The million dollar challenge

The challenge

What would you do if a million dollars suddenly landed in your lap tax free? I can list all the things I can buy and spend, but here’s another question you may not have thought of: How would you grow a million dollars?

I have read so many stories about successful people who started with little more than a few dollars and turned it into fortunes. What if you could start with a million? Would you have it easier? Could you make it five million, maybe ten or even a hundred? How would you do it?

I’ve been reading about Chinese culture lately and your investing method caught my attention. The Chinese have a simple rule of thumb about what to do with a sudden windfall of cash that somehow makes sense. If you had a million dollars today (tax free), you would follow these steps:

10% = fun money

Fun Money is simply spent on whatever you want! $100,000 sounds like a lot of fun! I would buy the Mercedes Benz that my wife and I have always wanted. It’s an E cup. That would probably knock out half my fun money right there. (sniff.sniff) The rest would be spent on paying off debt (credit cards, car payments, etc.), as well as making necessary repairs, modifications, and improvements to my home, and travel time with my family.

20% = low risk-low (to medium) return investment

A low risk, low (to medium) return investment is an investment that requires a lot of capital, but the ROI (return on investment) will be “slow but sure.” Within these lines I can venture into a series of franchises (food with good brands) or buy some real estate (land, apartments, etc.) that provide monthly checks and keep the investment at an appreciable rate. The goal here is to make a safe investment. There are no guarantees on anything, but these investments are considered less risky.

10% = High Risk High Return Investment.

This investment is simply a high risk endeavor with a potentially high return. They can be joint ventures with partners to form a company that brings a new and exciting high-potential product to market, sets up a new restaurant, etc. This can also be used as funds to be a venture capitalist for entrepreneurs with great ideas but little capital. On the other hand, if a good opportunity does not present itself yet, the money can be used to invest in the stock market, mutual funds or bonds, but the fact is that it can be liquidated in a short period of time when the right arises. the opportunity presents itself.

60% = Savings / Sleeper

Ultimately, $600,000 would be put to work through bank time deposits, CD’s, etc. The interest earned would be a nice reward. It can be used for more savings or to finish paying off the mortgage. The important thing is to let this large amount of money work for you. Can you imagine having $600,000 working for you while you relax? =) I would hire a financial planner who can introduce me to a lot of safe investment vehicles with good interest rates.

So out of a million dollars, 60% is intact and growing, while the other 30% is invested and already working for you. There are checks that arrive month after month without you having to work very hard to get them. This is called passive to semi-passive income. For me it is the right way not only to live life but to enjoy it.

So what would you do with a million dollars?