As had been said, a million dollars is not that much money.
One of the investment rules of thumb is to invest in the stock market and only spend 4% of the earnings. Playing around with an online modeler, the 4% rule works over long time periods, including the horrible economic downturns starting in the late 1800s. One might be able to squeeze out 4.5-5% but one increases the risk of running out of money. The horror stories of people running through lottery winnings just shows that some people do not know how to manage money. The couple that won $8 million could have spent $2 million on a house and cars, invested the remaining $6 million, and taken out 4%, which would have given them $240,000 a year to spend.
The wifey and I discuss what to do if we won the lottery or sold some land. She would want to pay off the mortgage because then the House Is Ours to which I agree. But.
We refied near the bottom of the mortgage rate decline and I would be tempted to pay a bit of interest on the money while investing for a higher return.
Sooo, after dealing with the house mortgage, one way or the other, we would likely finished building out the place as we had originally planned. This would include a barn and putting in solar with a large battery backup.
Then retire early.
If we won more money, then we would start looking to do charitable works. Do something that actually helps people help themselves. Not give away projects that encourage people to always be looking for a handout. BUT, even the charitable works would be paid for from the EARNINGS of the money. No way would we spend the principal. Ben Franklin was a rich man, not many people realize this, but he had made a fortune via his various enterprises. At his death, he left 2,000 pounds to be invested for, and given to, Boston and Philadelphia, 200 years in the future. Franklin had doubts the US would survive that long but figured it was worth a chance. Having said that, that 2,000 pounds was two million dollars at the end of the two centuries and the courts had to decide on who to give the money too. Me thinks, Franklin could have done better spending the money in his time, and setting up the organizations to spend the money, compared to letting the money be fought over in the future.
Later,
Dan
