Ask HN: What to do after $8M (all cash, post tax) exit?

[throwaway8m]

Going anonymous for this. I am just an average project manager who happened to be at the right tech company at the right time. They had a big exit and suddenly my stocks are worth $8M (the money came in my account last week).

I am just an average guy. I am 43 and middle level tech manager.I know coding (but nothing superb). I know business (but nothing much). I am not particularly very hardworking or particularly super intelligent. Not dumb or lazy - just average.

The point is I can probably find another similar job but probably nothing much higher.

I have two kids and a nice wife. I have a nice, small house and two small cars. Everything paid for. I have no debts or “vices”. I do not like smoking, drinking or going out. I do not think I have any real hobbies.

Just a simple guy with simple life and then this happens. What should I do? Should I donate it? Should I hire a personal wealth manager? Should I retire?

I am freaking out. Please provide some guidance.

[freddie_mercury]

Unsurprisingly lots of people have been in similar situations, so there is a Wiki article on one of the Internet's best personal finance and investing websites: "Managing a windfall" https://www.bogleheads.org/wiki/Managing_a_windfall

"Do nothing rash. Set aside one year's living expenses[note 2] and place the rest of the windfall into low risk investments (FDIC insured accounts, money market funds, treasury bills) for one year. As it may take as long as five years for the windfall recipient to adjust to a new life, this pause provides a chance for emotions to cool, helps avoid impulsive behavior, and, if warranted, allows the recipient time to put together a team of professional advisers."

[thehnguy]

Agreed with the bogleheads suggestion. I’m a lawyer who does some consulting to people in similar situations, and the mistake that everyone makes is thinking that because it’s a lot of money somehow it has to be treated differently. This is just plain wrong.

Resist the urge to hire a fancy money manager or do anything different beyond a celebratory dinner with your family.

Don’t tell anyone beyond your wife and very trustworthy family about this. Otherwise,you will quickly have lots of “friends” and family members who “love” you.

Going forward with work is a personal decision. Obviously, you don’t need to. A tried-and-true conservative investment approach will pay you sufficient income for the rest of your life (and our kids through college, and everything else). But it’s tough to stop working. Anecdotally, I’m about half retired (on a lot less money) and it’s a big challenge.

I’m getting long winded. For now, resist the urge to do anything special, anything too different.

[phkahler]

>> ...allows the recipient time to put together a team of professional advisers...

Yeah, because it takes a TEAM of people getting paid to figure out what to do with money. I could accept one financial advisor though I don't know how to select one, but a team sounds a bit like vultures ;-)

[zawerf]

> Unsurprisingly lots of people have been in similar situations

According to this article[1], you need $8.4 million to be in the top 1% of net worth so 1 out of 100 HN lurkers can probably also give useful first hand advice!

(assuming being rich doesn't make you less likely to visit HN)

[1] https://economix.blogs.nytimes.com/2012/01/17/measuring-the-...

[lukego]

You should also be able to find plenty of discussion threads in the Bogleheads forum started by other people who have found themselves in this position over the years.

[ziont]

seems like a great problem to have

a source of depression for some.

[dont_burn_it_up]

