Ask HN: What to do after $8M (all cash, post tax) exit?
Going anonymous for this. I am just an average project manager who happened to be at the right tech company at the right time. They had a big exit and suddenly my stocks are worth $8M (the money came in my account last week).
I am just an average guy. I am 43 and middle level tech manager.I know coding (but nothing superb). I know business (but nothing much). I am not particularly very hardworking or particularly super intelligent. Not dumb or lazy - just average.
The point is I can probably find another similar job but probably nothing much higher.
I have two kids and a nice wife. I have a nice, small house and two small cars. Everything paid for. I have no debts or “vices”. I do not like smoking, drinking or going out. I do not think I have any real hobbies.
Just a simple guy with simple life and then this happens. What should I do? Should I donate it? Should I hire a personal wealth manager? Should I retire?
I am freaking out. Please provide some guidance.
530 comments
[ 3.4 ms ] story [ 309 ms ] threadEdit: FIRE = Financial Independence, Retire Early
Since you mostly feel "lucky", find the devs or other people who worked their asses off to make this happen and who did not get anything.... and share!
Most of the comments about not losing wealth amount to either poor investment or "spoiling" oneself - ie spending excessively on luxuries. But, I imagine it's harder to avoid spending excessively on other people; what does "my parents can just buy me a new one" do to a kids perception of value, how do they develop a sound work ethic, would retired parents in their youth have a negative hold over their ability to perceive themselves as workers (for themselves or others).
This is not financial advice, but if it was me I'd personally just live off the interest and spend the rest of my days doing what I enjoy.
1. Do not sit there with your hands idle.
2. Start a business. Go talk with your friends, and friends of friends. Go talk to business owners who are friends of your friends and their friends. Find a business which needs something improved. Investigate how many more businesses have this problem. Figure out whether they will buy your future solution (do sales), and figure out how to help most of them in the least time.
There now you have a product idea going. Using your $$ to pay for your living, get to work.
Um, he has no need to work. Why would starting a business be the most important thing to do?
Basically, he can find out what sensible or quirky thing he likes and do that - just as long as it does not cost more than a middle class income can support. If he's entrepreneurial then sure, business.
But I see nothing wrong in spending ones life painting, sculpting, doing maths or science or volunteering and charity or whatnot. Or just spending time with the family (if that's something he enjoys). Just as long as it's something he enjoys and finds worthwhile.
When you're financially independent you have the freedom to pursue ideas that are more risk-averse. It's when you have the freedom to do things that you wouldn't have felt comfortable doing when you were worried about paying your personal bills each month like me, like my fellow peasants.
>just as long as it does not cost more than a middle class income can support.
Uh, his 4% safe-withdrawal-rate is 320k, if he wants to be cautious a 3% safe-withdrawal-rate is 240k. That's quite a bit higher than middle-class income (median HOUSEHOLD income in the country is 59k).
I completely agree, but we have no way to know what the best way for him would be to use his new freedom for self -actualization. There are lots of other interesting things to do in life as well.
"That's quite a bit higher than middle-class income."
Sure, but it's not still an insane amount of money. Before one gets the hang of finances it's better to think in purely middle-class (or upper middle class) financial terms. There are lots of ways to spend 8M fairly quickly.
There's a lot of ways to spend 8 billion fairly quickly. That doesn't mean that either isn't an obscene amount of money to many people (it's 250x~ my gross income).
Sure, he could go buy a jet and a manse and be broke in a week, but I could legitimately burn through 8 billion dollars fairly sensibly in several months throwing it at serious projects. Hell, I could burn through 8 trillion in probably 3-5 years pursuing society-changing projects.
It may not be a lot of money to tech/bay area types but to the rest of the world it's more money than the vast majority will see in multiple lifetimes.
I mean sure, it's roughly the size of the oil market so theoretically you could buy all the oil in the world for 4 years and just not use it, thus forcing everyone on a massive pace to post-oil economy.
But there's a huge hysteresis in how the society works, at such a massive scale, it's not sufficient to have the capital available, you also likely need a competent and willing organization to fulfill your goals, political co-operation from the major global players and most of all, for any of it to matter at all, you need to create a change that
a) lasts
b) changes things for the better
For example of moonshot ideas, I presume you could buy Space X and bankroll an entire series of Mars expeditions, but if you failed to create a sustainable economy and culture around your project it would ultimately be forgotten once the money runs out.
Of course, if you dump thousands of peoples on Mars, maybe other financial operators would take over.
I don't know if ending oil economy or colonizing Mars were the projects you had in mind, though.
Seriosly, if someone gave you 8 trillion... what would you do?
Maybe a moon base but that’s not cash-limited above a few hundred billion, I think. I might run out of rocket scientists and habitat specialists before running out of money.
The quality of primary education in sub-saharan Africa is abysmal compared to the developed world, Sierra Leone included.
