Sold my Business and currently have no Income, but 3m in cash

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GreenMan1111
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Sold my Business and currently have no Income, but 3m in cash

Post by GreenMan1111 »

Hi all,

As the title shows, I sold my business 6 months ago and am now sitting on 3 million in my checking account. I'm looking for advice on how to invest this money. My age is mid 30s, and my retirement accounts are quite small ( I always opted to reinvest my excess money into my business ). Here are my details:

Emergency funds: have 1 year set aside in addition to the 3 million

Debt:
Car loan - 80,000 @ 1.9%
Boat loan - 70,000 @ 5.9%
Mortgage 1 - 275k @ 3.875%
Mortgage 2 - 236k @ 4%

Tax Filing Status - Married Filing Jointly

Tax Rate - 37% Fed, 8.53% State

State of Residence - Iowa

Assets:
3 million in checking account (post tax)
1.5 million in crypto currencies (I am willing to sell some of this off to de-risk a bit, but initial investment was 200k)

401k - Fidelity 62k in S&P 500 stock index
401k - Principal 34k - 90% Principal LifeTime 2030, 10% Principal US Property

Income currently $0. This may change in the future; but it's a wild card. I would like to assume for this that I might not ever work again, unless needed.

Wife's income around 20k gross yearly

Thank you for any and all suggestions!
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by LadyGeek »

GreenMan1111, Welcome! As a reminder, cryptocurrency as an investment is off-topic. See: Greater Fool Investing Strategies
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Gill »

You have $661,000 of debt, most of it at high interest rates. For a starter, I'd pay that all off tomorrow morning.
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SubPar
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by SubPar »

^ that.

Edit: would also be beneficial if you posted a breakout of your annual living expenses. Might help to provide a more complete picture.
Last edited by SubPar on Tue Sep 28, 2021 4:59 pm, edited 1 time in total.
Californiastate
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Californiastate »

Pay off your debt and get a job. 2m after debt is hardly enough to retire at 30 unless it’s Mumbai.
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8foot7
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by 8foot7 »

I would pay off all debt 4% and above first thing tomorrow.

Despite what another poster said, you have plenty of money to retire if you have accurately laid out your finances here. 3 million less 661k to pay everything off leaves you with a paid off house, minimal ongoing housing expense (tax & insurance), no debt, a year's emergency fund in cash, and 2.339 million in savings.

Pull 3% out of that every year (not 4 as you're young and need some margin for error) and you're living on a hair over $70,000 a year. Go on Obamacare.

Congratulations. :sharebeer I'd buy into a lifestrategy 60/40 fund and be done with the whole thing. Enjoy your freedom.
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GreenMan1111
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by GreenMan1111 »

8foot7 wrote: Tue Sep 28, 2021 7:00 pm I would pay off all debt 4% and above first thing tomorrow.

Despite what another poster said, you have plenty of money to retire if you have accurately laid out your finances here. 3 million less 661k to pay everything off leaves you with a paid off house, minimal ongoing housing expense (tax & insurance), no debt, a year's emergency fund in cash, and 2.339 million in savings.

Pull 3% out of that every year (not 4 as you're young and need some margin for error) and you're living on a hair over $70,000 a year. Go on Obamacare.

Congratulations. :sharebeer I'd buy into a lifestrategy 60/40 fund and be done with the whole thing. Enjoy your freedom.
Thank you!
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GreenMan1111
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by GreenMan1111 »

Gill wrote: Tue Sep 28, 2021 4:23 pm You have $661,000 of debt, most of it at high interest rates. For a starter, I'd pay that all off tomorrow morning.
Gill
Even the mortgage at 3.875%? Wouldn't it be better to put that money to work in something like VTSAX over the next 30 years?

Genuine question; I'm rather clueless to investing
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GreenMan1111
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by GreenMan1111 »

Californiastate wrote: Tue Sep 28, 2021 4:54 pm Pay off your debt and get a job. 2m after debt is hardly enough to retire at 30 unless it’s Mumbai.
An option would be to sell off some of the crypto and wipe the debt, then still have 3 million leftover to invest. Could I invest that 3 million and retire comfortably? Say 100k+ per year?
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by retired@50 »

What are your annual expenses?

Without a working number for expenses, nobody can tell if you have enough to retire or not.

