The internet is awash with stories about regular people and celebrities blowing their fortunes -- but luckily, this isn’t always the case.
Reddit asked a group of people who'd come into unexpected fortunes overnight what they did to keep and grow their wealth.
Here's how those savvy customers turned their fool's gold into a cash cow — and their best advice for the rest of us.
Give yourself an allowance
Not me (alas), but I remember reading an AMA a while back from a Redditor who won the lottery. I think the jackpot was $30 million, and he got ... maybe $17 million? He was only in his early 20s, too.
He was basically a checklist for How to Behave If You Win the Lottery. He paid off all his debts, had some fun spending some of it, then got a financial advisor who gives him an allowance of something like $90,000/year.
The rest of the money is invested. Any time he's in danger of exceeding his allowance, his advisor calls and gives him [bleep].
Live simply, save often
Simple living plus investing in real estate and stocks. Inherited about 400k back in 2011. Paid off student loans, spent 17k on a reliable Honda civic, bought a 100k two bedroom condo, went on one really nice vacation then put the rest into stocks and retirement accounts.
I live in the modest midwest and I'm a naturally frugal person, but I can't tell you how cheap it is to live when you don't have a mortgage and car payment.
With those first two steps down I can put about half my salary into savings and I am well on my way towards financial freedom.
Enjoy your interests, not luxuries
Got a windfall of about $2 million in stock from a startup....
I was a single guy. I stopped working, put 30% into an S&P ETF, put the other 60% into five or six large cap companies I believed in. Held on, for the most part, through ups and downs, and only withdrew about 5% per year, which I've lived off since then.
I did not increase my lifestyle much. I still have the same car I had before the windfall (a 2004 Toyota).
I spend more on travel and food, but overall I live a pretty basic middle class life... except I have time to do whatever I want. And that's the greatest luxury of all.
Let the interest roll in
I knew about an investment account my dad set up for me when I turned 18. Every quarter we would go over the investments. It started at $150k when I first learned about it. When I graduated it was $200k and that's after paying for school.
I realized what it could be in another 10 years and decided to never touch it. My now wife and I live way below our means and we are extremely happy. We put $20k in the account each year (even after maxing 401k).
My dad made a point to me by creating an excel spreadsheet. He showed me if I saved $10k per year how much it would become when I turned 60. Then did it with $15k… $25k… etc. It's amazing what $1 today will be in 30 years if you leave it in investments.
Live well, but don’t go crazy
I sold my startup for mid-9 figures. My share was worth low 8 figures at the time of sale. I knew I’d want to go at least a little crazy, so I set aside a “small” portion for that... the flashy car, expensive clothes, etc.
The largest portion (roughly 60%) I put into a trust to safeguard it. The second largest portion went into a holding company that would purchase and manage real estate for me and my family as well as starting my next venture.
The next venture failed, but I didn’t lose too much. The following venture was very successful and was sold for 9 low figures.
Not only has my money lasted, it has almost tripled in size...
The key is to live well, but don’t go crazy. I try to not spend more than 1.2-2% of my net worth per year.
— rivox1 2903
Diversify your portfolio
I came into a little over $10 million recently and it seems like it will be extremely easy to make it last.
I bought a new Cayman S and a house; the rest of the money is invested in a diverse portfolio of equities that bankers at JP Morgan manage for me.
When I hear redditors saying they would put the money in safe investments like government bonds/savings accounts, that seems insane to me.
With this amount of money you can take on a ton of risk and still be very safe.
Put your money — and yourself — to work
My grandfather left me $250,000 a few years ago when he died. So far I have invested every cent of it and have made almost another 50K.
I have a great financial advisor who keeps his eye out for good opportunities and has made some great changes to the account as needed.
I pretend that I don’t even have it. I’m 22 and have a retirement plan that will set me up when I’m older.
Splurge once and invest the rest
My dad and I set up investments for my brother's and my inheritance. He doesn't even know how much we have coming/ available to us right now...
We both live off of our salaries (I make around $60k, and he's around $75k per year) and live modestly. My goal is to retire early, not spend it now.
Could I drive around in a Porsche and buy a house? Yup. But I'd rather retire 20 years early.
We're both big gamers, so the only really nice thing we both have is a TV, and he has a gaming rig.
Invest in your business
Came into about 30K from a life insurance policy. Paid off a rental property and used the rest to start spec home construction.
I have now turned 20K into another 20K in just about 7 months and plan to continue and expand until I can quit my day job.
Making the money last is easier for me when it belongs to the business and is immediately reinvested so it doesn't sit in the account long.
Live, work, and enjoy your safety net
Inherited about $2.5 million in a combination of capital and liquid assets. The liquid stuff I used to pay off bills and loans and the capital I hired someone to liquidate it.
I lived like a king for 3 months and after that it went all to a consistent growth portfolio. I have a financial advisor/manager who I pay to prevent any stupidity from happening...
I got some crazy experiences and now I just work a regular person job and love my life.
It's a blessing to know that one does not have to worry about certain things like retirement; it allowed me to find a career I truly love and make a decent living.