Kelly writes in:
What would you do if you won the lottery?
Since I don’t play the lottery, I’ll answer this question under the assumption that instead I’m just receiving a very big inheritance from my unknown Uncle Rockefeller and Aunt Vanderbilt.
The first step I’d take is to make absolutely sure all taxes on that income were paid. I would immediately hire a tax attorney to make sure that every single I was dotted and T was crossed so that I could be very, very confident that the money remaining was mine, free and clear.
Once I had cleared all of the taxes out of the way, I would give a one-time gift to several of my family members. I would not give them enough so that they could simply stop working, but I would give them enough to pay off all of their debts and have a significant amount in the bank. I would make sure all taxes on those gifts were fully paid, and I’d encourage them to invest in something that would pay them a steady income. I would be extremely clear that this was a one-time gift, however. There would be no lending of money at any point in the future and I’d make that fact clear as well. That’s how I’d handle family issues with the money.
I would also give some one-time gifts to a few charities that are near to my heart. For example, the community food pantry in my local town is a wonderful charity run by some wonderful people, but they constantly struggle with things like keeping their doors open. I would love to give them enough so that they were endowed to cover their basic expenses in perpetuity.
With the remaining money, I would invest every single dime of it. I would not keep even a dime of the balance for anything fun.
“That sounds boring!” Well, really, it’s not.
Let’s say that I had $20 million left over after taxes and gifts to family and charity, hypothetically. Let’s say I invested all of it in about twenty five different blue chip stocks that paid a 3% annual dividend on average. That simple move would earn me $600,000 a year for the rest of my life in income. I would never have to worry about anything financially ever again. I can’t conceive of my lifestyle expanding to the point where I would even use a majority of that income.
I would diversify more than that, of course, but my focus would be on making sure that I was earning a very healthy investment income that didn’t touch the principal.
What would I do with my life with a large, stable income like that? I’d travel with my family. I would expose my children to the wide world in an incredible way. I’d spend significant periods in several different countries with them. I’d also make sure that my children could go to any institution of higher learning that they wished.
For myself? Honestly, the security of that money would mean more than anything else. Sarah and I would probably buy a piece of land in the country and build a home on it. We’d probably involve ourselves in volunteer work, mostly apolitical but not always. I would love to go back to graduate school in the areas that I studied in college, but be able to do it for the sheer joy of learning and researching and not have a cutthroat push for a job that often exists in the postsecondary science.
I don’t really have expensive dreams. I’d just enjoy the security and lack of stress that such a gift would provide.
Upon my death, I’d leave a small portion of the balance to my children and other descendants, not enough to allow them to live vicariously, but enough so that they could secure a strong financial future for themselves if they work at it. Most of it, however, would go to form a nonprofit foundation with strict directives on how the money should be used.
This is my gameplan if I were to suddenly receive a large gift. It’s not glamorous, but it fulfills everything I want from life.