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Old 05-02-2021, 06:12   #1
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Just for fun, what would you do with a million dollars

I'm a longtime lurker but I thought just for fun



You've hypothetically been spending less than you earn and investing the difference for years. Now you've got a million dollars and want to go cruising with potentially no more income coming until pension time 20 years away.


How do you slice and dice the money? How much on the boat? How much on upgrades? How much do you leave invested or reinvest to live off?



And finally what do you do?
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Old 05-02-2021, 06:14   #2
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Re: Just for fun, what would you do with a million dollars

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I'm a longtime lurker but I thought just for fun

And finally what do you do?
Nothing.........
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Old 05-02-2021, 06:42   #3
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Re: Just for fun, what would you do with a million dollars

1. I wouldn’t count on my pension being solvent or paying out as agreed.

2. Set up some small passive or close to passive income streams.

3. Up to $500k on the boat and income stream and just factor in that it’ll deprecate

4. Live low, frugally, don’t touch the capital you left behind. Live off income streams.

5. Sell the boat when you’re physically unable to use it anymore.

7. Use proceeds of sale to buy a tiny cabin.

This is my life plan basically. Ha ha
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Old 05-02-2021, 07:09   #4
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Re: Just for fun, what would you do with a million dollars

Too many unknowns:
- Is the savings in retirement accounts?
- How much is the Pension?
- Is the Pension solvent?
- How much is Social Security?
- What type of cruising do you want to do?
- What else do you want to do?
- What type of lifestyle do you expect?
- Etc...
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Old 05-02-2021, 07:13   #5
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Re: Just for fun, what would you do with a million dollars

A million dollars isn't what it once was. I wouldn't do anything different until I had more like five or six million dollars.
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Old 05-02-2021, 07:30   #6
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Re: Just for fun, what would you do with a million dollars

Fun game, okay I'll make the following assumptions:

1) you are approximately 58 years old and will live exactly 20 more years then croak a happy man watching the sunset somewhere over the pacific.
2) you are a US citizen and will receive a modest SS payment that you claim early at 62 years old
3) you are single and no kids or other considerations
4) you are very handy and can fix stuff.
5) you are healthy and fit

Here is what you need to do:
1) Purchase a small condo for cash that can be rented out as part of your investment plan, plus it gives you a fall back plan if everything goes to hell in a hand basket. $200k "invested", rental income pays for all expenses, plus provides you an average of $500-$700 month net income conservatively. This way you are not priced out of the real estate market and smooths out any market volatility in other investments.
2) Purchase a nice well sorted out used monohull in the $100k-$150k range.
3) Put the $600k in VTSAX total stock market fund, pays roughly a 2% dividend.
4) Keep the remainder in cash for the first year to cover expenses and what-ifs until you get the hang of things.
5) Target a budget of $3k month for the first few years until SS kicks in and you have a feel for how expenses shake out. Statistically speaking this has 90%+ probability of working out and allowing you a stress free enjoyable life. If you sequence of returns work out to your favor on the investments, feel free to loosen up the spending a bit.
6) Go now and have fun!
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Old 05-02-2021, 08:29   #7
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Re: Just for fun, what would you do with a million dollars

You don't have enough money to retire at 42. Even at a .04 return on investment, you're making $40K, which is taxed at .22. So your net is around $31,200, giving you a $2,600 monthly income.

However, that is on today's money. The rate of inflation over the last 20 years (2001) has been roughly 46%. By the time you retire in 20 years, your purchasing power with that same $2,600 will be equivalent to roughly $1,404 per month. It doesn't magically drop, it will have slowly degraded over time.

As inflation occurs, you will be forced to draw down your principal, which will also server to reduce your return on investment. This potentially creates a loop where you need to then continue to draw down further on the principal.

Finally, is this money sitting in a tax shelter, like an IRA or a 401K, 403B, etc? If so, then you need to add the 10% penalty on all money withdrawn from those sheltered accounts.

