If I had a million dollars

by JT McGee

Inheriting a million dollars.

If I had a million dollars, I'd buy LEGO.

There’s a new “meme” circulating among finance bloggers about what they’d do if they inherited a million bucks in one fell swoop. YesIamCheap hosted a round-up with all the posts. I think I might be late to the party, but the topic is fun so I’m going to post about it, anyway.

If I had a million dollars…

I would put it all in CDs/TIPS and coupon clip. Just kiddin’

I’d purchase a 4-unit apartment building with the minimum amount down, and live in one. I think four to eight units would be reasonable, and I can think of the perfect location.

I’d still drive my 2002 Alero with 100k+ miles, since it just keeps ticking and gaining value thanks to a used car shortage.

I would invest $50,000 or so to speed up a few projects I’m working on. School would be put on hold. Six hours a semester max, just to avoid playing with family goodwill.

I’d go on a vacation for a week or two, only to find that I don’t really care to get away from home. I’d spend some cash on Amazon for a few books I have on my wish list, but have been too cheap to purchase.

I’d hire someone to do my shopping. I hate shopping.

I’d “splurge” on 1/200th of a share of a Karakorum thoroughbred because who doesn’t want to own a racehorse? Everytime I go to that site I have to resist the urge to buy in.

Achievement Unlocked: Accredited Investor

I’d enjoy my status as an accredited investor, having accumulated a net worth of more than $1 million. I would seek out a few startups for an angel investment, since once they put up a website, I can liquidate for big money on SharesPost. Thanks, dot com bubble.

I’d throw $200,000 into my InteractiveBrokers account to leverage it 5:1. I’d continue to seek out value investments, and frustrate myself with the lack of liquidity.

I’d start a $1,000 annual scholarship for students with no more than 2.5 GPAs who have 1800+ SAT scores, for revenge at top 20 B-schools that want 4.0 GPAs and paltry SAT scores.

For the sake of science I’d rent out a location in a local mall to see what kind of worthless junk I can sell to Christmas buyers. I’d test something new each month, something random I can source online. I’d contribute at least $25,000 to this cause.

I’d offer a convertible debt instrument to a local restaurant chain that I’ve wanted to own since they only had one location. If that doesn’t work, I’d look to buy exclusive franchising rights. I’ve never eaten there, but it’s going to be huge. I can feel it.

The end of my spree

Depending on how the above list plays out, I’d probably just hold onto the remainder in cash.

Hmm, a million bucks really isn’t that cool. Sure, I’d cut back on school and up the ante with my investments, but in reality, I’d be just as boring as I was before. I guess the main takeaway is that I’d try to turn it into more. 😉

What would you do with a million bucks?

{ 29 comments… read them below or add one }

Hunter July 13, 2011 at 02:59

I would start by giving probably around 10% to charity. I’d become a part time angel investor, like you were talking about. Some would go into foreign currencies and stock exchanges around the world. Some traveling would be fun to do, I might spend some time in Hawaii. I wouldn’t retire but since I no longer had to live for the moment, I’d focus on more long-term approaches.

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JT McGee July 13, 2011 at 09:54

Yeah, I’d probably squeeze charity in there somewhere. I toyed with the idea, but since it’s an inheritance I just assumed my family would get just as much as I would, so I left charity out. Some charities are great. Some fix problems that aren’t even problems. I’d have to give at least SOME money to Heifer International. http://www.heifer.org

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No Debt MBA July 13, 2011 at 10:14

I like that you’re dedicating some money to the ridiculous 😉 I’d stop by your christmas store though I might not buy anything..

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JT McGee July 13, 2011 at 10:55

Absolutely. The reason I want to start the Christmas kiosk thing will be touched on in a later article. (Hint: Silly Bandz).

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Jonathan July 13, 2011 at 10:27

My wife and I have discussed this very thing. We would donate at least 10% to a charity we’re heavily involved in, then spend the majority as a down payment on a larger housing complex of some kind that could generate enough income to replace one of our incomes (or both!). At that point we would increase monthly giving.

We would use some of it to take the trip to Spain she’s been wanting to go on. Maybe $10-15k.