This is a great thread. Throwaway also. Gonna write some stream-of-consciousness here, because I have to start my work day, but I personally made approx. this amount from an exit, and it has gone very well for me and my family (wife + 3 kids). Some additional fine-tuned advice of what worked for me: (1) don't be afraid to spend money - high hourly rates - for a good accountant and good tax attorney. (2) if I were you I'd sign up for a couple different brokerage accounts (e.g., Charles Schwab and one other) and split the money between them. It takes almost no time to do this, and it's nice to have some diversity there in case something catastrophic happens to one of them and your assets are locked up for a long time while it gets sorted out. (3) as others have said, just buy US treasuries (interest rates are good right now) while you sit back and think about it. (4) Eventually if you're not into picking things yourself, you'll just want some healthy mix of asset classes, which (5) you'll learn about by reading some books. (6) Those brokerages will put someone on the phone with you and help you buy the treasuries, if that's confusing. (7) The one thing you want to avoid is letting the brokerages sell you their own personal wealth management. Everyone from your bank to your brokerage will try to sell you the "we'll help you for 1% of your money per year" -- avoid this. Suddenly 10 years have gone by and $800k-ish of your $8million is in someone else's hands, who simply threw darts at a dartboard and did their best to obfuscate their performance during bad times. (8) AVOID PRIVATE INVESTMENTS. Unless you're a professional private equity investor, don't buy a piece of that friend's restaurant, that store that's opening up, that tech startup, whatever. This money tends to disappear. If you're ok losing money to support your cousin who's starting a new company, just give them some money and be honest to yourself and them about the whole thing (not that I advise this either, but don't confuse charity and investment.) Just don't invest in private stuff. The problems with private investments: (a) you lose all liquidity, (b) markets aren't efficient so you can actually do a veeeeery bad job, (c) it can get personal and/or skeezy. So seriously, avoid any kind of private investments. (9) Avoid starting your own business and pouring all your money into it. People tend to burn through windfalls in that way and regret it. (10) Don't race into fancier real estate. (11) Make no lifestyle upgrades at all during the next year. (12) Take your time with charities. It can be a fun family project in the years to come to pick charities together. You'll have income in many years from this money, so you're not missing an opportunity for deductions by not giving money in the first year. (13) OH ! When signing up for brokerages, don't enable options or margin trading. In addition to this being dangerous for you, I believe it allows them to be funky with your cash and holdings, and it complicates your relationship with the brokerage should they or a bank they work with ever go under. (14) don't rush into estate configuration, just start with a simple will. Then consider trusts and things like that in future years. From my and my friends' experiences, they tend to overcomplicate things. (15) TELL AS FEW PEOPLE AS POSSIBLE. (16) Keep working, but only on something you enjoy. (17) Stay or get in shape. Your body is more important than money.

Seriously, AVOID PRIVATE INVESTMENTS.

Kobe Bryant on taking care of family after a windfall: "You will come to understand that you were taking care of them because it made YOU feel good, it made YOU happy to see them smiling and without a care in the world — and that was extremely selfish of you. While you were feeling satisfied with yourself, you were slowly eating away at their own dreams and ambitions. You were adding material things to their lives, but subtracting the most precious gifts of all: independence and growth."

https://www.theplayerstribune.com/en-us/articles/kobe-bryant...

[refurb]

Wow. Great quote from Kobe. It's true. Parents have the urge to remove all the obstacles from their children's lives that they themselves had to struggle with. However, struggling builds independence and personal growth. It's a fine balance.

[thorawy44447]

Hi,

Some tips from me:

- Take a nice holiday - Don't rush into investing. Take some time to think about what you want to do. - If you invest in stocks, do it in a staged plan. Resist the urge to sell when it's going down, and the urge to buy when it's going up. (I could not resist buying when it went up beginning January this year). Start with small amounts first. Be there for the long run (don't sell/buy all the time). Be prepared that you can go up/down a lot in one day. - Rather invest in index funds then specific stocks - Don't invest everything in one type. Don't just use 1 broker. Stay away from leveraged, turbos, bitcoins, etc... - Be careful about tax impacts on your decisions, depending on where you live - Be careful about private investments. Only invest into something which you understand and have knowledge of and can help and make it possible. Only take market risk, and not the execution risk. (I for instance have not yet done any investments so far) - I put some of my money in hedge funds (Millenium, etc..) through a private bank (additional yearly fee + performance fee).

And: - Think about what you would like to do. For me that's starting a new company (since I already did that before and succeeded). If you like your job, then stay.

[zip1234]

I disagree on not hiring an adviser. The key is to know what kind of adviser they are. If they are a fee-only adviser with fiduciary responsibility, it is likely exceptionally worthwhile. It sounds like you have a good handle on how to manage your finances, but there is a LOT to know. Minimizing taxes, planning children's' college, etc. Also, the good ones don't charge a flat 1% all the way up. They will charge less the more money you have with them. Source: my wife is a CFP and works for a well-respected firm in that industry.

[defen]

> Seriously, AVOID PRIVATE INVESTMENTS.