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Silverado
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Silverado »

GreenMan1111 wrote: Tue Sep 28, 2021 7:31 pm
Californiastate wrote: Tue Sep 28, 2021 4:54 pm Pay off your debt and get a job. 2m after debt is hardly enough to retire at 30 unless it’s Mumbai.
An option would be to sell off some of the crypto and wipe the debt, then still have 3 million leftover to invest. Could I invest that 3 million and retire comfortably? Say 100k+ per year?
Not with a boat…

Seriously, I fear you’d need to make some lifestyle changes. Which is very possible! Besides paying off that debt, slow down, read the wiki, keep asking questions. You’re in great shape.
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Neus »

Have you pay capital gain tax for selling your business?

This might be big hit as your cost basis on your business’s equity should be very low

just a consideration that my impact the actual investable amount

Also, do you want to retire or get a job?
Joey Jo Jo Jr
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Joey Jo Jo Jr »

For the crypto, keep in mind that the federal long term cap gains rate is 0% if you are at or below the 15% tax bracket. So if you invest in assets that don’t kick off much income then you can take some crypto profits tax free. At an absolute minimum you should be doing that.

Personally I’d get rid of the crypto much faster than that, though probably not so fast as to get into the 3.8% net investment income tax or the 20% LT cap gains rate. On the other hand, I probably would move that crypto into a charitable remainder trust with the minimum charitable remainder interest and the trust can sell the crypto with taxes deferred until they are paid out to you each year for however many years you set it up.
inverter
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by inverter »

Can you tell us more about your expenses and lifestyle? The two mortgages and a boat worry me a bit with $2.5m in the market.

I would sell of the crypto to pay off the debt.
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by dbr »

GreenMan1111 wrote: Tue Sep 28, 2021 7:31 pm

An option would be to sell off some of the crypto and wipe the debt, then still have 3 million leftover to invest. Could I invest that 3 million and retire comfortably? Say 100k+ per year?
You might, but that proposition could also likely fail. It depends a lot on what is involved in the "+" and on what Plan B is if things don't go well for the first couple of decades.
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by David Jay »

I recommend you find something to do. You are in the enviable position of being able to do just about anything, but in your mid-30s you need something to to dedicate your time to. Some kind of job/business/avocation. Even a “hobby” business that doesn’t take the kind of effort your first business required.

What’s your “dream”?
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by 59Gibson »

David Jay wrote: Tue Sep 28, 2021 7:51 pm I recommend you find something to do. You are in the enviable position of being able to do just about anything, but in your mid-30s you need something to to dedicate your time to. Some kind of job/business/avocation. Even a “hobby” business that doesn’t take the kind of effort your first business required.

What’s your “dream”?

+1. Definitely
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Sandtrap »

1 pay off debt
2 what are current annual expenses?
3 You cannot retire or work part time.
4 Can you find employment or develop other income streams through business?

Familiar with your scenario.
PM me as you wish for long term structure and strategy suggestions that included business and crypto, etc.

Forum restrictions prohibit too broad comprehensive points of view.
PM me as you wish
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Lee_WSP »

GreenMan1111 wrote: Tue Sep 28, 2021 7:30 pm
Gill wrote: Tue Sep 28, 2021 4:23 pm You have $661,000 of debt, most of it at high interest rates. For a starter, I'd pay that all off tomorrow morning.
Gill
Even the mortgage at 3.875%? Wouldn't it be better to put that money to work in something like VTSAX over the next 30 years?

Genuine question; I'm rather clueless to investing
If you had income, a refinance to a lower rate would make sense, but you don't. So I'd pay it off.
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by LadyGeek »

GreenMan1111 wrote: Tue Sep 28, 2021 7:30 pm
Gill wrote: Tue Sep 28, 2021 4:23 pm You have $661,000 of debt, most of it at high interest rates. For a starter, I'd pay that all off tomorrow morning.
Gill
Even the mortgage at 3.875%? Wouldn't it be better to put that money to work in something like VTSAX over the next 30 years?

Genuine question; I'm rather clueless to investing
Yes, the mortgages (both of them). The math says that paying down the debt is the same as investing, but that's only in theory. The stock market could go flat or even negative for a while. It varies in every direction on a daily basis.