Is the money going to be invested in a somewhat guaranteed vehicle like an annuity? Or is it in the stock market. While the average is 7% over time that is not guaranteed. You could loose money in a bear market. Which is why I calculate the draw at 4% and not 7%. If you only draw 4% on bull years, you can maybe save the difference for those bear years.
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Old 05-02-2021, 08:42   #8
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Re: Just for fun, what would you do with a million dollars

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You don't have enough money to retire at 42. Even at a .04 return on investment, you're making $40K, which is taxed at .22. So your net is around $31,200, giving you a $2,600 monthly income.
I agree that if the OP is 42 they would not be able to retire to the comfort level most are shooting for, but just for a tiny bit of clarification, the tax code is progressive. So it is only 12% Federal Tax for the dollars earned between (approx.) $10k and $40k if you are considering this taxed as ordinary income without any deductions. Over $40k those dollars are taxed at 22%.
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Old 05-02-2021, 09:10   #9
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Re: Just for fun, what would you do with a million dollars

(quick edit: I skimmed and didn't read properly :/ You said you had been investing and built up to this, my theoretical had it all dropped in my lap, the numbers would be a bit more favorable in your situation)

Ill play.

41yrs old, happily married with an 11yr old son who has grown up outside in Alaska off the road system.
Assuming all borders open along with my windfall (if one can happen the other can as well right?)

After taxes I am left with roughly 665,000 of my one million windfall.

There is a Leopard 38 for sale in Quebec, spend $250,000 on it plus any upgrades it needs. = 415,000 remaining.
100,000 in checking for the next 18 months living expenses = 315,000 remaining

100,000 towards boat building shed back home in Alaska while we are gone = 215,000

Invest 215,000 for 18 months

Spend the summer on Lake Ontario learning how to operate and sail it.
Spend the following 12 months completing the Great Loop with winter in Bahamas and the summer again in Lake Ontario(close to family)
Besides growing up in Alaska our son will never forget the 18 month adventure on a boat with his parents, and if nothing else comes from this theoretical money, it was worth it.

Sell the boat, hopefully for more than 100,000 = 315,000

Rental income + investment earnings during that time bring the total up to ~350,000

Purchase and have shipped to arrive back home around same time as us the full cnc cut materials package to build a Schionning Solitaire (or maybe DH550) kit + extras + shipping around 200,000 = 150,000 remaining in investments.

Spend the next 8 years building the boat in evenings and weekends while working full time(in this fantasy wife and I both can walk back into our jobs after our 18 months away, in reality thats less than likely) Working allows us to finish the boat out wages instead of savings = 150,000 remaining in investments.... after 8 years maybe 250,000 and a brand new custom built yacht to live on.

By this point I am just over 50, we are empty nesters and ready to retire beyond the horizon.
Do we sell the house and leave right away hoping to live off the investments from that?
Do we stick around close to home working for another 5-10 years?
Does lightning strike twice and we find another million in green bills in the boat shed when we return home one day?
Did our investments during the pandemic double the next year instead of slow growth?
Did we "invest" it all in Gamestop the week before it spiked and sold it at the top?
Do we end up working the boat in charter to afford living the rest of our lives?
Do we end up hating the water and move to a Tibetan monastery for the rest of our lives?

Tune in next time to find out!
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Old 05-02-2021, 09:21   #10
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Re: Just for fun, what would you do with a million dollars

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Originally Posted by ol1970 View Post
I agree that if the OP is 42 they would not be able to retire to the comfort level most are shooting for, but just for a tiny bit of clarification, the tax code is progressive. So it is only 12% Federal Tax for the dollars earned between (approx.) $10k and $40k if you are considering this taxed as ordinary income without any deductions. Over $40k those dollars are taxed at 22%.
Very true!!

