Help me, I’m a millionaire
Sam asks: You set me up on a good financial path when I started working as a graduate.
However, I recently inherited a fortune from my grandparents in the sum of $6.3 million. I’ve never had much money and I feel so blessed to have been gifted such a large sum. I want to conservatively manage this money. What’s the best way to invest it, taking minimal risks, for the next 50 years?
Barefoot responds: You just scored a ticket to Willy Wonka’s one per cent club.
And that’s how I’d think about the money you’ve just received: as a golden ticket.
If you invest that money into a number of ultra low-cost index funds, the income the portfolio will generate will be roughly $200,000 a year (after tax and inflation). Every year, for the rest of your life, shot directly into the bank account of your choice.
Even better, in 50 years those index funds will have likely doubled in spending power, which your future children will be very happy about (if you choose to create some trustafarians).
So how do you set up a golden ticket? First, talk to an accountant and an estate planning lawyer and have them set up a family trust.
Second, talk to a financial adviser who specialises in index funds and have them set up a simple portfolio of local and international funds.
Do not pay any ongoing advice fees. Finally, think long and hard about how you can ensure this money won’t totally screw up your life.
Wait! What?
I’ve seen it happen way too many times. It’s called a “poisoned chalice”, receiving unearned money often brings up feelings of guilt and sparks frivolous spending (big houses cost a lot to maintain), and the results can be a lack of meaning in life. Remember, the main lesson from Charlie And The Chocolate Factory is to work hard and help others. Good luck!