What to do with your millions
One of the wonders of entrepreneurship is that sometimes we can get lucky and make millions. Paul Buchheit wrote a good article on what to do when that happens. His advice is very practical and covers both how to invest the money (don’t rush to invest it, keep it safe) and what to change in your life (very little – keep working, maintain your friendships, be grateful).
Fabrice,
Give us some of your investment advice these days. I mean aside from investing in startups, are you in equities, FI, real estate, etc. Would love to hear what you feel has the best return potential given these uncertain times… Also do you have an adviser or do you actively manage?
Though I’m no financial expert I would never hand over my $$$ to a investment advisor to manage for me. They are nothing but croocks because I used to work for one when I was in college. I would invest in what I’m knowlegable about and feel comfortable with ie real estate.
Though it’s always good to have a balanced portfolio and not keep all your eggs in one basket.
Now my investmnet tip is that some countries in the Middle East ie Iran offer % 18 1/2 interest rate a year on a 5 year term deposit. Ok which safe investmnet offers such a high rate of return? Even if it means converting your Dollars to Rial to get this rate of return why not? In the last 10 years there has been a devaluatuion of the Rial vs the Dollar but considering that you would still be making like % 13-14 on average with no governmnet taxes. It sure beats investing in equities or anything else and paying taxes.
Thanks Fabrice! I didn’t know how to invest my millions! Huge help 😉
so what investment advice did you give?
Great stuff. Thank you.
If there is one thing I learned after I sold Zingy is that money is hard to make and easy to lose! Despite predicting almost perfectly what was going to happen to the real estate market and the economy, I lost nearly a third of my wealth during the last 6 years. I am not particularly interested in wealth management and did not pay much attention to it which led to a large number of mistakes.
If anything I learned a few valuable lessons. I should not try to get richer with the money I already have. As an entrepreneur, most of my wealth derives from the startups I create. Given my understanding and connections in the Internet space, I also expect to get a positive return on my Internet investments. On the other hand, I am not an expert in wealth management and have not been impressed by the so called experts.
In the current uncertain environment with risks of either deflation or inflation, I currently prefer to be in liquid and safe cash-like instruments (CDs and Treasuries – avoid munis given the parlous state of city finances). Yields are so low and the risk premium is so low so don’t bother yield chasing. Stay safe and liquid. Being in safe cash protects you from deflation. Should inflation become a worry, being liquid will allow you to buy hard assets rapidly. People also undervalue liquidity. Having liquidity might allow you to get great deals in stocks or real estate should that time come.
My rent vs. buy analysis (http://www.fabricegrinda.com/personal-musings/rent-%e2%80%a6-unless-you-want-to-buy/) also suggests renting and not owning real estate at this stage (and I currently rent my house in Long Island).
Nothing in that article that is not known by the rusty pickup truck millionaires of the midwest United States. So much for your city folk being sophisticated!