What would you do with $15M? - Page 3
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Thread: What would you do with $15M?

  1. #21
    Senior Member tygrus's Avatar
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    Doesn't matter if you have 1 dollar or 100 million dollars. You follow the couch potato or mustache guy. Yeah thats great advice.

    If I had 15M none of it would go into the market. I would put it into HISA and GIC. Pretty sure I can live off $400k per year.

    But then again, someone who built a 15M business would know what to do with the money and wouldn't be on here with their first post.


  2. #22
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    Hi StayThirsty,

    Congratulations on completing your 15M deal!
    I can understand what it feels like and Im sure you must have worked hard and sacrificed a lot of things along the way to get to this stage.
    A windfall can be an easy thing to make people distracted and take wrong decisions but you have been quite responsible and Im sure you will be prudent in your decisions.

    Im assuming you dont have any loans or mortgages or debt. If you have some loans it may be a good idea to settle them off and use the remaining to invest. If its a low-interest mortgage you can retain it if the monthly payments are not burdensome.

    If you want to start investing with a simple, hands-off approach (sort of passive investing). I'm not a qualified advisor or professional but from personal experience I've seen that passive approach using ETFs (index, REITs, etc) as well other monthly income-generating companies listed on TSX are a great way to get started. The biggest challenge here is to be patient and not worry about making big numbers - rather focus on building it block-by-block.
    I dont want to brag about myself but just sharing my personal experience. I have had good success and failures in stock picking (outside Canada) and limited experience in Canada. So knowing my limits I stuck to index and income-investing approach which gave me peace of mind and regular income (like clock work).
    I started off with humble beginnings with limited savings to make $6 a month which could hardly buy a burger. In a matter of 8 months I've reached $60 a month level.
    Of course it was not a smooth ride and I had seen lot of volatility and losses and had to make adjustments for tax and convenience purposes.

    You can call the approach - Couch potato or passive of income investing or whatever, but at the end of the day like Kevin O Leary says an investment that does not pay dividends is just a Fantasy. This approach provides regular income plus the capital appreciation or stability although quite moderate. When you get dividends and channel it back and diversify your investment you are creating a growing compounding machine! You made $15M and achieved a lot. With passive investing you spend less time on the investing thing and instead pursue your interests in business, travel, family or other things where you will get better satisfaction or professional experience.

    My personal opinion is to avoid going to banks for investment advise or services. The reasons are obvious so I wont get in to that. If I were you I would have 2-3 or more discount brokerage accounts (for family members) and follow a disciplined and gradual investing strategy.

    Let me know if you have any question - I will try to answer as far as I know from my personal experience.

    If you can try visiting blogs like Freedom35, Young and Thrifty to get some ideas. I'm also working on crystallizing my ideas in to a blog, book or some kind of toolkit that can be of value to income-seeking investors.

    Good luck.

    Sridhar

    Quote Originally Posted by StayThirstyMyFriends View Post
    Hi All,

    I am suddenly about to be a "high net worth individual"! We are selling our company, should close in a couple of months I should be sitting on over $15M! It looks like financial independence may actually become a reality!

    Needless to say, I now have a new thing to worry about : how do I manage the money? I want to "retire"... I want the freedom to pursue a variety of hobbies, and travel and only work if I choose. I am in my early 50's, am married and have 2 kids that are still in school.

    This should be no problem with this kind of money. But I've always been a frugal, fiscally responsible type of person and, well, proper stewardship of this windfall just seems like the right thing to do. I'd like to invest it, live off the return with a conservative safe-withdrawl rate of, say, 1.5% after taxes.

    At least half the windfall will be held in a holding company (for tax deferral - part of the sale deal structure) and we will need to pay tax on any value we pull out of it. But both myself and my wife are shareholders in the holding company. I have set up a Family Trust that will allow us to do some investment income splitting with our kids (with non-holdco investments).

    I have no desire to pick stocks. I plan to either do passive investing, or have someone else actively manage our money.