12% <= $40,125
22% >= $$40,126

Since the calculation at a 4% return came down to $40,000, and we're slicing $126, I calculated on the side of caution. Getting the yearly income at or under $40,125 is going to be a major factor.
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Old 05-02-2021, 09:38   #11
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Re: Just for fun, what would you do with a million dollars

Pretty much what @Chotu said, with the main exception being I wouldn't spend more than $200k on the boat AND ALL THE REFITS NEEDED; $150k or $100k would be better.This might limit the size boat you're looking at.

Don't count on any pension or moneys from anywhere other than you. Passive income/side hustle money is great especially if you don't count it in your budgeting (it lengthens the runway, as it were). Tim Ferriss's "The 4-Hour Work Week" is a great way to get your mind rolling on ideas - just overlook some of his more outlandish/borderline ethical methods.
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Old 05-02-2021, 10:04   #12
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Re: Just for fun, what would you do with a million dollars

We're on the cusp of an adequately funded retirement. So an injection of $1m (assuming tax-free) would go as follows:
  • $250k to family members - top up pensions, towards kids education, etc
  • $100k towards a really nice Great Lakes monohull that would also be capable of running down to the Caribbean.
  • Maybe $100k on new vehicles, furniture, landscaping.... mad money
  • Up to $200k plus the returns from selling our house to move somewhere on a nice lake, maybe. Or just stay put; our current location is pretty sweet. A 10 min walk to our slip
  • Up to $200k allocated to travel, Caribbean, Med, or EU canal charters, etc
  • Balance added to retirement investments.
This was fun. Going to buy a lottery ticket now

(And sorry, I didn't read the 1st post carefully either. Above is based on a $1m windfall)
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Old 05-02-2021, 10:17   #13
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Re: Just for fun, what would you do with a million dollars

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Originally Posted by Shrew View Post
Very true!!

12% <= $40,125
22% >= $$40,126

Since the calculation at a 4% return came down to $40,000, and we're slicing $126, I calculated on the side of caution. Getting the yearly income at or under $40,125 is going to be a major factor.
You don't need to worry about that Shrew, its only the dollars earned over $40,126 are taxed at the higher rate. If you made $40,127 dollars, that $1 dollar extra you'd pay 22%, so if you went over by $1, you'll pay exactly $0.22 more, that's it.
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Old 05-02-2021, 10:27   #14
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Re: Just for fun, what would you do with a million dollars

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Originally Posted by patrickza View Post
I'm a longtime lurker but I thought just for fun



You've hypothetically been spending less than you earn and investing the difference for years. Now you've got a million dollars and want to go cruising with potentially no more income coming until pension time 20 years away.


How do you slice and dice the money? How much on the boat? How much on upgrades? How much do you leave invested or reinvest to live off?



And finally what do you do?


35’ boat, $30k, purchase, $30k outfit.

$30k into a CreditUnion and Visa card from there
$10k into a major bank like BoA or WF and a Visa card thru them too.
$200k into T-bills; emergency fund.
$700k into an index stock market fund: if there’s 5% return that $35k/yr to live on which goes to the CU. Anything over 5% goes into the index funds.
Anytime the US economy looks iffy all the whole index goes into T-bills.

CUs have much better customer service than regular banks but may not have the reach of a major.

Start on the east coast US ICW into the Caribbean.
If we like it then either we go east to Europe or west the Panama into the Pacific.
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Old 05-02-2021, 10:27   #15
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Re: Just for fun, what would you do with a million dollars

You asking what I would do, or what rich people would do? I can live very comfortably on 3K a month sailing around the world (based on previous experience and information from other cruisers.)

I'd buy the boat I actually have - a Tayana 37, and invest 100K to make it 100% ready for circumnavigation (what I'm currently doing).

Than I'd happily live on $3k a month for (based on your million dollar amount) for 25 years. That would put me at 74 years old and 4 years of social security (assuming that exists) and all the interest accrued on that 900K saved and ready to get me through to the afterlife as supplements to my SS check each month

Now, in real life - forget that! I have 3K minimum passive income set up for my travels, and I can't imagine leaving the docks at age 49 without income, but that's just me - many people would be quite happy with my answer to your scenario. Question is, would you?
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