Good advice. My understanding is that private investments are the #1 way professional athletes with even more money than OP go broke (excludig straight-up fraud by their investment managers).

[aswanson]

That kobe quote is poignant and experience on a much smaller scale than kobe was on, has taught me the same. Also, your advice re: single private investment is spot on. If you read any story about a formerly rich athlete, etc going broke, it invariably involves a large investment in a dubious, high risk scheme (restaurants, companies, real estate, etc).

[D77IM]

Sound advice. Also, I can't help but read it in the Baz Luhrmann "Wear Sunscreen" voice, which was a nice bonus.

Be careful and thoughtful about where your money goes. Spend on memorable experiences and things you and your family can enjoy together. Maybe use this as an opportunity to find hobbies together and get even closer than you are now. Enjoy!

[sethammons]

Re the 1% thing: might be worth it. Lots of people chase returns and pick risky investments. Instead of picking a diversified portfolio of index and/or blue chip stocks and sticking with it, they "play" the market, and almost never beat it. The 1% to a wealth advisor saves you from yourself. Of course, milage will vary

[alsothrownaway]

As someone who has been in your shoes to a lesser degree, here are some things I learned:

It is best to not upgrade your lifestyle at all, but instead to use your position to bring broken people out of the pit. Here is why:

- 1. It is better to end the suffering of someone else than to make your own already-awesome life slightly better.

- 2. If you lose everything like I did, you will have actually lost nothing and only gained friends and good deeds.

- 3. Humans are insanely envious creatures. If anyone figures you out, they will most likely hate you and secretly hope it all burns. Before this, I never experienced the butt-end of envy. It can be so isolating; even if you are the nicest person.

One other thing: Don't completely fall into the lifestyle and mentality of doing whatever you want, whenever you want to do it. Maintain a connection to some kind of job or responsibility where your reputation is on the line; something where there is accountability. It will be incredibly difficult to return to "normal life" if something ever goes wrong.

[joncrane]

The thing that concerns me is that "I do not think I have any real hobbies."

I suggest continuing to work, but perhaps being pickier about where you work. Perhaps there's a dream job you've always wanted to do that up until now wasn't feasible because it doesn't pay enough, like fireman, park ranger, teacher, musician, etc? The key here is to have an obligation (people depend on you) and social interaction.

Also, see if maybe you can develop some hobbies. It can be as simple as hiking or collecting stamps. Preferably one that has a social aspect so you have human interaction.

You're going to need, at the bare minimum, a passion project to keep you engaged.

Sometimes, retiring early is the worst thing to happen to a person. Make sure you know well in advance how you're going to fill your days. Because having a bunch of empty days in your immediate future can be very detrimental to your mental health.

Good luck!

[Phenomenit]

"Also, see if maybe you can develop some hobbies. It can be as simple as hiking or collecting stamps. Preferably one that has a social aspect so you have human interaction."

I would avoid material intensive Hobbies where you can buy accomplishment.

Unfortunately I am not in a similar situation but if I was I would try to maybe put some effort in to being healthy and not just focusing on beeing stimulated constantly. You can afford taking it slow, give it a try.

[cies]

I felt the same. Hobbies, especially the ones that promote health or fitness (like some cool sports) would be something I'd clearly look out for.

On top of that I'd be very keen to invest in health of both yourself and your family. Dead people do not enjoy wealth, and while the sick sometimes need money to fix themselves up one can argue they do not really enjoy it. Some doctors may help you with a proper preventive plan that involves some recurring tests, I'd certainly invest in that. You may need a few, like: an MD, a holistic doctor and a nutritionist.

Then investigate what it takes to "live healthy" for you. Food (more raw organic produce), exercise/sports (yoga, running, cycling, gym, climbing/bouldering, kite surfing), some spiritual practice (meditation, breathing techniques, some philanthropy). This all can bring a person years of healthy life.

If your are not hung up on the location to live, you may want to explore some over the years. Having 2 places to call your home is well within reach. Then if you are into it, you can build, or remodel a place to your interests: a hobby in itself.

