If you inherited $5ml today, what would you do?

Title. Describe what you'd do. Would you quit your job? How would you spend your time? How would you allocate that $5ml exactly?

Comments (102)

 
Jan 12, 2021 - 11:33am

Talk to an attorney about how to minimize my tax liability, pay off my debt, and then invest the rest? 

$5MM is a shit ton of money, but it isn't quite "retire immediately" money. 

Commercial Real Estate Developer

  • 2
  • 1
 
Most Helpful
Jan 12, 2021 - 12:18pm

CRE

Talk to an attorney about how to minimize my tax liability, pay off my debt, and then invest the rest? 

$5MM is a shit ton of money, but it isn't quite "retire immediately" money. 

$5MM invested properly should be at least $250k in yearly passive income. How is that not "retire immediately" money?

Array
  • 8
 
Jan 12, 2021 - 12:55pm

BobTheBaker

CRE

Talk to an attorney about how to minimize my tax liability, pay off my debt, and then invest the rest? 

$5MM is a shit ton of money, but it isn't quite "retire immediately" money. 

$5MM invested properly should be at least $250k in yearly passive income. How is that not "retire immediately" money?

Depends where you live and what you want to do.  That 5% rate of return looks a lot worse once you tax it.  Living in NYC on ~125,000 a year is possible, but it's not an extravagant lifestyle.  Ditto somewhere in the suburbs.  If you want to move to New Hampshire then so be it, but assuming you don't have several million additional dollars in the bank, that's not an amount of money on which you can retire and do what you want.  If you're in a medium COL area you still should be living on a shoestring budget, because you should 100% be socking away 10% of that passive income to fund a rainy day account, because the last thing you want to do is touch the principal on it

 
Jan 12, 2021 - 2:43pm

BobTheBaker

$5MM invested properly should be at least $250k in yearly passive income. How is that not "retire immediately" money?

Because a lot can happen in life. Kids are expensive. Getting sick in this country is expensive. Tastes and hobbies change. People have lost a whole hell of a lot more than $5MM too. 

$5MM would not be retire immediately money for me. That doesn't mean it isn't a lot of money, as I said. That just means it isn't enough for me personally to call it quits. 

Commercial Real Estate Developer

  • 3
 
Jan 12, 2021 - 11:47am

Assuming after-tax dollars...

Pay off mortgage (~350,000)

Give some to family (100 to brother, 100 to sister, 100 to parents, another 50 split between cousins = 350)

Left with $4.3M. $1.5M in 1-3% bonds. $1.5M in blue chip / dividend-paying equities. $300k in yolo bets

$1M left to fool around. Take time off to do some traveling. Party vacation with the boys. Golf / surf / snowboard trips

 
Jan 12, 2021 - 11:51am

Retire immediately because I'm not so out of touch with the common person to think that it's impossible to retire on $5 million....but then again, I'm not a limousine liberal so what do I know.

At most, I would consider doing a more laid back job at a non-profit or working as a part-time lecturer at a community college.

 
Funniest
  • Intern in IB - Ind
Jan 12, 2021 - 12:20pm

I think I would retire immediately as well. I would save a lot on housing, considering that I, as a liberal, live rent-free in your head

 
Jan 12, 2021 - 1:01pm

NoEquityResearch

Retire immediately because I'm not so out of touch with the common person to think that it's impossible to retire on $5 million....but then again, I'm not a limousine liberal so what do I know.

At most, I would consider doing a more laid back job at a non-profit or working as a part-time lecturer at a community college.

"Impossible" is not the same as "wouldn't".  By this logic, why does anyone bother working a job that pays more than a middle class salary in a low cost of living area?  This idea that we should all aspire to blend in to the average is absurd, and is something I've found absurd about conservatives for a long time.  Why is "someone I'd want to have a beer with" a qualification for higher office, for example (for those of us who remember the 2008 election)?

I'd like to excel at my chosen field.  I'd like to have the income to be philanthropic if/when I retire (and before). I can easily imagine a life in which I retire with income to spare on the back of a $5mm investment account.  That doesn't mean I want to.  Not sure what's wrong with that attitude, either.  

 
Jan 12, 2021 - 1:17pm

There is something inherently disingenuous about the attitude that you want to fight inequality but not for YOU....you should be allowed to live in NYC with a big yacht and plenty of disposal income.

By the way, nothing at all average about making $100K per year for 50 years, assuming you didn't even reinvest the money. That is also what's funny. You're one of the most liberal posters on here and apparently have NO FUCKING clue what the average person in this country actually makes and what they retire with.

Also, if you want to give it to charity, then say that instead of bitching about living in New Hampshire as your first response. Say, I'm 10x times more compassionate than everyone else on WSO.  I'm such a great person with all my great compassionate ideas and I'm giving it away with little thought of living an ultra wealthy lifestyle in NYC.