I don't know what else is wrong, but not having an educated population is an obvious hindrance towards japanization.
To fix that, you'd probably need to:
* Create a system for teacher education * Instill a sense of vocational pride in teachers
The most critical part in educational outcomes is often the fact how much the surrounding culture values education. To support the improved infrastructure and operators in primary education an education positive sentiment should be instilled using various public education campaigns, including advertising and using popular media such as TV shows to proactively affect public opinion.
Soap operas (or equivalent popular entertainment) are a really powerful tool to instill cultural shift if you can get all stakeholders to co-operate.
After education is fixed someone should probably invest capital in some industry that can create jobs and wealth. I don't know Sierra Leone so I don't know what that is.
If they have lots of natural resources then a land reform where the ownership is divided among many smallholders often is a great way to distribute and create national wealth. It can also backfire badly if you don't know what you are doing (like in Zimbabwe).
First I'd set some milestones for private rocket companies to hit that had funding payouts, think x-prize but considerably more money and tiered. I want to see something like BFR operational ASAP. In this scenario I'd actually try and 40% or so of SpaceX which would chew up 10 billion or more at their most recent valuation, this would allow for hiring more employees and getting more production capacity online. I absolutely one all of our eggs out of one basket, to do this we need to start having humans on other bodies to start seeing if living at reduced gravity is viable long term without genetic modification.
I'd do similar for the current companies that have expressed interesting in asteroid mining, on a smaller scale to encourage them to develop spacecraft initially testing ideas for tackling the problem. While mining asteroids isn't going to be economically viable for export to earth (although I think if we could drastically reduce the cost of rare earths and precious metals, we may spawn new technologies. Rare earths and precious metals may also be important for grid storage and renewable energy at greater quantities than are easily accessible on earth) but would allow for cheap construction in space as well as cheap fuel in space. Once we could figure out how to pull stuff off of asteroids, we could work on manufacturing technologies for microgravity.
I'd assemble several missions to Venus, the Moon and Mars. I'd send several identical communication relays to Mars and place some around the Moon for relaying data for both current and future missions to both bodies, I'd send several identical orbital reconnaissance satellites to all three bodies.
I would work with local governemnts to re-establish kelp and seaweed in coastal regions. This helsp reduce ocean acidification, provides safety for various marine species, helps to sequester some carbon dioxide and is a farmable crop.
I would work on deploying PV panels on roofs of public buildings. Think schools, government buildings, libraries distributed across the US to show people that PV doesn't need to be ugly and to considerably help distribute some power generation across the grid.
There's also a few people working on carbon sequestration I'd like to throw money at, but the amounts would be insignificant compared to a trillion plus.
This would easily chew up 1 trillion plus in 1-3 years just buying materials and paying wages.
I've ideas for many other sectors and avenues too but this gives you some idea that I could legitimately spend that amount of money. Some of it would be funding crazy research, some would be helping companies to expand current production capacity, a lot of it would be x-prize style stuff "hit a notable milestone, get more money".
I'd like to throw money at:
- understanding memory/the brain with the ultimate goal of backing up a brain
- exploring some fringe science for anything remotely valid
- find a use for our nuclear waste, so throw some money at companies like Oklo
- energy efficiency
- permaculture
- greenhouse growing to reduce all this importing and exporting of food all over the world. The US imports 40% of it's fruit, exports 40% of it's corn and similar percentages of other grain etc. Purely from a fuel standpoint this is baaaaad for the environment.
- encourage local manufacturing, I currently work in international freight and from publicly published numbers about our aviation jet fuel use it's mind-blowing how much carbon just my company produces each year.
- encourage more sustainable technology, socketed/modular upgrades for phones and computers
Etc
Hadn't had my coffee yet heh.
Painting and sculpting, science or volunteering are fine if the person loves it. Otherwise he'll be happy doing what he's been doing all his life before this moment — programming, creating his own project.
Which I must admit I enjoy in a weird way.
Guidance: don't freak out, it's gonna be fine.
Spend time with your wife and families, save in different places/accounts/things so you don't risk too much. Very often you don't have hobbies because you feel you don't have time - now you have that.
Just, imho, don't start overspending in stupid things, like luxury cars or boats or huge houses, or your expenses can go quickly out of control.
If you want a hobby, i suggest things that are 'physical' and group/community activities, maybe some sport or building things. See mr. Money mustache for inspiration.
It would have been good advice a few years ago. :D
What you need to do over the next few months is answer a single question:
"What do I want to do with my life?"
That's a hard question without the $8M too :)
Also to add. If you can't work out the answer to that question then don't feel pressured into trying to force it.