[pppaaauuulll]

For you or anyone else who is looking for hobbies, there is an enormous universe of amazing projects that desperately need volunteers with modest levels of skill.

I run a small science fiction magazine with some friends and we're always looking for support to help this project grow. What we need most is volunteers who can commit enough time to learn the ropes and move the project forward - it's hard to find anyone who can commit more than an hour or two a week.

Pick literally anything that you are interested in, and there's likely a community of people trying to do interesting things in that field. All you have to do is reach out! So, go get 'em.

You have the freedom to chose what you do with your time, but that freedom could become crippling if you don't fill it with something that you find meaningful/fulfilling.

[disease]

It can be equally detrimental to your physical health as well.

[WalterBright]

It may feel like infinite money, but can be burned through at terrifying speed. This happens to a lot of people who suddenly get money.

My advice is do nothing with it, and start reading books about finance, investing, and money management. Then start gradually investing it as you learn the ropes.

Hire a good CPA to help you with taxes.

Buy liability insurance, because you're now a target for jackpot lawsuits.

Don't listen to advice from the internet, your friends, family, any personal wealth manager, or anyone who wants you to invest in their business.

[owaty]

> My advice is do nothing with it, and start reading books about finance, investing, and money management.

I see where you are coming from, but if you step back for a second, this just sounds bizarre.

OP now has more money than they need or ever have had, and instead of relaxing and finally caring about something other than money, you suggest they actually start caring more about money.

[feistypharit]

This. Buy liability insurance. It's cheap and sadly, you are now a worthwhile target.

[__derek__]

> Don't listen to advice from the internet

Strongly disagree. Don't listen to the wrong advice from the internet. Do listen to wise, earnest, un-conflicted advice from the internet (e.g., Bogleheads).

[flarco]

Can you elaborate on why you think he should not listen to a personal wealth manager (assuming that's the same as a financial advisor)?

[Novashi]

>My advice is do nothing with it, and start reading books about finance, investing, and money management.

Unless you have serious interests in it, you're likely to be a lazy investor and lean on index funds with some gambling money.

There's a big pit where investment performance tanks between lazy index investors and serious investors. These people simply want to trade on their own invented investing signals and feel like they are doing something. It's a big, easy trap to fall into.

Maybe stay out of index funds until Trump is gone because he's volatile for world politics and the market has likewise been volatile and that swings index funds. Not because you'll lose money long-term (in fact, time in market > timing the market), but because seeing your portfolio drop $300,000 in a week is going to shock you and you might make bad decisions before you've developed resilience to these things. This is because the news is so good at making the world seem like it's going to end while you are treating it as serious investment warnings because you don't have the experience. It's like armageddon calculus.

Definitely don't invest in cryptocurrency though, even with your gambling money.

[jungler]

Speaking as someone who made a decent pile in cryptocurrency:

1. Don't ride on the stocks forever. You'll feel it as a windfall now, but it's an investment. You invested in the company, and it paid off, so you should probably part ways and start a new chapter, since the company's fortunes can change quickly. Every investment comes with risk and the more you have in one investment, the more you will feel that risk - so get some diversity in the portfolio as you are able to. Assume that you will have to give up a hefty percentage of the $8mm in taxes and fees in the process of doing so. Advisors can help mitigate that, but you want to keep watching the finances while you rearrange your life.

2. Even as a multi-millionaire, you can't afford "big things" like premium real estate or private jets. The numbers do not pencil out. It's healthy to still want a simple lifestyle and use the cash to indulge more modest luxuries. I like being able to order anything I want from Starbucks!

3. It doesn't matter if you succeeded financially, you'll still have plenty of things to struggle with in life - the Stoics say as much. The only difference is that you have room to choose which things you struggle with. You don't have to plan to take on the world, but you can now devote yourself to any altruistic pursuit you wish, any academic study or athletic achievement, or travel wherever you like, for as long as you like. These are things that you mostly can't do if your existence is premised on paying the bills. But you do want to stay hungry in some way, even if a paycheck can't do it.

[infinite8s]

OP said the $8M hit his account after taxes.

[merricksb]

This sounds much like the situation Paul Buchheit found himself in as Google employee #23.