There's also an emotional component. Having a mortgage means that you have an obligation to pay it back regardless of what happens later in life. Lose a job, retire, etc. it still needs to be paid. Pay it off now and you no longer have that emotional baggage dragging you down.
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by LadyGeek »

I removed a link to a YouTube video containing language above our family-friendly threshold.
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by ThankYouJack »

Californiastate wrote: Tue Sep 28, 2021 4:54 pm Pay off your debt and get a job. 2m after debt is hardly enough to retire at 30 unless it’s Mumbai.
The OP has a NW close to $5M or more depending on the equity in the real estate. And lives in Iowa which I assume is a LCOLA. I don’t see the need for a job unless the OP wants to live a pretty extravagant lifestyle.
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GreenMan1111
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by GreenMan1111 »

Re: Job

I do plan on starting another business. However, the income is unknown. Business could fail, etc. So I'm trying to figure out what to do with this money in the mean time. If it's enough to not have to worry about work/income, that's fantastic.
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by 123 »

Consider contributing to Traditional or Roth IRAs. If your income is too high this year (i.e. business sold at a profit) consider backdoor Roth contributions for yourself and spouse. On an ongoing basis you both may be able to qualify based on spouse's earnings.

As indicated earlier the ownership of a significant boat (in the absence of information about a residence adjacent to water) sometimes indicates a lifestyle/spending issue that can interfere with a planned retirement.
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GreenMan1111
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by GreenMan1111 »

123 wrote: Tue Sep 28, 2021 9:44 pm Consider contributing to Traditional or Roth IRAs. If your income is too high this year (i.e. business sold at a profit) consider backdoor Roth contributions for yourself and spouse. On an ongoing basis you both may be able to qualify based on spouse's earnings.

As indicated earlier the ownership of a significant boat (in the absence of information about a residence adjacent to water) sometimes indicates a lifestyle/spending issue that can interfere with a planned retirement.
Thanks, I will look into the backdoor roth.

The 2nd mortgage is for our lake house with the boat.
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by ivgrivchuck »

GreenMan1111 wrote: Tue Sep 28, 2021 4:19 pm Thank you for any and all suggestions!
What I would do:

- Pay off all the debts.
- Sell off all the crypto
- Invest all the money in 60/40 or 70/30 portfolio (based on your risk tolerance)
- If you want to retire, 3% annual withdrawal rate is a pretty safe bet.
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by kelway »

Californiastate wrote: Tue Sep 28, 2021 4:54 pm Pay off your debt and get a job. 2m after debt is hardly enough to retire at 30 unless it’s Mumbai.
It most certainly is.... perhaps not in "Californiastate".
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by casualflower »

With $3M, Firecalc says you have a 95% chance of making it 60 years spending $110,000 a year. That's something I'd be comfortable with.
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Vanguard User »

Californiastate wrote: Tue Sep 28, 2021 4:54 pm Pay off your debt and get a job. 2m after debt is hardly enough to retire at 30 unless it’s Mumbai.
$2M at 4% SWR is $80k a year.
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Vanguard User »

casualflower wrote: Tue Sep 28, 2021 11:08 pm With $3M, Firecalc says you have a 95% chance of making it 60 years spending $110,000 a year. That's something I'd be comfortable with.
What it it was 90%? What’s the safe #?
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by trooma7 »

Vanguard User wrote: Tue Sep 28, 2021 11:34 pm
casualflower wrote: Tue Sep 28, 2021 11:08 pm With $3M, Firecalc says you have a 95% chance of making it 60 years spending $110,000 a year. That's something I'd be comfortable with.
What it it was 90%? What’s the safe #?
Does that calculation include his wife's 20k/yr income? If she feels like she wants to continue working, then effectively changing $110k to $90k would increase the percentage even higher. As for 'the safe #', it depends on how much of a gambler you are I suppose 8-) .
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Unchained »

I sold my business in 2017 at age 52 with resources similar to you. I strongly disagree with those that suggest you don’t have enough, should seek a job, etc. You have plenty to draw the $100K you mentioned. Read the Wiki on windfalls. Decide whether to invest lump sum or over a reasonable period of time. Enjoy your freedom and don’t let anyone interfere as you learn over time what type of life you want.

I am very happy with my freedom. I read a lot, eat well, exercise regularly and take better care of my house than I ever did when I worked. I have time for my wife, the neighbors, etc. I don’t see myself employed ever again in any capacity. That works for me.

I suggest that you keep the extent of your wealth to yourself. You’ll be on the receiving end of snark, glib remarks and outright resentment. Even from people who love you. I learned to say that I sold my main business, have other investments and do a little consulting work (I don’t) and that I’m plenty busy (I’m not).