    For our RRSPs, I have been a couch potato investor for many years. I understand the theory of passive investing and it makes sense to me. But I've never really tracked my performance. (With an account that you are contributing to monthly with annual top-ups and infrequent rebalancing, it is hard to evaluate return on the back of an envelope I find.)

    So, although I like passive investing, I don't have completely confidence in it... not when my family's future is at stake. I believe that there maybe stormy waters ahead in the global economy and... sometimes I start falling into the dangerous trap of thinking "this time its different" With the way interest rates have been for so long, and global fiscal experiments like quantitative easing. Maybe having some financial professionals on my side who contemplate these issues 24/7 is not a bad idea? But as a closet couch potato, I obviously want to minimize management expense and have a distrust of financial advisors - they're just trying to get a comission

    So... thinking about low-maintenance active management, I've talked to my bank's "High Net Worth Wealth Management" branch. They have their actively managed funds with fees that start at 1.3% and creep down the more money you have invested in them. At $5M for example, their rates are 0.85%. This program has a $1M investment threshold just to join the plan.

    I have considered talking to a 3rd party active management house like Steadyhand. Their rates seem similar to the bank.

    I've heard of TIGER21, which seems like an investment club for rich people (not sure if I'm rich enough to join though).

    My thought at this point is maybe give the bank, and Steadyhand, each $2-3M and see how they do - how I like the service, how much confidence they instill - and in the meantime just couch potato the rest. Also thinking that I should have the active managers focus on equity, and focus my own management efforts on fixed income. Since fixed income is typically safer but with less return, it doesn't make sense to me to have to pay the active MER's for portions of the money that are in fact much lower maintenance investments. (Does that make sense?)

    I also wonder if there are resources for "high networth individuals" that I am not tapping into.

    So... why am I posting here? (Other than to flaunt? Seriously, I hope it doesn't sound like that, but this expected change is already making me feel self-conscious about my good luck.) I'm wondering if people have any comments about "what would you do in my situation". How would you manage this windfall? Also, do people here have any insight into the HNI resources I wonder about?

    Anyway, looking forward to any responses. Sorry to be long winded but this kind of thing doesn't happen to me every day.

  3. #23
    Senior Member tygrus's Avatar
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    This thread is fishy for another reason. Nobody would buy a 15M business that doesn't have an established revenue stream. So why would you sell a revenue stream to put it into another revenue stream you know nothing about. You know your business better than any alternative investment.

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  5. #24
    Senior Member humble_pie's Avatar
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    Quote Originally Posted by kcowan View Post
    I have several friends have have north of $10 million. Mostly they are interested in nice homes and cottages, nice cars, and sometimes nice boats. Only one hangs around the internet because he manages his own portfolio. He is careful not to divulge the size of his stash. He has found resentment/disbelief when he does so.

    All these people made their money by developing a business and selling it. We share some common interests but our budget prohibits us from participating fully.

    the above parties are not the parties i'm referring to!

    as mentioned, the parties i'm focusing on have zero background in this forum. No history whatsoever. Typically, as with this OP, they announce in their very first post that they've recently acquired a humungous number of $$.

    then they ask for advice. Not the kind of advice they *should* be asking for, ie how to find lawyers & accountants to help them set up corporations or possible vacation property trusts in other countries, or how to plan for their estate heirs ...

    no, they ask for simple ordinary couch potato advice, so the ETF salesmen on here can then rhyme off their recommendations about alphabet soup portfolios.

    as soon as the interest dies down - maybe 2-3 weeks - mister nouveau riche promptly vanishes. Totally vanishes. Forever & ever.

    another version of mister suddenly-rich is the virgin never-before-seen poster who discovers that daddykins or mummykins or granpappy is actully worth more than a million bucks, so now VNBS wants to know how to *help* their rich ancestor ...

    as mentioned, these stereotypes are appearing regularly in cmf forum. Every few weeks.

    one tentative hypothesis could be that it is the forum owners who are doing this - or at least sub-contracting all these brand-new but suddenly-rich new members - in order to bring the forum focus back to finance.


