What would you do with one million cash?

[MrMan]

If you had $1M already taxed dollars to play with, a simple, but not very diversified investment would be to buy three houses worth $333,333 houses out. If you can get 1% of it's value for monthly rent, you could get 8 cents shy of $80,000 a year, which is considered a good-to-decent decent annual salary in many parts of the US.

But that doesn't take into account having to deduct for repairs, or 10% rental fees. Maybe you can clear $60K. You could buy in developing areas, on roads you think will likely go commercial in the next 10 or 20 years.

Under this scenario, I would still need to work.

Many of the other scenarios I mentioned would involve taking attention away from my work to manage a business. The amount of money to make it worth quitting... based on my financial reasoning... would probably need to be a few million. I'm thinking of enough money to cover insurance, or buying or starting a company that has a deal worked out to offer my family insurance.

There are also a lot of baby boomers retiring who want to sell small businesses now, but the problem is lack of diversification. If you know the industry, an acquisition may make sense.

[rudder]

If you had $1M already taxed dollars to play with, a simple, but not very diversified investment would be to buy three houses worth $333,333 houses out. If you can get 1% of it's value for monthly rent, you could get 8 cents shy of $80,000 a year, which is considered a good-to-decent decent annual salary in many parts of the US.

But that doesn't take into account having to deduct for repairs, or 10% rental fees. Maybe you can clear $60K. You could buy in developing areas, on roads you think will likely go commercial in the next 10 or 20 years.

Under this scenario, I would still need to work.

Many of the other scenarios I mentioned would involve taking attention away from my work to manage a business. The amount of money to make it worth quitting... based on my financial reasoning... would probably need to be a few million. I'm thinking of enough money to cover insurance, or buying or starting a company that has a deal worked out to offer my family insurance.

There are also a lot of baby boomers retiring who want to sell small businesses now, but the problem is lack of diversification. If you know the industry, an acquisition may make sense.

Do you have rental properties? I would like to get involved. I was thinking about working in the USA and buying apartments in the 3rd world where my wife is from and having her brother be the property manager on our behalf. Retirement would be whenever we could get enough rental income to pay for the lifestlye cost of living in the third world. Using this geo-arbitrage method would make it quicker than trying to work and invest in the USA or trying to work and invest in 3rd world.

[rudder]

To answer the original question:
I would do the above, also invest 10% of that in crypto and gold/silver, and also go get paraguayan residency so that I'd have a place to cash out further investment gains to avoid tax in my two current countries. Depending on the success of my rental properties, I would be seriously considering renouncing US citizenship and then moving to Chile to start the path to another south american citizenship so that I could visit the USA visa-free in the future.
I'd probably also travel, and look for another home-base in another continent, so that I don't have to spend my whole life in the americas.

[fschmidt]

$1m ain't what it used to be. Right now there is no sure real return on any passive investent. Real estate requires property management. Outsourse this and you make no return. Do it yourself and it is a serious job. The best would be to use the money to start a business, but this is hard these days because there is no one to partner with. Since everyone is scum, you have to be responsible for everything yourself. (Anyone want to partner with me? I thought not.) So you are left just living off the money until it runs out.

[Shemp]

Put it 50% VTI (USA stocks), 50% VXUS (non-USA stocks) then live off the dividends, about $30K currently. Tax rate is low for $30K dividend icome, so net would be over $2000/month. That's enough for a nice life in many countries.

[fschmidt]

Put it 50% VTI (USA stocks), 50% VXUS (non-USA stocks) then live off the dividends, about $30K currently. Tax rate is low for $30K dividend icome, so net would be over $2000/month. That's enough for a nice life in many countries.

Or simpler, just buy VT (world stocks). That is what I did. But dividends still don't cover inflation.

[MrMan]

If you had $1M already taxed dollars to play with, a simple, but not very diversified investment would be to buy three houses worth $333,333 houses out. If you can get 1% of it's value for monthly rent, you could get 8 cents shy of $80,000 a year, which is considered a good-to-decent decent annual salary in many parts of the US.