By the way, your comment on SATs got me wondering what is considered an impressive score nowadays? I’m only a few years older than you but came in several years before the switch from a 1600 top score to 2400. Back then, most of the “smart kids” in my high school class would be in the 1300s. Some of those with more natural intelligence but sometimes less application in school (i.e. worse grades) would score in the 1400s and above. “Average students” would be around 1000. So what would those categories of people score now?

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JT McGee July 13, 2011 at 10:54

I like the complex and traveling ideas. When you have that much cash coming to you, it just doesn’t make sense not to put at least some in real property. Apartments are less interesting to me than the equity markets, but hey…I still recognize the value of something that can’t just be created out of thin air. Property definitely fits that void.

Impressive is…anything over average with a 4.0 GPA. And I’m not kidding. Even though the score changed from 1600 to 2400, the first two sections, critical reading/verbal and mathematics (which were the original two sections, as I understand) are still weighted heavier in applying for school. Average is a 1500. The new section is writing, which, as you can imagine, is pretty subjective and doesn’t necessarily fit inside the construct of measuring aptitude. Writing scores are a good way to make sure that, at a minimum, a student can put a sentence together. For that purpose, they’re great for admissions.

Theoretical conversions put 1300 on the first two sections at a 130 IQ, 1400 at a 137. I can tell you from experience/other’s experiences that having a SAT score in that range is not, in any way, a good way to get into school. Grade inflation has given rise to a belief that bad grades are indicative of laziness, when in reality, lower grades are indicative of boredom. I’ll never forget hearing a counselor say, “you wouldn’t believe the number of really smart kids we have in advanced classes that just fail everything.” Yeah, I would; it’s because the difference between “advanced” and “regular” is twice as much busywork and just as much critical thought.

The divergence in importance for aptitude testing and GPA is a running complaint of mine. Granted, I screwed around big time in HS (not like 1.0 screwed around), but had well above average SAT scores, one of the largest entrepreneurial scholarships and I didn’t stand a chance in getting into a B-school. It is what it is. B-Schools want employees.

I can’t blame anyone but myself. But if you’re in HS and reading this, a 1500+ score is a checkmark. It will not, in any way, “fill in” for a lacking GPA. Get a 4.0 GPA and you can get a 1400 (less than average) on your SATs for most top-20 schools. Honestly, you’d be better off with a 4.0/1500 than a 3.0/2000.

You opened a whole new can of worms. 😉

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Jonathan July 13, 2011 at 11:08

In my experience with “advanced” vs. “regular” classes, the curriculum may not be too much more interesting, but a) it generally moves along faster, b) you’re in class with much brighter and more interested kids, and c) you often get better teachers. I can’t say there’s necessarily a greater emphasis on critical thinking, though you implicitly make a good point that lack of critical thinking education throughout school leads to a crop of highly intelligent followers rather than outside-the-box leaders and entrepreneurs.

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Ashley @ Money Talks July 13, 2011 at 10:36

I’d pay off all our debt and then buy rental property with rest. I’d pay cash for it though. I’d want to get at least $3,000 a month income from that. If I had no debt and an additional $3,000 a month in rental income we wouldn’t have to work. Then we could do whatever we wanted job wise. Anything we made would just be fun money.

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JT McGee July 13, 2011 at 10:57

Think about how much more property you could have with leverage, though! Haha, I know that doesn’t sell well with some people as it does to me.

Really though, from what I understand about RE law, it’s best not to pay off a rental property because it becomes a target for lawyers should you have problems with a tenant. Do you know anything about this? I need to read more on the topic.

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Jonathan July 13, 2011 at 11:02

My FIL has lots of rental property and I’ve never heard that as a reason not to pay off a mortgage. Lots of insurance is as good a situation in most cases, as well as holding the property through an entity or company. There are other reasons you may not want to pay off a mortgage, of course—primarily liquidity.

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JT McGee July 13, 2011 at 11:23

I’ve heard of having a GP and LLP setup, where the GP is keyed into the ownership of the LLP. I’m in way over my head here. Law isn’t my thing.

Having it in a company makes sense, but even then they can take the house in a suit. They just can’t take yours. 😉 General liability insurance or umbrella insurance would fit the bill, I suppose…as long as you don’t tell anyone you have it.

