Hey, folks. Today’s Daily Prompt is all about winning. Specifically, what you’d do if you won one billion dollars, tax-free. I like that the prompt included that little bit on the end, because that makes things far less complicated in terms of structuring a portfolio. Nobody likes paying taxes, and doing it for a billion dollars would probably physically hurt. So, what do you do with that kind of money? A lot of people would spring for some kind of mansion, cars, an island, etc. Sorry to be boring, but I don’t think I’d go that route. Not immediately, anyway. Having that much cash suddenly dropped on me would certainly solve some of my short-term problems, but it’d potentially cause a ton more without a good amount of foresight and planning.
There’s a pervasive belief that being rich means you can retire. Maybe you’ll get a big coin vault and . Or maybe . Spending the rest of your life in the lap of luxury sounds pretty awesome, doesn’t it? And while it’s technically possible to do with a tax-free billion, it would be inherently limiting. The amount of money in your account isn’t as important as how you spend it to maintain your standard of living. Basically, stuff adds up. Read up on Warren Buffett sometime; the dude’s lived in the same house since 1956. His lack of extravagance is something I’d like to emulate. For example: I don’t have a car, so I walk and take public transit. Sure, that makes me a scrub in most people’s eyes. But I’m saving thousands annually on insurance premiums and maintenance. The same goes with the phone; I’ve been using the same ratty old flip phone for the better part of a decade. Its data plan is almost non-existent. It doesn’t have a camera, a music player, or even the Internet. But it can make or take calls, and that’s all I need.
General rule of thumb/common sense: If you want to make a profit, earn more than what you spend.
However, that doesn’t mean I could or want do more. Money is one (and certainly not the only) means by which we get resources and opportunities. I may not need a smart phone, but it’d make managing a business and building relationships much easier. So, if I want more opportunities, I’d have to make more money. I’d get the immediate problems out of the way, like getting the house paid off and health insurance coverage handled. After calculating my standard of living and doubling it in case of unforeseen expenses, the rest would be left for investments. Since this money is tax free, I won’t have to put all of it immediately into my IRA, though a portion of it certainly would. Some of it would go towards at least a few interest bearing accounts or fixed-rate CDs, even though the percentages these days are pathetically low.
Did I mention I was in banking for 12 years?
The investments wouldn’t be just in terms of accounts, either. Technically, everything you own is an investment. They just have varying degrees of necessity and returns. I may be a huge geek, but I know a week’s worth of groceries is always better investment than a TARDIS replica. If you’re in the photography business, you don’t just get the best camera money can buy; you get one that doesn’t break your bank and still suits your needs. If you’re a diplomat en route to Beijing, it’s probably a good idea to invest in learning Mandarin. Everything you pick up along the way are just pieces of the foundation of your financial career.
Mine would likely include investments in real estate development, particularly in China. Renewable energy, psychology, educational, food, transportation, and health care technology developments would also be essential. Communications, preferably with a focus online streaming and messaging, would also be a priority. Privacy, too. The stock market is also plausible, but it’s way riskier. I still have chilling flashbacks of working at a bank when the recession hit. I’d rather have a good, steady burn instead relying on just finicky economic confidence. Once I have a solid return, I’d donate to charities, particularly those involved with world hunger, depression, and education. Maybe start a college.
…And build a personal library. Deep down, I’m still a bookworm.