Financial Tips for the Suddenly Wealthy
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| Author       | Source       | 
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| [u/Minako_mama](https://www.reddit.com/user/Minako_mama/)| [Reddit](https://www.reddit.com/r/GME/comments/m6lyid/financial_tips_for_the_suddenly_wealthy/) | 

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[Discussion](https://www.reddit.com/r/GME/search?q=flair_name%3A%22Discussion%22&restrict_sr=1)

Edit: Apologies for the fact that some of this advice is U.S.-specific. I'm an American Mama Ape, so that's the best advice that I can give.

Most of the principles will apply anywhere. But if you live outside of the U.S., your local tax professional should be able to point you in the right direction on everything else.

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I thought I would take a moment to write up some tips for people who suddenly find themselves with a life-changing influx of cash. When the squeeze is over, many of us will see digits in our bank accounts that we've only dreamed of before. That kind of money can feel like a LOT, but if it's not properly managed, it will disappear before you know it.

Have you ever watched any of those shows about lottery winners who wound up poor again? If you don't think that could happen to you, I implore you to find some of their stories and read/watch them. This can happen to absolutely anyone. Decision-making skills tend to get lost in the noise of the euphoria that comes along with suddenly becoming incredibly wealthy.

I'm not a financial advisor, but I have done work in personal financial planning. None of this is financial advice, but it's definitely suggestions on things to consider when you find yourself flush with new money. You ultimately will need to hire a team of actual financial advisors who can help you make smart decisions for your specific situation. These tips are just ideas to keep in mind.

1 -- Taxes

First, take out a calculator (or use your noggin, this isn't difficult math). Take the amount that you just sold your shares for and divide it in half. In your mind, half of this is going to Uncle Sam and whatever state you live in. Now, you won't actually pay exactly half to taxes, but depending on your state, you may come damn close to it. But mentally telling yourself that half is going to taxes will protect you from getting a bit crazy and over-spending.

The next thing you'll want to do is call a CPA (Certified Public Accountant). Not your brother's best bud's cousin who has a 2-year accounting degree, but an actual CERTIFIED PUBLIC ACCOUNTANT. These guys are wizards with taxes and can help you find the best way to protect your money from the tax man.

Do not skip this part. And do not try to get cute and figure out a way to hide money and dodge taxes on your own. Uncle Sam ALWAYS GETS HIS CUT, and if you try to pull one over on him, he will make sure that you learn a very, very hard lesson.

The amount that you will have to pay in taxes on your gains will make you sick to your stomach. But it's best to just suck it up and pay.

2 -- Insurance

Now that you're rich, all kinds of people are going to want to sue you. Rich people are great targets for sue-happy people. You'll want to get umbrella insurance to cover yourself and protect your assets in the event that you are found to be liable for anything. Your insurance broker can help you find the right insurance plans for your specific situation. But don't skip this, or you could be one car accident away from losing all of your money.

3 -- Legal Advice

You'll need an estate planning attorney. I'm not really good about all of the nitty gritty on this, I just know that you need one.

4 -- Investing

Let's say you have $2,000,000 after taxes. You could decide to quit your job and live off of your money. If you use $100,000/year off the principal, that money will be gone in about 20 years. Ooph.

A better method of living off of your newfound wealth is to invest it and live off of the earnings. If you invest $2,000,000 and earn an average 10% return annually, you can safely live off of 5% each year, and let that other 5% protect a bit against inflation.

You'll want to hire a wealth manager to help you choose the right investment vehicles and plans for your situation. Just remember that your money can be the goose that lays the golden eggs. Don't butcher the goose. Live on the eggs for life.

If your money isn't quite enough to live off of 5% right now, consider staying at work for a few years and letting it grow until it is. If your money earns a steady 10% each year, you can double it in just over 7 years if you don't touch it in that time.

EDIT: You don't necessarily have to hire a wealth manager. You can do some self-directed investing and save on that commission. Just make sure you learn how this works and you do your research carefully.

Also, the 10% return on investment is not a guarantee. There are a lot of variables that will affect your investment returns. I'm just using numbers that are easy to calculate as an example.

5 -- Debt

I am personally an advocate for paying off debt and remaining debt free. We will be paying off our mortgage when this all goes down, hands down. Some people prefer to only pay off debt that is at a higher interest rate than what you can earn back on investments.

For example: our mortgage balance is $250,000 at 3.875% interest. If we invest that $250k and earn 10%/year, we make out better than we do if we just pay off the whole mortgage at once. But personally, I hate owing people money. I prefer to just pay everything off and be done. But if you want to play investment interest against debt interest, that is absolutely an option.

6 -- Spending

You've got to spend some of this money on fun stuff, right? Of course! Just budget a certain amount alongside your investing plan. Give yourself some fun money to blow, but don't let mindless spending eat away at that goose. You want those golden eggs to be as big and plump as possible!

6 -- Relationships

This one can be tricky. You may want to keep your newfound wealth as quiet as possible, or you'll find yourself with a whole lot of new "friends", and a lot of people in your life with their hands held out.

My personal plan is that we won't be telling anyone. ANYONE. I have close family members who also hold positions in GME, and they are going to get wealthy alongside us. But beyond that, we won't be telling anyone.

Also: if you want to give money to a family member, that's a nice thing. I am all for newly wealthy apes helping out their loved ones. But before you go moving ANY cash or assets to a family member or friend, run it by your CPA first. There is a right way and a wrong way to give someone money, and if you do it the wrong way, you will find yourself with an enormous tax bill.

7 -- Charity

This doesn't need too much explanation, but it's worth a mention because it's a good thing to do. There are a lot of organizations that need help. Find one (or two or three) that resonate with you and help them make the world a better place. Also: tax write-offs!

Thanks for reading through my ramblings. Again, I'm not a professional, and I may have missed some important things in all of this. I've just seen a lot of questions about how to handle all of the money once it comes in.

A good way to pass the time while we wait for the squeeze to squizzle is to play around with numbers, research local financial professionals, and look into various charitable organizations that you want to support. It's a nice distraction from watching the ticker all day, or a good way to keep busy on the weekend.

&amp;#x200B;

TL;DR - Just read it, people. If you find yourself suddenly a millionaire, it's worth spending a few minutes reading about how to manage your money.

But if you insist: Hire a CPA, pay your taxes, hire a lawyer, get insurance, make a solid investment plan, budget before your spend, don't tell people that you're suddenly rich, and be generous.