He wrote a blog post [1] on this topic back in 2010, in response to a HN thread just like this.

Note that the post is no longer available on his own blog, so as you're reading it, try to read them as the words of a 2010 version of Buchheit, not a present-day one, as it seems that for whatever reason, he doesn't want this post attributed to his present-day self.

[1] https://web.archive.org/web/20180119114049/http://paulbuchhe...

[cantrevealname]

HN founder Paul Graham has some fantastic advice[1] on how to avoid losing your fortune:

When we sold our startup in 1998 I suddenly got a lot of money. I now had to think about something I hadn't had to think about before: how not to lose it. I knew it was possible to go from rich to poor, just as it was possible to go from poor to rich. But while I'd spent a lot of the past several years studying the paths from poor to rich, I knew practically nothing about the paths from rich to poor. Now, in order to avoid them, I had to learn where they were.

So I started to pay attention to how fortunes are lost. If you'd asked me as a kid how rich people became poor, I'd have said by spending all their money. That's how it happens in books and movies, because that's the colorful way to do it. But in fact the way most fortunes are lost is not through excessive expenditure, but through bad investments.

Be careful with anything other than the most ultra-conservative investment if you're putting millions into it.

[1] http://www.paulgraham.com/selfindulgence.html

[cmuguythrow]

Mental trick I recommend: You don’t have $8M - you own a business that lends money to people. Your business gives money to various companies through financial vehicles called ‘index funds’, which ensure that your loans are distributed across many different companies. The businesses use this money to fund their ventures, and are happy to pay you some money for the access to this capital. Your business is quite successful, earning you (.03 * 8M) = $240,000 per year. If someone else saw your balance sheet, they may be willing to pay you $8M for access to such a lucrative and easy-to-run business! Thinking this way allows you to spend the money however you want. Want to buy a Lamborghini? Go ahead! Use your $240k salary to finance your new car, just like any other normal person. But NEVER mortgage or sell any part of your amazing business just to buy a toy.

[ChuckMcM]

Having been in your shoes, and having had many friends in a similar place, I can only share what did and didn't work for us.

Diversifying was a positive for everyone who did it. John Doerr's advice to a friend was 'sell half' and diversify that. Because of the dot com crash (which may have been an anomaly) the folks who diversified completely (sold it all and moved into a balanced portfolio) did better.

Not changing your lifestyle. You have a 'burn rate' just like everything else (car payments, house payments, tuition bills etc). Leave that alone and your life will continue as it has, only more securely. One of the folks I know switched over to the lifestyle of the 'rich and famous', lots of parties, upgraded house, new cars, vacation trips all around the world. Burned through all their wealth and when it became obvious they had to go back to work, was in the place of going to people who had known them as the rich playboy type, and really impressing upon them how much they needed a job. It wasn't fun for them.

I would recommend you work with a financial adviser, or take a class at a community college on the basics of finance, or both. Back in the dot com days when I thought I was going to be a zillionaire I took the Forbes Wealth Management home study course. It was like 30 cassette tape lectures and a workbook. It did a good job of covering the foundations so that I could understand what people were talking about when they were comparing various options.

Put some aside for your kids college, giving them a debt free college education has a strong positive impact on their future success.

Sleep better and take care of your health.

EDIT: And talk to a tax accountant. Seriously. Moving around money in the "wrong" way can expose you to serious tax liability that might be surprising to you come April.

[matty_makes]

Retire. You can live off the interest if invested in mostly stable stuff (so I've heard) assuming you don't have a larger tax bill looming.

You may read lots of "awesome coder, great bizdev person" stuff online but 95% of the people out there in Tech are just working on someone else's idea/company bringing home pay. You are free from that now.

Be bored for a while and your interests will emerge. Take up a hobby, be a stay at home dad, think back to what excited you as a kid and explore those things.

[tim333]

Retiring is pretty dull at age 43. Maybe work on something you're into but which doesn't necessarily bring in much money. Personally, also having some money, I'm working on startup idea to fix the world etc which currently brings in zero money but is fun. Maybe it'll turn in to something real later, who knows. By the way re investing I recommend mainstream stuff like blue chip stocks, income producing real estate etc.

