What would you do with a million dollars?

What would you do with a million dollars? How much is a million dollars? If you have a million dollars, can you quit your day job?

Back in 1999 I was working at Microsoft. I had received an offer from Apple. Quite a few people were shocked that I would even consider leaving Microsoft, especially to take a job at Apple. Everyone knew Apple’s days were numbered. What I heard often was, “if you just stay at Microsoft until you’re fully vested, you will be a millionaire. Then you can work wherever you want, you won’t have to worry about money.” I talked to several Microsoft millionaires who had done what everyone was suggesting I do. They gave me pretty much the same advice. In order to live on investment returns you should plan on a 5% return rate. So, you need to have enough invested that you can live on a 5% annual return. Under this theory, one million dollars would yield an annual salary of $50,000. I have no idea whether the particulars are accurate but the general concept is interesting.

Lotto jackpots are a favorite seed for daydreams. What would you do with five hundred million dollars? Most daydreams focus on how to spend that money. Cars, boats, yachts, ships, houses, city blocks, islands. What could you buy with that much money. After my experience in thinking about leaving Microsoft, my thought process changed. I realized that five hundred million dollars invested wisely and conservatively would mean that the next two, maybe three generations of my family would never have to work to make a living. Using the formula the Microsoft millionaires gave me, five hundred million dollars would yield twenty five million dollars a year. That is six and a quarter million per year per immediate family member. If we could manage a modicum of frugality and live on only one million dollars a year, the invested base would continue to grow such that it is reasonable to assume my grandchildren and, quite probably my great grandchildren would never work for a living.

I some times post the question on Facebook; “What would you do with LatestJackpotValue dollars?” Someone proposed a very interesting answer. He would use a relatively small part of it to take care of himself and his family. Then, he would give away $250,000 to a perfect stranger every week until the money ran out. The amount in question, after he had taken care of his own, was one hundred million dollars. Again, using the Microsoft millionaire formula, if my friend restricted himself to giving away $250,000 twenty weeks a year, basically every other week, he would be able to give away money for the rest of his life without ever touching the initial one hundred million.