 
  • Intern in IB-M&A
Jan 12, 2021 - 1:28pm

Its pretty amazing I've seen on here multiple times about how MDs don't have ~that much~ money given lifestyle costs or how $1 million/yr is "upper middle class." I wonder what they think of the median household salary being $50k/yr.

 
Jan 12, 2021 - 2:46pm

NoEquityResearch

Retire immediately because I'm not so out of touch with the common person to think that it's impossible to retire on $5 million....but then again, I'm not a limousine liberal so what do I know.

At most, I would consider doing a more laid back job at a non-profit or working as a part-time lecturer at a community college.

WSO is such a weird place sometimes. The same website that claims a $80,000 salary plus 20% bonus for a 23 year old in real estate is barely getting by because 23 year olds at Goldman or Blackstone make double that acts like $5 million dollars is some ungodly amount of money. 

I'm not sure what one's place on the political compass has to do with this and I never said "impossible" either. 

Commercial Real Estate Developer

  • 2
  • 2
 
Jan 12, 2021 - 5:05pm

CRE

NoEquityResearch

Retire immediately because I'm not so out of touch with the common person to think that it's impossible to retire on $5 million....but then again, I'm not a limousine liberal so what do I know.

At most, I would consider doing a more laid back job at a non-profit or working as a part-time lecturer at a community college.

WSO is such a weird place sometimes. The same website that claims a $80,000 salary plus 20% bonus for a 23 year old in real estate is barely getting by because 23 year olds at Goldman or Blackstone make double that acts like $5 million dollars is some ungodly amount of money. 

I'm not sure what one's place on the political compass has to do with this and I never said "impossible" either. 

I think that if you're looking for intellectual credibility or a consistent moral center, reading into any conservative position is going to give you a headache.  Just as the GOP is a post-policy political party, conservatism is a post-intellectual political alignment.  It no longer stands for anything except retarding progress of any kind.  It's not preserving what is best, it advocates stagnation and fossilization.

 
Jan 14, 2021 - 9:17am

$5 million after tax is almost $10 million of gross bonus money which is probably more than 10 years of an average MD's career. Average. 

Considering probably greater than 50% of MDs don't last 10 years, I would say $5 million post tax is a sufficiently large amount of money for even finance people to consider an "ungodly amount of money" or alternatively more than enough to retire on. It would put you squarely in the 97 percentile net worth bracket. Even in the finance bubble, not many W-2 folks reside in that territory.

 
Jan 12, 2021 - 11:59am

At first - hire someone to help manage it and deal with any tax/legal issues. Then - as little as possible for a few months save maybe adding a small portion to a trading account for fun (I'm talking like ~50k or so). 

Otherwise - I'd want to leave as much invested as possible as, frankly, I just don't need much of it right now. I think it would largely give me piece of mind and flexibility to just not worry as much about random trips, expenses, etc. I would certainly look to take care of those I love - but try and do it out of the interest over time rather than diminish the principal. 

Job wise? I'd consider what I want to do but wouldn't quit immediately. Again this gives me the flexibility to really consider what matters and potentially take a slightly less paying job or start my own thing If I really want to with some safety net. 

I guess overall it just makes things easier, right? Assuming I don't develop a bad habit of champagne and caviar at LIV on Friday's... I probably won't have to worry much about money as long as I don't do something really stupid. 

 

 

 

 
Jan 12, 2021 - 12:37pm
  • Retire
  • Earmark ~$300k for risky business ventures. Assuming here that I could lose 100% of this sum - but the upside is obviously multiple more millions.
  • Use ~$250k for a down payment on a $1MM house in a low COL city (Houston/Austin/Dallas/Atlanta/Charlotte, etc.).
  • Use ~$100k for a down payment on a ~$400-$500k vacation home, preferably on a lake.
  • Invest the remaining ~$4.3 million and live off of passive income. Investments would include the stock/bond market and real estate. Very limited allocation to alternative investments.
Array
 
Jan 12, 2021 - 4:02pm

Sequoia

Good earmarking, although you don't think you'd get bored retiring in your 20s? How would you fill your time?

I assume at least early on that my time would be spent on turning that $300k that I earmarked for a business into an actual profitable business.

Array
 
Jan 12, 2021 - 1:24pm

Some people really say that you can´t retire of 5M lol. There are literally mansions on sale in Texas for 350-450k with Texas also having low taxes. You would still have over 4,5M available to do whatever you want with it. Let´s assume that your monthly expenses are 5k (which is a lot given that you wouldn´t have to pay rent or a mortgage) that just equals 60k a year. Sounds like a comfortable lifestyle to me.