[tdewitt]

This.

Sounds like you have enough to live off of, with a little planning. Enjoy the time you get to spend with your family. Find a few things that interest you, taking some random classes, try new stuff. Were I in your shoes, I'd buy a home with enough dirt to build a shop and I'd tinker.

[athrowaway87965]

As one of the "wealth managers" who you apparently should avoid like the plague, I'll just put my $.02 here for what it's worth.

There is undeniably a lot of crap in the financial services space. I live in it and I could not agree more. I have to face this down every time someone asks what I do for a living. But this isn't really relevant to whether or not OP should hire an advisor. It just makes the job of finding a good one more difficult. But they exist.

The HN community is mostly made up of DIY types, so there's lots of advice to that effect popping up here. But, much like the infamous Dropbox announcement comment, some people don't want to "get an FTP account, mount it locally with curlftpfs, and then use SVN or CVS on the mounted filesystem", as "trivial" as that might be. Some people just want a little green check mark telling them that their files are synced. I'm 100% pro-DIY for the person who has the capacity mentally and emotionally. (Sidenote: the significance of the emotional capacity peace is severely underestimated by almost everyone). And I will happily tell a prospective client that they don't need me and wouldn't be happy with me if I can see that's who they are.

Finally, most people think my job is making money for people. It's not. I'd argue that one of the most significant pieces of info OP shared was:

> I am freaking out.

That's my job. Talking people down and helping them avoid all the bad advice their getting from family, friends, and internet strangers (there's a lot of GOOD advice here, for the record).

Congrats on your success, OP. Best of luck. $8M is a good thing. Don't freak out.

[lubujackson]

Just to add to this, having gone through a similar situation I went it alone and kind of wish I hadn't. I simply didn't care to learn and stay updated about markets, currency fluctuations etc. So there were some simple opportunities I didn't do (even boring things like sticking cash in a 6 month CD to earn 1% instead of 0).

I do think the advice to "do nothing for a while" is the best advice though. Give it a few months, anyway. If and when you DO want to consider a wealth manager guy, find a guy who doesn't take a percentage and works for a flat fee. Still, they might get kickbacks from certain investments so don't just jump into anything if it doesn't make clear sense to you (being skeptical is free, being closed off can cost you). I know a few high-up investment banker types and the interesting thing is most people with wealth aren't trying to find the next Apple stock but simply want to not lose their money. Most people with a lot of money invest with this mindset, so your feelings are pretty normal.

At a certain amount of money you start to realize there's no such thing as a safe place to stash it all. Keeping it in cash has risks (inflation!), FDIC only insures to a small amount and the stock market tends to move all at once because everything is tied together. So don't stress yourself out too much about it and don't try to get too cute because "you have a feeling the market is gonna..."

Change your life as little as possible is probably the best advice for not spending too much too fast with the risk of forming lifestyle changes that grows out of control over 10+ years. But I DO recommend spending money on things that make your day-to-day life easier or happier. That could be anything from buying 30 pairs of the same socks and throwing away your old ones so you don't have to find matching socks all the time to moving closer to work (if you still work) so you have less of a commute, or anything in between. I found it really helpful for a while to ask myself "is this something I wouldn't previously buy but it will improve my happiness every day?" If the answer was yes, I mostly made that change and it helped me continue to apply money to things of value without hamstringing myself needlessly.

[whack]

$8M is a big chunk of money, but most retirement advise being followed by the upper-middle-class still applies to you. If you follow the recommended investment advice given to retirees, you can afford to withdraw ~4% of your principal every year in perpetuity. This comes out to ~$320k (inflation adjusted) per year. Find a financial adviser with fiduciary duty, and he can help you get set up with this.

If your wife is working, I'm guessing $320k/year is a little higher than your existing household income. What that means is that both your wife and yourself can now quit your jobs and still maintain the same quality of life you currently have.

Note that quitting your job doesn't mean doing nothing. It just means that you can be intentional about what you want to do. If you want to spend time with your kids, read books and travel the world, you have the option of doing that. If you want to work as a teacher or non-profit volunteer or even start your own non-profit, you have the option of doing that. If you want to go back to work as a tech manager, you have the option of doing that too.

