You’ve Got Money, Now What?

You've got money, now what?Most of the adult population is asking Siri questions like,

  • “How can I buy a house with $0 down?”
  • “What should I do if I can’t make all of my payments this month?”
  • “How do I survive on Social Security?”

But not you…

You’ve Got Money, Now What?

You’ve scrimped, saved, sacrificed, and now you’ve got a pretty impressive nest egg built up for yourself. First of all, congratulations! You’re one of the few.

But, because you’re in the financial minority, there really isn’t a ton of material out there for you, the responsible saver with loads of money. So what is it that you should do?

1) Let Yourself Enjoy It

All your life you’ve been following the mantra of living below your means, saving for a rainy day, and investing heavily for your retirement. You are a natural saver. When you live like this for 20, 30, or 40 years, you know what can be extremely difficult? Spending.

Sounds crazy, right? Who wouldn’t love to spend money on something they love to do? For many, it’s only natural. For you, it’s downright terrifying.

What if this wild spend limits your freedom in retirement? What if you start spending too much and your money runs out sooner than you thought?

If you’re reading this post, chances are that you’re already a millionaire and your investments are growing by nearly $100,000 a year. Remind yourself of this.

Chill out, take that cruise you’ve always dreamed of, and when you get back you’ll still have millions.

Related Article: 9 Reasons You Should Spend More Money

2) Keep Investing and Diversify

Alright, so you’ve given yourself the freedom to spend once in a while and enjoy your life. That’s important, but we obviously also want your money to keep growing.

If you’re like the masses, you’ve loaded up your 401(k) at work, but you don’t have many other investments besides. It’s about time you diversify.

Take a look at these three areas:

  • Roth IRA
  • Real Estate
  • Motif Investing

Roth IRA

It’s not as intimidating as you might think. Simple Dollar offers an awesome article, “How and Where to Open a Roth IRA?“, that tells you exactly which brokerage is right for you. Sign up online, contribute your funds, and BOOM, you’re invested in a Roth IRA. Simple as that.

Real Estate

This is a true diversification from the stock market. When the market’s down, the quantity of renters typically increases, which means you can actually earn more with your money in the real estate world.

Have enough money to buy a rental house outright? I strongly recommend it. Liz and I bought our first rental with cash almost a year ago and we’ve been earning 12% on our investment. Not too shabby.

Want to see how quickly your real estate empire could grow? Check out this Rental Property Investment Calculator! It’s amazing how quickly your investments can skyrocket!

Motif Investing

With Motif Investing, you can invest in the market, but you can also diversify by investing in commodities. Liz and I bought up $2,000 of the “Precious Metals, Gold, and Silver” motif to hedge ourselves against next down market. When the stock market dips, our motif should go up. We’ll then sell the motif and use the money to help buy some depressed real estate! Based on historic trends, I’m banking on this happening toward the end of this year.

3) Learn to Track It

I got an email from an avid reader last week. She’s done incredibly well with all her investments, but she was freaking out because Mint.com told her she lost 33% of her money. Long story short, Mint sucks at tracking your investments and was totally wrong about the 33% loss.

Since Mint has many glitches in their “investment” tab, I recommended that she load her investments into Personal Capital instead (it’s free). She tried it instantly and loved it. Plus, they provide some pretty in-depth charts that show you exactly what types of funds you’re invested in (stocks, bonds, cash, currencies, etc.).

You've got money, now what?

Now that you’ve got the right tool for the job, it’s time to learn how to actually track your money.

First, compare your earnings to the general movement of the market (use a performance chart for this). Are you earning more or less? Second, gauge your risk. If you want to earn more, are you okay with the increased risk? If you’re more risk averse, are you alright with earning less year over year?

Track your investments and never stop learning about what you’re invested in.

4) Protect It

The more money you have, the more likely it is that people will want to take it from you. Either they think it’s just not fair that you have so much when others have so little (while ignoring the fact that you worked your butt off to get to where you are today), or they’re just greedy and want to steal your money away for themselves.

Either way, it’s a good idea to take the proper actions and protect yourself and your money.

Mainly, this can be accomplished with insurance:

  • Car Insurance – Bump up your liability coverage on your car insurance. People are notorious for upping their lawsuit requests when they discover you have hundreds of thousands (or millions) of dollars.
  • Home Insurance – Check your home insurance policies and make sure it covers you in the event that someone gets injured on your property. This is especially important if you have rental properties.
  • Medical Insurance – Don’t buy medical insurance that has an annual limit specified on the policy. If you get cancer or some other serious disease, you’ll likely exceed the limit with expensive treatments and lose your wealth quickly thereafter. Be smart. Check your insurance policies and understand how you’re covered.
  • Umbrella Policy – The wealthier you become, the smarter it is to get yourself an umbrella policy. It’s not very expensive, and it can protect you in the event that you exceed your other insurance limits.

Start thinking about your legacy as well. What will happen with your money when you die? Have you set up a will so your assets go to your loving family instead of to the state? Have you set up a trust to make the transition hassle free? This can all be done for less than a thousand bucks. If your estate is worth millions then I’d say it’s well worth the investment.

Action Steps

Before you click away from this article and move on with your day, commit to taking action on the above points.

  • Enjoy your money
  • Continue investing
  • Track your money regularly
  • Protect your wealth

What are you going to do in the next five days to take your wealth journey to the next level? Will you start tracking your money? Will you set up some new investments to protect yourself in a down economy? Write it down! Stick it on your bathroom mirror and commit to get better with your money. You’ve done an amazing job so far, so be sure to take the next steps!

You’ve got money, so what action steps are you taking next? Tell me in the comments below!

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6 comments to You’ve Got Money, Now What?

  • Kathy

    Each year we update our information for our son in case we should die at the same time. This year we laughed because we said we had a small savings acct. in one bank, a small checking account in another bank and a small checking account in the credit union. All these small accounts added up to nearly $50,000 and they weren’t our main accounts at al. I grew up with a very frugal (cheap)mother and it is still very hard for me to acknowledge the amount of money we have.

    • Ha, I feel like we’re getting there too. What used to feel like a ton of money ($2,500 at one point in our lives) is now just a drop in the bucket. I guess that’s just what happens when you’re responsible with money and can handle more and more of it.

  • Are you looking to invest more in real estate? I had an interesting conversation with a gentleman at a dinner event Saturday night. He said he will never sell his properties and is always looking for opportunities to purchase SFH or land. Do you like SFH or MF more?

    For me, I want to explore the real estate market more and possibly buy a property this year. If not, then I want to get into dividend stocks after maxing my 401k. Lots of options as I’m able to save a pretty good amount of my income…
    Erik @ The Mastermind Within recently posted..K.I.S.S. – 8 Personal Finance Tips

    • Yup. We’re looking to invest in another rental house by the end of this year. We’re still saving up the cash, but we’ll get to the amount we need by November/December.

      I like the security of single-family homes. They probably won’t yield as much of an ROI as multi-family, but they typically attract better renters and if you ever want to get out of the rental game, they’re much easier to sell!

  • Nicole

    Really enjoying learning about Personal Capital Derek. Thank you.

    Hopefully the title of this article will apply to me in a few years but the part about having a,Will applies to all. I really need to work on that. I’m single with no kids but if I died my family still would hear the burden. That worries me.

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