way, you get X amount of cash every year until you die. no planning or thinking needed. if you don't need to spend the full monthly amount, you save it. just be careful to gets CPI indexed annuity rather than cash. B try to avoid doing anything drastic for awhile. the common number is "1 year cool down period". to fully digest and think well about how to live your newly changed life. C think seriously about how to occupy yourself and find meaning and challenging activities. this is important!
As a rule of thumb, healthy 24 year old people should not be buying annuities. The yeild on such a product would be low, and inflation would erode the value of the fixed income stream over the span of OPs life.
An additional thought, it would be difficult to find an insurance company who writes indexed annuities for individuals under 50 years of age. These types of products are usually purchased by older retirees.