It may take you a while to figure out what you really want to do with your time... but don't try to rush it. Once you've quit your job and have time to think and experiment, you'll eventually figure it out.

The most important thing you can do in the short-term is to not burn your principal on something stupid like a private concert with a celebrity. The $320k/year I mentioned earlier is assuming that you have the entire $8M invested. If you splurged half your $8M upfront, your investment income will drop to ~$160k/year. Still a nice amount of money, but you'll find yourself in a situation where you have to continue working to maintain your desired lifestyle.

[throwaway94305]

Be careful: You can burn through $8M post-tax quicker than you think. We have a annual household income of >$1M pretax, so I have some experience here.

I'm assuming you live in the bay area. The price of nice but not stunning houses in many desirable areas is around $4M. Assuming your life expectancy is another 50 years, that's at least $45K/yr in taxes, so at least $2.2M in lifetime property taxes. The median home in Palo Alto is now >$3.2M, and that figure includes small or decrepit teardowns listed for land value alone. You won't be able to afford (and it would be a mistake to buy) some of the larger or newer houses on the market for $8M+.

Private school for two children can approach $100K a year (Castilleja in Palo Alto is $44K/year). You didn't say how old your children are, but if you include preschool and college, that could be $2M. You might want to hire a nanny. That's $30/hr, or over $70K/yr with employer taxes, or $1.4M without a raise for 20 years.

That's $9.6M for just a house, schooling, and child care. That doesn't include food, household cleaners, insurance, clothing, landscaping, pool maintenance, cars, a second house, hobbies, gifts to children, travel, etc.

Sure, maybe your investments will do OK. But on the other hand they need to beat inflation. Castilleja isn't getting cheaper. Your property taxes will increase, slowly but steadily, every year for life, and then there are local bond measures for additional taxes.

So my advice is to live below your means. We've tried this ourselves. Also you might want to stay employed, at least one of you, to extend your runway. Finally look for something meaningful in life. Attend a local church service over Christmas. Spending money by itself won't do it.

[triviatise]

Friend of mine in his 60s who was semi retired for the last 15 years had all his brokerage accounts emptied by hackers this year. He might get his money back, but might not. Make sure you use 2fa for all accounts. I prefer RSA secureID where you have a detached fob. Your phone can be hacked and hackers can then get verification codes.

Dont invest in anything except (almost) guaranteed returns for now(1 year CDs are starting to pay 2-3%) .

An emergency fund of 2+ years expenses in cash.

Slowly increase your standard of living over a long period of time (or not at all). I operate from a budget, not from cash in the bank. Religiously stick to the budget (this is hard) but dont beat yourself up if you go over. Quicken does a reasonably decent job of setting up a budget and allows you to keep spending in various "accounts" under control.

The standard safe withdrawl rate is 3%. Im planning for a more conservative 1.5% approach. This means you can take out up to 3% of your total funds each year and never run out. At 8m and 1.5% safe withdrawl you still need to work.

The strategy requires you to have a reasonably significant percent in the market. While the market could keep going up, I think you can wait a few years for the inevitable recession, but eventually you will have to get it into index funds.

I make a good income from my business and it is easy to get sloppy when I have too much cash. Last year at a fundraiser I got drunk and dropped 30K. Im not mad about the donation, but Im mad about the way I did it while being out of control.

Also this account is an example of a wasted $100k :)

[Sohcahtoa82]

> At 8m and 1.5% safe withdrawl you still need to work.

$8m at 1.5% is $120,000/year. Since he's already mentioned the house and cars being paid off already, that's going to be a living wage even in Silicon Valley, especially considering he also said the $8m is AFTER taxes. He doesn't need to work.