    .
    ''A narrow place can hold a thousand friends" - old Syrian proverb

  6. #25
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    Over time I'd put all of it in quality dividend paying Canadian stocks. Just look at the largest holdings in cdn etf's for a guide. You have to have the right mind set for this however. You have to have confidence in what you are buying so you don't bail out during a hiccup, pot hole, or what have you. You mitigate risk by buying quality. Once you see the dividends rolling in you'll like it.
    We can not know things as they are in themselves, but only as they appear to us.

  7. #26
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    HP, I think your intuition in this matter is correct. That is why, in my early reply to this thread, I made no attempt to give serious advice but suggested, instead, blowing the roll on an East Vancouver house that could be used to generate gross revenue of $1,500 per month.

    Certainly it's an odd first post to come here and announce a "windfall" (as the OP described it) of $15 million. One is left to wonder how it can properly be characterized as a "windfall". Presumably, if the company in question was built up over time to have that kind of value, the OP should be somewhat familiar with financial matters and should not be taken by surprise by what the company is worth. The OP said "we" are selling, which suggests there might be other shareholders who are also about to receive millions and the company might well be worth a good deal more than $15 million.

    It is also passing strange that the OP speaks of '"suddenly about to be a "high net worth individual"'. Did the company just experience a major gold ore strike? If the company has been built up to have significant value, I would expect it to be the case that the OP has been a "high net worth individual" long before now. The net worth was in the shareholdings. Now it will be cash. What has changed?

    There are probably few (if any) members here who have a net worth in the $15 million range. Seems like the wrong crowd to approach to seek advice about investing a sum well beyond the ken of almost all.

    Finally, I'll observe the unusual tenor of this language of the OP: "We are selling our company, should close in a couple of months I should be sitting on over $15M!" If there is indeed a sale in the offing of such a valuable asset, there should be a lot more certainty about the matter than is captured in the words "should close in a couple of months". and "should be sitting on over $15M". By this late stage the lawyers should have the matter tied down to a certainty, there should be earnest money in trust and I would expect to see the post couched in language more along the lines of "closing will be in a couple of months" and I will be sitting on a fortune.

    Ed. note to the OP: Should your post be what it purports to be, please forgive the skeptics here. Enjoy your millions. Perhaps go farming until the money is gone. Don't forget to show some beneficence to the less fortunate.

  8. #27
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    My last post to this thread was intended to follow hard on the heels of HP's last post. While I was composing, several more posts have interceded, including some retort by the OP.

    I have decided not to edit what I said, supra, but I'll say that portions of the retort lend some substance to the notion that the OP is not a troll. We'll see how this develops in the fullness of time. Cur. adv. vult.
    Last edited by Mukhang pera; 2016-07-30 at 01:17 PM. Reason: To clean up some faulty diction, made apparent by the OP's quote of my post, infra.

  9. #28
    Senior Member tygrus's Avatar
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    OP what is your revenue stream? I am just asking because if you invest that amount according to the couch potato, its very conservative returns. In the order of 3-4%. Thats not a great return on 15M and then you have the market volatility with it which is going to be hard to stomach on that amount.

    If you are planning a 1.5% with draw, put the rest in something solid like GIC ladder. I wouldnt put 15M in the markets for a measly 3% return.

  10. #29
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    Quote Originally Posted by Mukhang pera View Post
    I have decided not to edit what I said, supra, but I'll say that portions of the retort lends some substance to the notion that the OP is not a troll. We'll see how this develop in the fullness of time. Cur. adv. vult.
    Your suspicion is fully understandable.

    If this thread turns into only discussing whether I'm a troll, and picking apart my logic to prove that I'm a figment of imagination, though, I'll definitely turn to other sources

  11. #30
    Senior Member humble_pie's Avatar
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    Quote Originally Posted by Mukhang pera View Post
    ... the OP is not a troll

    of course he's not a troll. Did anybody, least of all myself, say he was a troll .

    what i said is that - at first glance - which now requires updating - he was appearing to be another one in a long line of uber-rich newbie posters with zero histories but suddenly they show up here out of the blue with millions of $$

    & i was asking How come we have all these suddenly rich newbies?

    ''A narrow place can hold a thousand friends" - old Syrian proverb

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