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Krantcents July 13, 2011 at 15:43

I would take a portion and set up an educational foundation to award scholarships and invest the rest.

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JT McGee July 15, 2011 at 16:52

Great idea. Giving back, especially through scholarships is something I’d have to do, no doubt.

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Super Frugalette July 13, 2011 at 23:52

I would start a foundation to provide monetary assistance to families caring for severely disabled children. It will be called “The Fuzzy Bee Foundation”. However, when you do get you 1M. I would like to be hired as your personal shopper!

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JT McGee July 15, 2011 at 16:53

You’re hired!

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Jeff Reed July 14, 2011 at 13:48

I would give at least 10% to one of my favorite charities. Then I would buy a 1969 Camaro RS or SS convertible and restore it. That was the first car I owned and I wish I still had it (other than getting 8 MPG ). My daily driver would remain my 2001 Buick LeSabre with 175K miles. I would look for solid income stream properties with 50%, plowing the cash into a small homebrew and wine-making supply shop. That business might not make a lot of money but at least I could get my hobby equipment out of my garage and basement plus you get to drink your mistakes.

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JT McGee July 15, 2011 at 16:52

Just out of curiosity, would you restore it yourself or have it restored?

Haha! That business would be fun, I think. Knowing myself, though, I’d probably drink all my profits. 😉

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Jeff Reed July 16, 2011 at 22:11

I would have it restored by someone that knew what they were doing while I focused on the homebrew.

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retirebyforty July 15, 2011 at 15:38

Wow, you really plan to leverage to the hilt!
I find that 4 plex are built in weird spot and they are very rare in nice neighborhood. If you don’t have income, I think it would be difficult to get a loan even if you have 1M.

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JT McGee July 15, 2011 at 16:51

They way I see it is that failure isn’t really a big deal in your 20s. A million bucks is a guaranteed way to have an above average standard of living if invested extremely conservatively. But anyone who starts young can have the same above-average standard of living. No need to take risk off the table.

The area I’m thinking is a bad neighborhood only in the sense that its a college area. Above average rents have helped keep the area clean, and properties well maintained. It would come at a premium, of course, but hey, still a solid investment. Pretty sure I meet income/credit requirements to take on a property like this with 20% down. Either way, real estate is the least interesting idea of all those above, so if I couldn’t, then who cares.

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Yes, I Am Cheap July 15, 2011 at 21:28

You cracked me up with the selling some crap for Christmas and with the scholarship. I was one of those students. Eff ’em! Good post. I put you in the round-up!

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JT McGee July 16, 2011 at 00:51

Haha, you have to admit that it would be a blast to run one of those kiosks in the middle of the mall. Even if its a money loser, there’s something that intrigues me about selling stuff to people from a 6×6 stand thing.

And yeah…I hear you on the grades. 😉

P.S. I put the link to the roundup that I had forgotten earlier. My bad!

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Marie at FamilyMoneyValues July 16, 2011 at 16:17

I’d have to have a 24 hour emergency manager for that 4 plex if I was a live in owner – hate having calls about stopped up toilets in the middle of the night!

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JT McGee July 17, 2011 at 13:27

Definitely. Ten percent of cash flow for property management is an awesome deal.

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Darwin's Money July 16, 2011 at 23:17

Wow, what a fun meme. So, me? If I had a million dollars (outta nowhere)… I’d do nothing for 1 year. I’d let it sit there in various FDIC-insured accounts (5 I suppose), while I formed my strategy.

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JT McGee July 17, 2011 at 13:26

Smart. Patience pays off.

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Financial Samurai July 17, 2011 at 10:25

I just LOVE this line! “I’d start a $1,000 annual scholarship for students with no more than 2.5 GPAs who have 1800+ SAT scores, for revenge at top 20 B-schools that want 4.0 GPAs and paltry SAT scores.”

We’ve had fantastic debates about this, so kudos to you for doing that with your new millions bucks!

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JT McGee July 17, 2011 at 13:26

I have to put my money where my mouth is, right? 😉

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Harri @ TotallyMoney July 25, 2011 at 10:13

I’d definitely swing by your Christmas stall! Would fight the urge to part with my hard earned cash though.

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