[vader1]

Congrats! Perhaps start here: https://www.reddit.com/r/personalfinance/wiki/windfall

[maaaats]

I see reddit mentioned by multiple people. I think the sub https://www.reddit.com/r/financialindependence/ might also be a nice fit, as it is about how to become financial independent (already achieved by OP) and then what to do after (retire early? how to manage the money? etc)

[topmonk]

I came into a windfall about a year ago. I found that it's easy to fall in a rut. Having so much money made me feel like that what what other people perceive as the biggest thing about me. I miss the praise and respect that a job well done gave me, that I had while working. After retiring, it's easy to think that, besides the money there is nothing worthwhile about me.

Then there is the question about what to do when meeting new people and they ask what I do? Tell the truth, and I create this weird social dynamic. Mutter “computer programmer” and I've just stunted any possibility of a real longterm connection by not describing who I truly am. Not sure what can be done about this, except say to prepare for loneliness.

The other piece of advice is to get deeply involved in learning something or creating something. I was amazed by how much the feeling of accomplishment gave me happiness and contentment over going to a fine restaurant or buying expensive clothes.

[thescriptkiddie]

Put it all in VTSAX. Sell 4% or less per year. Enjoy a six-figure income for the rest of your life. If anyone ever asks you to do something you don't want to, tell them "fuck you".

[CyanLite2]

I don't suggest the 'do-nothing' route. Time is limited. I'd suggest:

1) Splurge a little bit. Like $100k. Buy that Oculus VR you've been thinking about. Trade in your car to the new Tesla Model 3. Your wife has been eyeing a vacation to Hawaii for a few years now, go do it. Finish off your mancave basement project. Life is great, enjoy the fullness thereof. Don't feel bad about buying your kids a dozen new nerf guns and video game systems.

2) Focus your time now on improving the quality of life for others. You're rich. You've made it. You can live off of 2% interest the rest of your life and so will your wife/kids/grand-children. Now.... what are you going to do about the other 5.8 billion people on this planet who are struggling to make ends meet and are literally a few dollars away from death? Are you going to sit in your high-castle and collect bond coupon payments the rest of your life? Life is too short. What will be the legacy you leave this world? You have to do it now while you're still relatively young and healthy. Just volunteering your time and technology skills can affect the quality of life of thousands of people and their offspring for generations. Trust me, that's more fulfilling than buying a bigger house.

[askafriend]

I just wanted to chime in to say that this is just terrible, terrible advice.

It's clear you're not speaking from experience.

One has to be incredibly careful with a windfall like this. $8m is not a whole lot - certainly nothing like what you're fantasizing. Behaviors like you're suggesting can be incredibly damaging and snowball fast.

This is why most people who obtain sudden windfalls (an extraordinarily high percentage) go broke within years.

[sokoloff]

First of all, the taxes are probably not all paid on it. Some shares have been withheld (perhaps at 28%) when the actual figure is going to be higher (if ordinary income) or lower (if capital gains). You will need to find out next year when you actually file what the figure will be and be prepared to cut your state and Uncle Sam a fair-sized check.

Second, there may be a lockup period where you can't actually access all of the funds for perhaps 6 months. Then, if lots of people stampede for the exits on the same day, you could see some volatility then.

In your situation, I'd plan to keep working (or doing whatever you currently do) for at least 6-12 more months. You have enough money to retire (figure that you can treat as income 3.5-4% of your investment portfolio each year, provided it's invested appropriately [mostly in equities], so you're looking at $200K-$300K in pre-tax income just from the portfolio).

Why keep working? Well, you need something to create stability, normalcy, provide the same social interactions (with other people going through some similar things, presumably) and it keeps your health insurance and everything else "normal" for a while.

Other advice around is mostly good. It's a retirement amount of wealth, but it's not a crazy-large amount, so your lifestyle doesn't have to change much (and probably shouldn't) If you were happy 3 months ago, you should be about as happy now (not a ton more and not any less).

Don't buy annuities with it. Or at least not without talking it over with at least 3 financially savvy people that you deeply trust and letting the idea kick around in your head for 45 days.

Give it time to settle. Don't be in a rush to go through any "one-way" doors (quitting job or locking the money up in complicated investments). Put the money in something like VTSAX while you wait (that will give you broad-based stock market exposure).

[joshmlewis]

I don't see how not having access to the funds applies or that the stock price might have volatility since he said the money was in his bank account already.