 
Jan 12, 2021 - 1:58pm

First, buy into or start up some small business that can easily become stable and eventually leave my job thereafter. Then, start up some type of business abroad that trains, educates or bring skills to people in developing countries that have a harder time earning a livable wage. Ideally, some type of business that can help provide people skills or bring people work in those countries. There's too much unemployment and underemployment in these places, I'd like to do what I can to help. For whatever remains, just putting it into investments to bring me closer to retirement. 

Array
 
Jan 12, 2021 - 2:55pm

Sumerian

$5M won't help with your ED.

$5M would buy you a lot of Viagra 

Commercial Real Estate Developer

  • 3
 
Jan 12, 2021 - 3:08pm

I would put it in a trade program. I work with one of the most powerful financial institutions known globally. You would net 50% of your profits and we guarantee your principal.. Let that money generated money. 😉 we give you a safe haven approach. Can trade 1-5 years.

 
Jan 12, 2021 - 3:11pm

I would put the $5M in a trade program. I work with one of the most powerful financial institutions known globally. Put it in, you net 50% of monthly profits. We take the safe haven approach and guarantee your principal with 35 days. Let your money keep making money😉

 
Jan 12, 2021 - 6:02pm

Fuzefund

Invest and buy a house

Same

House with sick home gym and heated lap pool. 

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

 
  • Analyst 1 in IB - Gen
Jan 12, 2021 - 10:35pm

everyone saying you cant retire on 5 mil is retarded. Inheriting 5 million is the same as getting paid 100k a year for 50 years, except it's not - its even better. No taxes and you can invest and earn ~8% a year, more than that if you want to be more aggressive. Unless you're trying to ball out for the next 5 decades, you'll be just fine

 
Jan 12, 2021 - 10:42pm

FYI for all, the general rule is you can "retire on" 4% of principal permanently in the same real dollars each year. $5,000,000 should produce $200,000 real 2021 dollars per year.  This works literally 98-99% of the time.  It's called the 4% rule.

Array
 
Jan 13, 2021 - 7:39pm

this is pretty aggressive. 4% gives you the 99% chance of not going below a balance of 0 within 30 years. if you want to extend the period and avoid getting close to 0 balance better to use 3%. I still think 150k/yr at very low risk is enough to pursue whatever passion you want at any age

 
Jan 14, 2021 - 2:24pm

I would take the first 500k and invest it in a rising cryptocurrency
I would take the next million and invest in specific companies/stock markets that have consistently rising stocks and statistics
Use the next 1.5 million to start my own company
Set aside 1 million for usage in life
And save the last million

 
Jan 14, 2021 - 5:04pm

1. Hire an accountant and a lawyer.

2. Buy a gas station, a carwash, a laundromat, and a burger chain.

3. Keep my day job...but now I have a "F**k you I quit" card that I can use on my boss anytime I want.

4. Use the passive income from #2 to buy lands in up and coming areas.

5. Find a real estate developer to start a JV, build up hundreds of overpriced houses, cash out.

6. Use profit from #5 to buy a junk yard, a strip club, a liquor store, a bar, and a funeral home.

7. Retire.

 
Jan 15, 2021 - 12:03pm

You can't do anything with five, Greg. Five's a nightmare

Big4 Audit --> TMT L/S

  • 1
 
  • Research Analyst in HF - EquityHedge
Jan 15, 2021 - 12:03pm
Start Discussion

Popular Content See all

Life Hacks during WFH | How do you avoid burnout?
+53IBby 1st Year Analyst in Investment Banking - Mergers and Acquisitions">Analyst 1 in IB-M&A
Leaked EY Email
+49IBby 1st Year Analyst in Investment Banking - Industry/Coverage">Analyst 1 in IB - Ind
I’ll never take WSO for granted again
+45OFFby Principal in Venture Capital">Principal in VC
Girlfriend vs PE
+41PEby Investment Analyst in Private Equity - Growth Equity">Investment Analyst in PE - Growth
What's so good about Evercore?
+30IBby Prospective Monkey in Investment Banking - Mergers and Acquisitions">Prospect in IB-M&A

Total Avg Compensation

January 2021 Investment Banking

  • Director/MD (9) $911
  • Vice President (30) $350
  • Associates (139) $232
  • 3rd+ Year Analyst (18) $155
  • 2nd Year Analyst (85) $152
  • Intern/Summer Associate (89) $144
  • 1st Year Analyst (344) $134
  • Intern/Summer Analyst (298) $83

Leaderboard See all

1
LonLonMilk's picture
LonLonMilk
98.5
2
Jamoldo's picture
Jamoldo
98.4
3
Secyh62's picture
Secyh62
98.3
4
CompBanker's picture
CompBanker
97.9
5
redever's picture
redever
97.7
6
frgna's picture
frgna
97.6
7
NuckFuts's picture
NuckFuts
97.5
8
Addinator's picture
Addinator
97.5
9
Edifice's picture
Edifice
97.5
10
bolo up's picture
bolo up
97.5