Getting $1Million, how to make it last

[whitestripe]

if i was given $1m i would pay off our mortgage and bank the rest in a high interest account for a year and work like normal. then i would withdraw the interest each year and leave the rest in.

[Pitman]

Since FDIC is insuring accounts up to $250K, I'll spread the 1Mil around 4 savings accounts, and just live off the interest. After I buy a 2009 M3 of course.

[Broken Arrow]

All great advice.

Avoiding a big tax hit initially will be the biggest challenge.
Be wary of financial advisers that profit on your investments or earn commissions.
Build a diversified portfolio of investments.
Don't chase gains that have excessive risk. Don't try to time markets.

It probably took whoever is leaving this money to you a lifetime of hard work to accumulate. Show your respect for that by not squandering it and being very cautious about how you invest it.

Good list, Windcrasher!

[disneysteve]

Since FDIC is insuring accounts up to $250K, I'll spread the 1Mil around 4 savings accounts, and just live off the interest. After I buy a 2009 M3 of course.

Careful. I believe the 250K FDIC coverage is only temporary and will revert back to 100K next year.

You don't want a savings account anyway. You could do CDs, as someone mentioned earlier, but you'd need more than 4, even with 250K of coverage, because as soon as the first interest payment posted, you'd be over the insurance limit.

Assuming a 100K limit, you'd need accounts at 10 or more different banks to keep the money fully insured.

[noppenbd]

If you really do decide to put this $1M in CDs or bank savings, look into the CDARS program. It will allow you to bank in one location, but still have the full FDIC protection.

Certificate of Deposit Account Registry Service

[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]

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]

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.