Getting $1Million, how to make it last

[Vladimir Vautov]

No, no, no Give it to me I surely know what to do it!!! Thats joke and if you want seriously - than you got to buy Mclaren F1, and forget about da money}} That was another joke
In this hard time you better do nothing, put them under your pallow and sleep for 24 hour each day

[jIM_Ohio]

There are so many ways around the 100k/250k FDIC limits.

I've read things about spouses name, trust and similar to open 3 accounts.

My banker told me he would put each 100k CD in "another branch" as the FDIC limit is per branch, not per bank (I still need to confirm this).

[disneysteve]

Originally Posted by jIM_Ohio

My banker told me he would put each 100k CD in "another branch" as the FDIC limit is per branch, not per bank (I still need to confirm this).

Jim, this is definitely NOT true.

From fdic.gov:

The basic insurance amount is $250,000 per depositor, per insured bank.

The $250,000 amount applies to all depositors of an insured bank.

Deposits in separate branches of an insured bank are not separately insured. Deposits in one insured bank are insured separately from deposits in another insured bank.

[jIM_Ohio]

what is "insured bank"- by branch, state, or name?

For example I have some CDs with 5th 3rd-Ohio, and I have some with 5th-3rd Tennessee (the day I opened them TN banks were running a promotion and I have 4X the interest rate of Ohio).

None of them are close to 100k, much less 250k, but I was told the FDIC limits on each CD was 250k.

[disneysteve]

Originally Posted by jIM_Ohio

what is "insured bank"- by branch, state, or name?

That's a good question.

Again, from fdic.gov:

Deposits with each FDIC-insured bank are insured separately from any deposits at another insured bank. If an insured bank has branch offices, the main office and all branch offices are considered one insured bank – a depositor cannot increase insurance coverage by placing deposits at different branches of the same insured bank. Similarly, deposits held with the Internet division of an insured bank are considered the same as deposits with the "brick and mortar" part of the bank, even if the Internet division uses a different name. If two banks are affiliated, such as having a common holding company, but are separately chartered (indicated by having two different FDIC Certificate numbers), deposits in each bank would be separately insured.

So it looks like the key is whether or not the branches in different states are separately chartered.

[EEinNJ]

I see a lot of "whats" here, but not "whys?". The first thing to do is take a look at your situation, and take a realistic look at your goals. I don't mean a goal of x% return, but life goals. At 24, that may not be clear. Questions like, do you like your job, do you have family plans, do you want to move around or would you be happy settled in one place. Having and growing money is not a very fulfilling goal in itself, it's more valuable as a tool to give you freedom of choice in life. I'm not saying spend it, or don't work- make wise choices, but know why you are making them.

[DebbieL]

$1 million at 24. I am so jealous my face is probably green. Seriously. I wish I had your problems

[segmond]

limit your expense.
move to a cheap city/state.
buy a cheap foreclosed house in a nice area.
buy a nice reliable used car.
pay off your bills.
finish school if you haven't, get a job.

wait for opportunities to come up in this terrible economy and grab em.

[LivingAlmostLarge]

DebbieL i think it's called a jealousy-gasm! Me too. But seriously I hope the money didn't come from a death or anything.

[scfr]

Not knowing the details of your specific situation, I can't make any recommendations. So, I'll do a make-believe scenario and pretend that I can go back 20 years in time and advise my younger self, with the benefit of hindsight, what to do with the imaginary $1mill I had just inherited. This is what I would advise my younger self:

1. Tell as few people as necessary about the inheritance. You will never have to wonder if people just pretend to like you because they know you have money.

2. If you get married, for crying out loud, get a prenup.

3. Just park the money for at least 5 years. Take maybe $10K to blow on something if you really want to, but don't touch the rest. Develop your career. Figure out what you want to do with your life. Some amazing possibilities might occur to you. If you're entrepreneurial, you may decide to start your own business (and you'll be able to finance it with cash, instead of incurring debt). If you're uber-charitable, you may decide to adopt special needs children and become a stay-at-home-parent to them. You may decide to become "The Millionaire Next Door," living in a paid-for modest home and driving a sensible sedan. Etc. Etc. You get the picture. You have been given the gift of choice. Make your choices consciously and deliberately. Don't let the money slip through your fingers.

Be patient. Be smart. Good luck.

[cptacek]

Good advice, scrf.

Me, I would sit on it for a while. You don't have to decide what to do immediately.

I would probably want to invest it and not touch most of it for about 10 years...which should double it to $2 mil, especially at these rock bottom stock prices! Then, at 4% withdrawal, I could get $100,000 every year and not touch principal at all.

[LuxLiving]

At that young age I'd probably do something to lock it away from myself for a few years! And before I did too much of anything with it would be getting myself a good financial education and VERY VERY CAREFULLY selecting a financial planner. And perhaps after studying for myself deciding that no body can plan better for my life than myself. Keeping that capital intact would be of utmost importance and only spending interest would be a priority for me. Try not to kill the golden goose.

