Ask HN: What to do after $8M (all cash, post tax) exit? • Hacker News Board

Re: Ask HN: What to do after $8M (all cash, post tax) exit?

#371

Post by dec0dedab0de » Wed, Dec 05, 2018, 5:27 PM UTC

I don't know what you should do, but I can tell you what I would do. The goal being to spend more time with my family.

First thing I would do is split the money into different accounts and banks because it is not insured over 250k per bank + category

Then I would put a large chunk in stocks of big companies I personally heard of and think will last.

I would buy a few gold bars and a safe and bury the safe, and pour cement over it. Probably not the best advice, but the wannabe-spy in me thinks this would be fun.

Basically I would lock myself out of large chunks of the money for the future, while trying to resist inflation, and continue living.

I would take my family on trips, and spend time exploring my creative side. Maybe even creating something that could turn into a business.

Re: Ask HN: What to do after $8M (all cash, post tax) exit?

#372

Post by throwaway94305 » Wed, Dec 05, 2018, 5:27 PM UTC

Be careful: You can burn through $8M post-tax quicker than you think. We have a annual household income of >$1M pretax, so I have some experience here.

I'm assuming you live in the bay area. The price of nice but not stunning houses in many desirable areas is around $4M. Assuming your life expectancy is another 50 years, that's at least $45K/yr in taxes, so at least $2.2M in lifetime property taxes. The median home in Palo Alto is now >$3.2M, and that figure includes small or decrepit teardowns listed for land value alone. You won't be able to afford (and it would be a mistake to buy) some of the larger or newer houses on the market for $8M+.

Private school for two children can approach $100K a year (Castilleja in Palo Alto is $44K/year). You didn't say how old your children are, but if you include preschool and college, that could be $2M. You might want to hire a nanny. That's $30/hr, or over $70K/yr with employer taxes, or $1.4M without a raise for 20 years.

That's $9.6M for just a house, schooling, and child care. That doesn't include food, household cleaners, insurance, clothing, landscaping, pool maintenance, cars, a second house, hobbies, gifts to children, travel, etc.

Sure, maybe your investments will do OK. But on the other hand they need to beat inflation. Castilleja isn't getting cheaper. Your property taxes will increase, slowly but steadily, every year for life, and then there are local bond measures for additional taxes.

So my advice is to live below your means. We've tried this ourselves. Also you might want to stay employed, at least one of you, to extend your runway. Finally look for something meaningful in life. Attend a local church service over Christmas. Spending money by itself won't do it.

Re: Ask HN: What to do after $8M (all cash, post tax) exit?

#373

Post by bitxbitxbitcoin » Wed, Dec 05, 2018, 5:29 PM UTC

kkarakk wrote: post #120

maaaats wrote: post #110

Earlier quoted context omitted.

I see reddit mentioned by multiple people. I think the sub https://www.reddit.com/r/financialindependence/ might also be a nice fit, as it is about how to become financial independent (already achieved by OP) and then what to do after (retire early? how to manage the money? etc)

warning: high value individuals can expect a fair amount of abuse on that subreddit, it's for how to get to FI not how to manage being there

For those that fall into this abused category, a lot have moved to https://www.reddit.com/r/fatfire

Re: Ask HN: What to do after $8M (all cash, post tax) exit?

#374

Post by cortesoft » Wed, Dec 05, 2018, 5:30 PM UTC

gizmo wrote: post #363

thorawy44447 wrote: post #255

Earlier quoted context omitted.

Hi, Some tips from me: - Take a nice holiday - Don't rush into investing. Take some time to think about what you want to do. - If you invest in stocks, do it in a staged plan. Resist the urge to sell when it's going down, and the urge to buy when it's going up. (I could not resist buying when it went up beginning January this year). Start with small amounts first. Be there for the long run (don't sell/buy all the tim…

Honestly this is mostly bad advice. The guy should just sit on his hands for a year or two while he processes the idea of having money. Telling somebody who has never made a big financial decisions to start buying millions of dollars worth of financial assets is terrible advice. Unless by "start small" you mean invest a non-material amount, which still leaves the question: what to do with the remaining 99% of the mon…

You should NOT have 8 million in a checking account.

