What if you win the lottery?

Cliff Kang
cliffed
Published in
6 min readJan 15, 2021
Photo by Erik Mclean on Unsplash

It’s January. Time to evaluate your life, eh? This year, instead of just thinking about skills and specific goals, I embarked on this thought experiment. It expanded my usual short term goal driven mentality to a longer view on the life I’m trying to build.

The thought experiment itself is simple, really: What would you do if you suddenly got $1 million, $10 million, and $100 million?

$1 Million

It’s enough money that you could cover basic expenses, but in a symbolic sense, it represents the freedom to do the work that you want to be doing. Meaning, you can pick a job based not just on what pays the most, but on what fulfills you the most. And depending on your age and where you want to live, it could also be enough to just retire, too.

So, 1 million represents: what work do you want to do if you didn’t have to worry about how big your salary is?

$10 Million

At a 4% annual disbursement, you’d have about $400k a year. So, basically, a lot of money. It’s enough money that you can basically do whatever you want. You don’t need to work at all and you can still live a relatively lavish life. Your family is taken care of for multiple generations.

So, 10 million represents: what do you want to do in life if you didn’t have to worry about money?

$100 Million

At this point, needs are beyond met. You can completely take care of your family and still have the majority of the money leftover, so it becomes about what impact you want to make on the world.

So, 100 million represents: how do you want to impact this world if you had the capital to try?

So — the takeaway

For me, it was honestly a lot of fun just thinking about what I would do with that kind of money. The detailed plan is in the following sections below! But the gist is this: I’d have a place of my own to call home, a better car, and the money to just live the life I want to live. That’s the active part about how I would spend the money, but in this thought experiment, you should also consider how you would spend your time.

Photo by Mariia Zakatiura on Unsplash

I’d invest in my health with exercise and better foods. I’d explore and find new things to eat. I would read & write more. I would sing and practice piano. I’d spend time with people, learning their stories. I’d look for business opportunities while practicing real estate.

The question of how you would spend your time is really telling us how we should be spending our time now; that these are the habits to start building now, so in 10–20 years time, we can be spending our time this way.

The 1 million tier is a great barometer of where you want to head in the next 10–20 years. And for my family, the things in the basics 1M tier are the exact things we‘re building towards and hoping to accomplish in the next 2–5 years.

The 10M & 100M tiers are the things we can try if we happen to get lucky in life. It’s good to dream and just maybe, there will come an opportunity to accomplish some of them in our lifetime, albeit on a smaller scale.

The Plan for the basics

Taking care of the basics: housing, car, cash in bank, passive investments, and giving.

Housing

  • 1M: housing for my family and my parents. If I wanted to stay in the greater Los Angeles area, I’d probably look for a duplex or some type of home where my parents could live close to me, but not with me, hah. Probably, a quieter part of Orange County, so let’s say a $700,000 home → $150k for the down payment + closing costs. ($150k, 15%)
  • 10M: again, housing for myself and parents, but probably more expensive, so let’s say a $1.5M home → $330k for the down payment + closing costs. ($330k, 3.3%)
  • At the 10M tier, probably also help with down payments for extended family ($400k, 4%)
  • 100M: again, housing for myself and parents, but probably a bit more expensive, so let’s say a $2M home…in cash! ($2M, 2%)
  • down payment help for extended family ($600k, 0.6%)

Vehicles

  • 1M: cars for my family & my parents in the range of $40k-$50k each, financed. So probably spend about $20k in down payment + financing costs. ($20k, 2%)
  • 10M: again, cars for my family & my parents in the range of $60k-$90k each, financed. So probably spend about $40k in down payment + financing costs. ($40k, 0.4%)
  • 100M: again, cars for my family & my parents in the range of $80k-$120k each, except, probably buy it outright. ($200k, 0.2%)

Emergency + Day-to-day Fund

  • 1M: $50k, 5%
  • 10M: $200k, 2%
  • 100M: $500k, 0.5%

Passive Investment

Personally, not a big trading type of guy. Maybe I will eventually, but not at the moment.

  • 1M: $200k, 20% (~$10k/yr appreciation @5%)
  • 10M: $2M, 20% (~$100k/yr appreciation @5%)
  • 100M: $10M, 10% (~$500k/yr appreciation @5%)

Give

With great wealth, comes great responsibility!

  • 1M: $50k, 5%
  • 10M: $500k, 5%
  • 100M: $5M, 5%

The Plan for the fun stuff!

So, what I would actively do with the money after the basics are taken care of! For every tier, I would eventually leave my day job. At least for me personally, I want to try my ideas out and try building something of my own. I’m guessing that at the 1 million tier, there would be a good chunk of people who would want to just keep working — just maybe being more selective about where they worked…but that’s just not me.

Photo by Nolan Issac on Unsplash

1 million ($530k left, 53%)

Basically, do real estate full-time. At this level, it’d be harder to live off of just passive investments, so one would have to be actively doing something. In addition, I’d probably just keep looking for business opportunities where I can, whether it’d be something I’d try to start on my own or to invest in others.

  • buy two rental properties in the $400k range ($180k for down payment + closing costs, 18%)
  • use the rest to start doing real estate flips ($350k, 40%)
  • start a YouTube channel about the real estate, hah

10 million ($6,530,000 left, 65.3%)

It’d be a multi-step approach. Kind of difficult to “use” this kind of money right away. But, I like real estate a lot, so that’d probably be the basis. At this tier, though, I’d want to eventually start getting involved in building businesses and then philanthropic work.

  • build a passive portfolio of real estate and hand over management to a company ($3M, 30%)
  • actively start flipping real estate ($1M, 10%)
  • start YouTube channel about real estate :)
  • get involved with a non-profit
  • do some angel investing ($1M, 10%)
  • eventually, start a family foundation ($2.53M, 25.3%)

100 million ($81,700,000 left, 81.7%)

If this were to happen, lol, I’d probably just jump into philanthropic work & then building businesses. If I were to fall into this kind of money, I feel like there’s an obligation to give back. So, at least for me, front and center would be about building out a family foundation. Then, it’d be angel investing on the side & eventually trying out some business ideas out.

The type of philanthropic work would have to be explored, but my family is particularly interested in poverty alleviation & social enterprise, so it’d probably be in those arenas.

  • open a family foundation ($60M, 60%)
  • do angel investing ($1.7M, 1.7%)
  • try out some of my business ideas ($20M, 20%)

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