It's ok not be able to answer the question. Life is a search for meaning. Sometimes it comes, sometimes it doesn't. The money in and of itself isn't going to answer the question. And in fact, freedom from the 'toil' required to make ends meet might remove some of the purpose that OP previously felt. But I think when faced with change and upheaval that removes the certainties of life (in this case 'work, eat sleep, repeat') you owe it to yourself to see if you can work out the answer.
One...don't donate your money...donate some for sure, but most organizations generally fail by eating up the lions share of donations through administration costs and other costs of business. So your money gets nowhere...now if you want to make a difference this leads to point two.
Two. PLEASE dear god don't invest all of your money in stagnant safe investments, invest some small portion of your 8 million into starting a business. I don't mean this in order to grow your own wealth...but to help grow that of your community. I don't know where you live...but in Australia...the hoarding of wealth through property and the stock market is basically killing small towns/communities left right and center. Investing money in that doesn't really grow the economies of small towns/communities. Start a business, nothing huge, nothing too fancy, but invest in training you community/small towns! Seriously it will provide a bigger difference to those whom you employ than if you were to give to a charity supposedly servicing them!
And you can do it anonymously at your own pace.
I'd invest in the climate, most importantly alternatives for plastic waste and meat.
This guy just won the startup lottery. He needs to invest in low-risk and assets, not in phylantropic issues. 8 million is not enough to start thinking in that direction.
Watch out for isolation.
Try to change as little as possible because the truth is not much has changed except you owning yourself.
Don’t give it away. Don’t give it to your friends, they won’t be your friends if you do.
- Don't make any drastic changes to your life now
- Learn how to make your money work long term (diverse investments with plenty low risk etc)
Give yourself time to understand what you are going to do with it. You don't sound like the type of person that will end up like the lotto winners, but bear in mind a sudden increase in wealth can lead to pretty negative things if not managed.
Of course - it can bring a boatload of positive things too. Think of the things you could do. Retire early, help others, work on something special without worrying about salary, find a hobby :P Congratulations!
2. Find an interesting problem to work on. It is hard to be free and have no goals. Now you have the ability to build your own goals. Dont rush into it, take your time.
For 1 yr decide on what to do next --> it can be anything which you like
Yeah, you should probably invest most of it responsibly. Don't buy yachts.
Buy a bolthole somewhere that will have a good microclimate/rainfall even as things hot up. You don't need to go all prepper but build some kind of house there and start your integration into the local community, it will be good to have friends. Plant some shade trees. Get some solar, water tanks, etc. Go over capacity so that you can help out others.
Spend time with your kids, that's one thing you can never get back. Travel - slowly and considerately - by yacht, not be jet. Learn about the world first hand. Help them become adaptable and resilient, they're going to need it.
Who knows what the world of work will hold, so think of the money as having to not just see you out but also one or two generation after you. Then it won't look like quite so much, and you'll be able to make wise choices.
Educate yourself on investment and then find someone to manage your money, in Germany I would go maybe even for some rich-peoples bank and invest with the lowest risk portfolio possible.
In zhe meantime, enjoy life and your complete freedom. I know it is hard, but now you can do whatever you want and you have the time to figure it out, too. Go back to college if that's your thing. Tutor students from troubled families or not so well off backgrounds (you think about donating, so I assume you have a social sense). Or do some consulting on the side. I would suggest to not brcome idle, that breeds boredom which doesn't go well along with $ 8M.
Or go a long vacation with your family, visit the world. That is if your wife and kids can come along with you.
In general, be patient, stay cool and take your time to figure things out. Be conservative with the money.
And finally, congrats to your near complete freedom you and your family have now!
Just a nitpick but even the "official" inflation rate is somewhere around 2%, is it not? The real one is probably 3% or higher.
The trick is to figure out what your liabilities are, how you might be affected by the price of X changing, and invest accordingly to attempt to hedge that risk.
I forget the exact benefit but it was something about independent analysis and not being the consultant and the provider at the same time.
Don't put the money into the stock market -- we've been going on a bull run for 10+ years.
You've got plenty of cash to wait out a next crash.. it's not going to take another 5 years before a next recession hits.
But realistically you'll at some point want to reinvest most of that money into passive, safe(r) investments so that you can book a x% annual return and live off capital gains. (Fun fact; capital gains are taxed lower than income)
Feel free to put some (i.e. $500k to $1m) aside for higher risk investments if you feel like you wouldn't mind the money disappearing or going 50x.
Also: DO NOT JUST GIVE IT TO A BANK -- best way to pay a ton of fees and end up with no (or worse, negative) returns.
Also: (but this is me) I would give back to a cause you care about. Maybe something local where you know the money will have a big impact? Those donations are often also tax deductible (so might as well).
since the bear market started, wouldn’t this be a good time to buy at bargain prices?
(I'm leaving it up to you to decide if it's a short-term correction, beginning of bear streak or anything else)
Why you'd have to pay a ton of fees on a heavy deposit?