Suppose you win 100 million. What do you actually do with it? Banks only guarantee 250,000. Do you have to invest it? Is there anywhere you can just let it sit and draw interest?

  • OceanSoap@lemmy.ml
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    1 year ago

    I’d hire someone who knows what they’re doing with it and follow whatever advice they give.

    • spencerforhire81@beehaw.org
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      1 year ago

      The trick is to hire SEVERAL groups of people (read: wealth management advisor teams from major financial institutions) and let them each manage a $25M+ chunk of it. You’d want to have 2-3 different groups, and then a simple portfolio you manage yourself that trades in market-tracking ETFs and highly rated government bonds. That gives you the combination of excellent security with minimal personal maintenance. And you get all the perks of being a wealth management client from several large institutions like below-market loan rates and unique investment opportunities. Also, the really big institutions like JP Morgan and Goldman Sachs have lots of resources available for financial education for their wealth management clients.

      That’s the best advice for someone who doesn’t really know what they’re doing. Never give one person the keys to your entire net worth, THAT’S how wealthy people end up broke.

      In this hypothetical, even if JP Morgan or Goldman Sachs collapsed or embezzled your funds (which is INCREDIBLY unlikely), you’d still have more than enough wealth to live comfortably for several lifetimes in your other accounts. Just make sure your accountant knows where everything is, because you don’t want to go to prison for tax evasion.

      • SugarSnack@lemm.ee
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        1 year ago

        This is absolutely the way to go, but be aware that it can lead to concentration/sectoral risk when managers aren’t aware of positions in the other portfolios. For example, Goldman could invest heavily in tech or pharma or whatever, not realising that JPM also have a big investment in that area.

        • JackbyDev@programming.dev
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          1 year ago

          Investors shouldn’t be picking winners. That’s already too much risk and too many fees. Total market index funds and total bond indexes are what you should be investing in.

      • mysoulishome@lemmy.world
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        1 year ago

        By listening to someone who knows how to manage money? Or by letting someone handle it it who fucks them? If you’re talking about a professional who is licensed and bonded and all of that seems like it would be smart…

      • OceanSoap@lemmy.ml
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        1 year ago

        No, they end up broke because they spend as if they’ll never run out of money without putting it into places that continue to make money for them. They level up their house, car, clothes, flight class, whatever, then end up living paycheck to paycheck with no savings and not being able to keep it up forever.

        Are there cases of some wealthy person trusting the wrong guy, whom they hand over their $$ to and that person runs off with it? Sure, but that’s a far cry from getting advice from a professional and following their advice.