But that doesn't take into account having to deduct for repairs, or 10% rental fees. Maybe you can clear $60K. You could buy in developing areas, on roads you think will likely go commercial in the next 10 or 20 years.

Under this scenario, I would still need to work.

Many of the other scenarios I mentioned would involve taking attention away from my work to manage a business. The amount of money to make it worth quitting... based on my financial reasoning... would probably need to be a few million. I'm thinking of enough money to cover insurance, or buying or starting a company that has a deal worked out to offer my family insurance.

There are also a lot of baby boomers retiring who want to sell small businesses now, but the problem is lack of diversification. If you know the industry, an acquisition may make sense.

Do you have rental properties? I would like to get involved. I was thinking about working in the USA and buying apartments in the 3rd world where my wife is from and having her brother be the property manager on our behalf. Retirement would be whenever we could get enough rental income to pay for the lifestlye cost of living in the third world. Using this geo-arbitrage method would make it quicker than trying to work and invest in the USA or trying to work and invest in 3rd world.

You'd need to make sure what the returns are on properties in the target country. If labor rates are lower, renting out properties overseas may make sense. Our eviction and real estate laws in the US are rather well-defined. Though I did know a land lord who had some Mexican squatters just come in and take over an apartment in California, without ever renting it. Local eviction laws were so difficult, slow, and onerous, he hired a gang member he'd done construction with, offered him a back dated contract, and told him to go tell those people to get out of his apartment. He said they wall went out the back door fast and then the gangster and his buddies took their furniture and sold it. Most places in the US probably have easier laws to for landlords.

I'm not a landlord, btw.

Also, if your brother-in-law is trustworthy and competent. But if I were going to do something to help a relative, I would be wary of risking my livelihood to do so. If he doesn't do a good job and you fire him... there could be backlash in the form of relationship issues with family members, not just him, but your mother-in-law, sister-in-law, etc. It gets complicated.

It seems like I heard or read a 10% property management fee here locally in the US. I know some landlords. One of them, a landlady I suppose, complained about how freely a property management company would spend on repairs and their lack of concern about prices.

If I did house rental, I think I'd want a little closet there with stuff in it. I might include the first batch of heater filters, but also a larger version of one of those toilet snake auger thingies, and have the property management people teach the renters how to use it and get them to agree to use that first before calling a plumber over a stopped up toilet, then have them agree to pay for plumbers to handle stopped up toilets that are not due to faulty equipment. They could pay an extra $50 or $70 just to keep the low energy consumption light bulbs in there and leave the light bulbs when they leave, and to agree to replace with those light bulbs. That keeps from having to switch to the cheap incadescant bulbs when renters leave and keeps them from having to switch out bulbs. That's wasted labor kind of like the idiotic practice of New Yorkers bringing the toilet bowl with them when they move because the last tenant stole the toilet when they left because the other apartment's last resident stole the toilet.

[Shemp]

Put it 50% VTI (USA stocks), 50% VXUS (non-USA stocks) then live off the dividends, about $30K currently. Tax rate is low for $30K dividend icome, so net would be over $2000/month. That's enough for a nice life in many countries.

Or simpler, just buy VT (world stocks). That is what I did. But dividends still don't cover inflation.

Bad idea in taxable account because percent non-USA stocks under 50% with VT, so no eligibility for foreign tax credit. Also, there are long-term advantages to having at least 2 funds with constant percentage allocation, either USA versus non-USA stocks, or stocks versus bonds, because of the rebalancing effect, which tends to force buying low and selling high over the long-term. VT also has lower liquidity, thus bigger spreads on purchase, though this is a minor consideration.