[Broken Arrow]

Originally Posted by quidam01

... i would say municipal bonds

Typically, I'm wary of overly-simplistic answers... but this may not be that far from the truth.

Your two biggest killers is going to be 1) Your shopping impulses 2) Capital gains tax.

There are also initial taxes of some kind which can't be avoided, but the two above can.

[jasonnoguchi]

Buy government bonds. period.

100% capital protected semi annual cashflow and you won't have to even think about it.

[LuxLiving]

re: govt. bonds - "you won't have to think about it."

????????

...unless you're me, and you'd stay up all night worrying if that particular government's $ was about to go belly up.

In ref to US govt. bonds, yes, they've been VERY SAFE thus far. Going forward? I'm not as sure as I once was.

[jasonnoguchi]

Originally Posted by LuxLiving

re: govt. bonds - "you won't have to think about it."

????????

...unless you're me, and you'd stay up all night worrying if that particular government's $ was about to go belly up.

In ref to US govt. bonds, yes, they've been VERY SAFE thus far. Going forward? I'm not as sure as I once was.

On a long enough time span, EVERY currency goes belly up. If that's the point of contend, then the only thing you can do with a million is to buy and stock up gold bars AT HOME. That's useful when WW3 happens, is it hasn't already.

On a "which if" basis, investment has no value.

Put money in bank: What if bank goes belly up? So many has gone belly up, how do you guarantee that yours won't?

Buy government bonds: What if governments default? what if currencies go under?

Buy stocks: what if company goes belly up? what if market crash? what if currency go under?

Keep cash under your pillow: what if thief visits? what if rats got to your cash?

Keep gold bars at home: what if thief visits? what if neighbours rob?

Buy real estate for rental residual income: what if property prices tank? what if tenant defaults? what about maintenance and tax?

ALL of the above has happened at least once in my lifetime, not on me fortunately (except market crash). In that kind of world, its best not to have that million in the first place. Agree? (this is actually when investment professionals like myself tell you to just surrender the money to us cos we apparently has a better plan for it than you have... NOT!)

If the USD goes under, no assets are safe because everything is still USD linked. Vote RMB as the next world currency? maybe.

Maybe you can advise us all what is the "safest" investment to do with a million now.

You mentioned "keeping the capital safe" as the utmost important thing for the OP, so, let me ask you. Which capital carrying vehicle is "safe" in your opinion? Bank saving account? How about currency risk? how about inflation risk? the longer you keep cash in the bank, the lesser capital you have, surely you should know that. Within less than 2 years, you will see inflation hit the headlines all over the world. So, what is safe?

If you have been to finance school, surely you know EVERYTHING is subject to primary, systemic and idiosyncratic risk. There is no such thing as "safe". For unsophisticated investors like the OP, the only way to protect the money against himself and to protect capital value against inflation and still not have to make sophisticated investment decisions is to invest in bonds such as the TIPS. That way, not only will he have no access to the cash, capital value can also be protected against inflation.

[Inkstain82]

If you are genuinely worried about the U.S. dollar going belly-up, your best investment would be a nice country home with a large basement full of non-perishable food supplies, guns and ammunition. Those would have a lot more value than gold in an apocalyptic scenario.

[jasonnoguchi]

Originally Posted by Inkstain82

If you are genuinely worried about the U.S. dollar going belly-up, your best investment would be a nice country home with a large basement full of non-perishable food supplies, guns and ammunition. Those would have a lot more value than gold in an apocalyptic scenario.

hahahhaha, can't agree more! ok! indeed, nothing beats a self-defended and self-sustaining fortress!

** Just curious... what kind of food supply is "non-perishable"?

[disneysteve]

Originally Posted by jasonnoguchi

** Just curious... what kind of food supply is "non-perishable"?

Canned fruits, vegetables, pastas and meats.
Dried pasta and other dehydrated products.

Lots of stuff isn't perishable.

[LuxLiving]

jason said:
"Maybe you can advise us all what is the "safest" investment to do with a million now."

Nope. If you read the rest of the forums, you'll note elsewhere I've mentioned that we do take all those risk scenarios into consideration when we make our asset allocations.

The stability of the US government backed investments is of concern to us at the moment. We will likely make a foreign currency play in our next reallocation process.

But, I am not a financial planner, and it has never been my intent to play one here. May be you are one? If you'll notice when I replied to the OP, t'was saying what "I" would do.

Having just inherited not one but two large sums of money, the answer is no, Jason, I don't believe we'll be handing over our money to you. And, I would rather have the people in my life than the money they so nicely bestowed.

FYI: I would consider myself to have a fairly high risk tolerance, however, that does not stop me from considering all those doomsday scenarios you so nicely laid out for us when we decide where to put our dollars - and right now the actions of the current WH administration have me very concerned.