This may be surprising to some, but multiply or leverage these dollars intoadditional millions would actually be a very low priority. Let’s face it, you’ve struck it rich. There is no need for you to take on no where near the same level of risk as someone whose financial goal is to attain even one-hundredth of your present level of wealth. In my humble opinion, 70% in securities, be it mutual funds or individual stocks, is way too heavy a concentration of assets. It’s probably fine for an individual trying to figure out how to allocate their 401k contributions with the purpose of securing their retirement. However, it would in most cases be entirely inappropriate for someone that has this kind of money to invest. The over arching investment benchmark goal would be to beat inflation on average by a few of percentage points a year. That’s all there is too it. How do you get there?

I would be looking at a highly diversified portfolio of stocks, bonds, and real estate of various types e.g. residential, commercial, undeveloped land. Precious metals, commodities and foreign currency could also be part of the mix, but only for hedging market risk and not speculation. Ventures like starting one’s own business or investing in individual companies ( e.g. start ups) would generally be off the table. And yes, philanthropy in all of its different forms can also be part of the equation, especially if the person expresses an interest. We actually encouraged it, since the psychological return of money and efforts invested in such endeavors can rarely be beat. Jus ask Bill Gates :)

Again, the overreaching goal would be to shield the portfolio from any sudden and dramatic losses that could not be recovered with a high degree of certainty within a reasonable time frame. This focus on risk aversion has become increasingly important in the wealth management field in recent years given the uncertain state of world affairs. I think Warren Buffet famous rules regarding wealth creation sum it up best: Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.

Sorry folks for this long post, but I hope it was worth you time.

I would make sure to have at least 20% of the portfolio (and maybe 50%) out of the US currency and out of US markets.

A basic rule of thumb, if you have to ask, then you need help!

I would also look at investing through a company such as the D.E. Shaw Group or Dimensional Fund Advisors–they’re going to be able to do some things that are not available to the small investor. (Though actually, relatively small investors can now invest in DFA Funds through Assetbuilder (www.assetbuilder.com), minimum investment $50,000.)

Educating the teenager, though not necessarily just an expensive college, is key.

I am glad I don’t have this problem in many ways. While the money would be great in a lot of ways, I would tend to find ways to give it away to worthwhile causes now rather than build a pile that can be subverted for other things later.

BTW, Trent, you didn’t note foreign investments. While I would tend to find one or more professional managers, I would also look overseas for at least a chunk of it.

Brad

Once you get beyond the $100,000 range, you go from what can you invest to get 5-10% return, to which return gets you the best investment. There are so many funds and places to invest, it’s just a matter of where your money will work harder for you at.

The bottom line is that $50 million opens up investment opportunities that the “normal” person has never thought of, and is perhaps totally unaware of (even if the realm of mutual funds). Even though I’m a total do-it-yourselfer, I would definitely seek the counsel of a well-respected wealth manager. Ideally, as I said above, I’d seek multiple opinions. And the first words out of their mouth had better be something along the lines of “What are your goals (or those of the trust) when it comes to investing this money?”

What level of wealth would trigger a serious consideration for professional help in wealth management?

Off the top of my head, the closer that someone gets to the crossover point the more seriously they should consider it.

As she’s a teenager, it probably makes a great deal of sense to have quite a bit of money available to pay for college.

The basic idea of having some set aside for medium term living expenses and the rest in long term investments is a good one.

If the girl is mature enough, you can also try to see where she’s going in life. Is she inclined towards a poor-paying career, where she’ll need that stipend? Is it likely that she’ll have health problems at a young age? Is she civic- and charity-minded? Does she want children? Obviously, she’ll change as she grows up, but you can try to use these characteristics to shape your initial investment strategy.

I hope someone is raising this girl right. That much money is both a blessing and a danger. I hope the administrator of this trust is giving her “the freedom to do anything but not the freedom to do nothing.”