We’re Rich!

Scott,

My husband (30) and I (24) have inherited an eye-watering $6.5 million! We have paid off our mortgage, bought an investment property and cleared our debts, yet we have no idea what to do with the rest of it. (We have locked it up in our high-interest account while we decide what next.) Now that we have the financial freedom to enjoy our weekly wages freely, we want to be wise with our next move. What do you suggest?

Tim and Sarah

Hi guys,

You have reached your ‘enough’ figure at a time when most couples are still trying to scrape up a house deposit.

That’s the first bit of advice: understand that you have ‘enough’. More money won’t make you any happier from this point on. In fact, as you’ve probably worked out, having lots of zeroes in your bank account is actually bloody stressful, right?

Well, here’s how I’d think about it if I were in your shoes.

Let’s say you have $5 million, which you decide to invest in a low-cost index fund (via a family trust for asset protection).

I want you to think of that investment the same way I think about my family farm (stay with me here!). Twice a year your ‘farm’ will deliver you a golden harvest, in the form of dividends, and it will grow each and every year.

In my case, the land value of my farm goes up, down and sideways (just like share prices), but I don’t care, because I’ll never ever sell my family farm. Besides, it’s the harvest that puts food on the table.

In your case, your ‘farm’ should deliver you around $275,000 pre-tax a year.

Yes, there will be the occasional ‘drought’, and lean times -- but as long as you own the farm, you collect the harvest.

And that’s the lesson: you plant once, and then you can harvest forever.

And that is why you have more than enough.

Scott