Re: Ask HN: What to do after $8M (all cash, post tax) exit?

#375

Post by toast0 » Wed, Dec 05, 2018, 5:32 PM UTC

arbol wrote: post #230

leetcrew wrote: post #195

Earlier quoted context omitted.

with a wise investment strategy, the guy can spend about $300k per year without losing money in the long term. that's a lot of money, but it's not so much that you can't easily overspend if you're not careful and/or start "seeing green". if his kids end up going to top schools for college, that'll be ~$150k per year right there.

Even if OP spends 1M on college fees ( I forgot how expensive it is in the US ), I would imagine that they'll still be very comfortable for a long time. Plus, you need to factor in their future earnings. When people speak of retirement, they really mean just doing something else they're interested in. The likelihood of these activities generating income, at some stage, is substantial. Also why would anyone need to sp…

Add up a few even ifs of $1M each, and the comfort level drops considerably. $8M should be enough to live comfortably, but it requires a bit of planning and a reasonable definition of comfort.

It doesn't take a lot of reading to get towards get a nice umbrella policy, talk to an estate lawyer, and then put most of the money in a diversified bond fund and a diversified stock fund', and plan to pull out a small % per year as your annual budget; allow for large expenses occasionally, but be aware of the impact on your future annual budget. Maybe set aside a specific amount money (in consultation with your significant other) for unwise investments, if you want to learn first hand why they're not recommended.

Re: Ask HN: What to do after $8M (all cash, post tax) exit?

#376

Post by nkohari » Wed, Dec 05, 2018, 5:32 PM UTC

owaty wrote: post #128

WalterBright wrote: post #45

It may feel like infinite money, but can be burned through at terrifying speed. This happens to a lot of people who suddenly get money. My advice is do nothing with it, and start reading books about finance, investing, and money management. Then start gradually investing it as you learn the ropes. Hire a good CPA to help you with taxes. Buy liability insurance, because you're now a target for jackpot lawsuits. Don't…

> My advice is do nothing with it, and start reading books about finance, investing, and money management. I see where you are coming from, but if you step back for a second, this just sounds bizarre. OP now has more money than they need or ever have had, and instead of relaxing and finally caring about something other than money, you suggest they actually start caring more about money.

Unfortunately, that's what happens when you get a windfall. It happened to my wife and I when we sold our company. It's a fantastic "problem" to have, but it takes some time to get comfortable. This is especially true in OP's case, when they could feasibly retire immediately.

Re: Ask HN: What to do after $8M (all cash, post tax) exit?

#377

Post by marshalmallows » Wed, Dec 05, 2018, 5:33 PM UTC

Probably the best thing to do is to set up trusts for your family invested in a broad range of companies across a portfolio. It could help with education of your grandchildren even. You never know when you may need it.

Re: Ask HN: What to do after $8M (all cash, post tax) exit?

#378

Post by dboon » Wed, Dec 05, 2018, 5:33 PM UTC

toastermoster wrote: post #228

phkahler wrote: post #152

Earlier quoted context omitted.

>> ...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 ;-)

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 offe…

Anecdotal, but a friend of mine works directly under Clark Howard. By all accounts he is a wonderful and generous man, rare for one giving financial advice. I would generally trust him.

Re: Ask HN: What to do after $8M (all cash, post tax) exit?

#379

Post by option_greek » Wed, Dec 05, 2018, 5:34 PM UTC

> Should I donate it?

You have time and money. Why would you trust some one else's judgement on how to do good things with your money. Spend your time and money to do good. I think that would be more rewarding than anything you can do anyway.

Re: Ask HN: What to do after $8M (all cash, post tax) exit?

#380

Post by artpi » Wed, Dec 05, 2018, 5:34 PM UTC

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Please be conservative and take time to educate yourself about investing / markets. It will take about a year. YOU CANNOT TRANSFER RESPONSIBILITY for this. You need to know how this works.