Dividends don't "cover inflation", they naturally rise in line with inflation. That is, approximately 3% on a mix of 50% each VTI/VXUS is real return, and so the $30K dividends from $1 million will grow each year, if future similar to past. Of course, future might be different than past, and stocks might be a disaster in the future. I prefer 100% stocks precisely because stocks are real assets (as is real estate, but real estate is not entirely passive) and thus at least somewhat protected from hyperinflation, whereas ordinary bonds have no protection. Inflation is a big risk.

[Edit: dividend yield on combined 50%VTI/50% VXUS is avidly more like 2.3%, so about $20K after tax, or about $1700/month. Still possible to live well on that in many countries. Because companies in both VTI and VXUS are reinvesting part of profits, dividends should grow more than inflation. So if you can manage $1700/month first few years, things get easier as time passes and income rises.]

[fschmidt]

Bad idea in taxable account because percent non-USA stocks under 50% with VT, so no eligibility for foreign tax credit.

I haven't heard of this. Do you have a link that explains foreign tax credit on dividends?

Also, there are long-term advantages to having at least 2 funds with constant percentage allocation, either USA versus non-USA stocks, or stocks versus bonds, because of the rebalancing effect, which tends to force buying low and selling high over the long-term. VT also has lower liquidity, thus bigger spreads on purchase, though this is a minor consideration.

I don't want to rebalance, I want my allocation to reflect current values. The point is that I think the US stocks will drop once the dollar collapses and I don't want to buy US stocks on the way down.

Dividends don't "cover inflation", they naturally rise in line with inflation. That is, approximately 3% on a mix of 50% each VTI/VXUS is real return, and so the $30K dividends from $1 million will grow each year, if future similar to past. Of course, future might be different than past, and stocks might be a disaster in the future. I prefer 100% stocks precisely because stocks are real assets (as is real estate, but real estate is not entirely passive) and thus at least somewhat protected from hyperinflation, whereas ordinary bonds have no protection. Inflation is a big risk.

I mostly agree except that I don't think stocks will keep up with inflation in the next few years. But I am still mostly in stocks because I see no better alternative.

[rudder]

If labor rates are lower, renting out properties overseas may make sense.

Why?

[MrMan]

If labor rates are lower, renting out properties overseas may make sense.

Why?

Hiring a cheap brother-in-law versus expenses prices in the US, if cap rates are the same.

[MrMan]

If labor rates are lower, renting out properties overseas may make sense.

Why?

Hiring a cheap brother-in-law versus expenses prices in the US, if cap rates are the same.

[Shemp]

Bad idea in taxable account because percent non-USA stocks under 50% with VT, so no eligibility for foreign tax credit.

I haven't heard of this. Do you have a link that explains foreign tax credit on dividends?

IRS is the authority. I never really researched it because I've always separated USA and non-USA stocks, but i have read that VT is a problem for this reason. Possibly VT simply doesn't report foreign taxes paid on 1099, which is why you aren't aware. Foreign tax credit is a big issue for me because i have a lot of taxable non-USA stocks. The tax credit requires form 1116, which is complicated if you file by hand but easy if by computer and you aren't subject to Alternative Minimum Tax.

[Natural_Born_Cynic]

That's easy.
I would put it in ETF funds, stocks, and bonds and live in some inexpensive country in Europe or panama.
I don't do mass real estate because too many hoops you have to jump through with local building permits, fire inspections, taxes, repair cost, and possible legal issues with your tenants. I just buy small house for my self in my new country.

[MrMan]

That's easy.
I would put it in ETF funds, stocks, and bonds and live in some inexpensive country in Europe or panama.
I don't do mass real estate because too many hoops you have to jump through with local building permits, fire inspections, taxes, repair cost, and possible legal issues with your tenants. I just buy small house for my self in my new country.

Let's say you wanted to put your millions in ETFs for just a few months and take them out. I know if the market goes down, you could lose money doing this, but what about transaction costs? For a million dollars, can you get the transaction costs down to where putting them in an investment won't lose you money over the short term like that?