I decided to be debt free. Yeah, I may have left some returns on the table, but I don’t have to worry about monthly bills and nothing can be taken away from me.

If you love your boat, keep your boat. You’ve got the time!
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Parkinglotracer »

Unchained wrote: Wed Sep 29, 2021 12:12 am I sold my business in 2017 at age 52 with resources similar to you. I strongly disagree with those that suggest you don’t have enough, should seek a job, etc. You have plenty to draw the $100K you mentioned. Read the Wiki on windfalls. Decide whether to invest lump sum or over a reasonable period of time. Enjoy your freedom and don’t let anyone interfere as you learn over time what type of life you want.

I am very happy with my freedom. I read a lot, eat well, exercise regularly and take better care of my house than I ever did when I worked. I have time for my wife, the neighbors, etc. I don’t see myself employed ever again in any capacity. That works for me.

I suggest that you keep the extent of your wealth to yourself. You’ll be on the receiving end of snark, glib remarks and outright resentment. Even from people who love you. I learned to say that I sold my main business, have other investments and do a little consulting work (I don’t) and that I’m plenty busy (I’m not).

I decided to be debt free. Yeah, I may have left some returns on the table, but I don’t have to worry about monthly bills and nothing can be taken away from me.

If you love your boat, keep your boat. You’ve got the time!

Yes this is great advice
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Wricha »

GreenMan1111 wrote: Tue Sep 28, 2021 7:30 pm
Gill wrote: Tue Sep 28, 2021 4:23 pm You have $661,000 of debt, most of it at high interest rates. For a starter, I'd pay that all off tomorrow morning.
Gill
Even the mortgage at 3.875%? Wouldn't it be better to put that money to work in something like VTSAX over the next 30 years?

Genuine question; I'm rather clueless to investing
Your debt jumps out as a bit of a red flag. (80k car 70k boat) Had you not sold the company you may been in a bind. “I am clueless to investing “ even more reason to pay off 3.875% loan.
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Wricha
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Wricha »

GreenMan1111 wrote: Tue Sep 28, 2021 7:30 pm
Gill wrote: Tue Sep 28, 2021 4:23 pm You have $661,000 of debt, most of it at high interest rates. For a starter, I'd pay that all off tomorrow morning.
Gill
Even the mortgage at 3.875%? Wouldn't it be better to put that money to work in something like VTSAX over the next 30 years?

Genuine question; I'm rather clueless to investing
Your debt jumps out as a bit of a red flag. (80k car at 35, 70k boat) Had you not sold the company you may have been in a bind. “I am clueless to investing “ even more reason to pay off 3.875% loan. You have made your money in big chunks sold a business, cryptocurrency at a young age which is very good. My caution is it may not happen again in your life time set up a budget and understand your living expenses throughly.
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by BlueJay207 »

GreenMan1111 wrote: Tue Sep 28, 2021 4:19 pm Hi all,

As the title shows, I sold my business 6 months ago and am now sitting on 3 million in my checking account. I'm looking for advice on how to invest this money. My age is mid 30s, and my retirement accounts are quite small ( I always opted to reinvest my excess money into my business ). Here are my details:

Emergency funds: have 1 year set aside in addition to the 3 million

Debt:
Car loan - 80,000 @ 1.9%
Boat loan - 70,000 @ 5.9%
Mortgage 1 - 275k @ 3.875%
Mortgage 2 - 236k @ 4%

Tax Filing Status - Married Filing Jointly

Tax Rate - 37% Fed, 8.53% State

State of Residence - Iowa

Assets:
3 million in checking account (post tax)
1.5 million in crypto currencies (I am willing to sell some of this off to de-risk a bit, but initial investment was 200k)

401k - Fidelity 62k in S&P 500 stock index
401k - Principal 34k - 90% Principal LifeTime 2030, 10% Principal US Property

Income currently $0. This may change in the future; but it's a wild card. I would like to assume for this that I might not ever work again, unless needed.

Wife's income around 20k gross yearly

Thank you for any and all suggestions!


What I would personally do-

#1) sell your initial investment in crypto ($200k). Then you are essentially playing with the houses money at that point (1.3million)

#2) payoff that boat ASAP. I would also pay that car off as well even though you have a low rate. Both these items would use up most of your initial $200k crypto funds.

At this point you still have 1.5million in crypto, 1 year living expense, and $3 million from the sale of your company. Paying off the items in step #2 has likely free'd up around $1k in cash per month (just a guess). I would then think long and hard on step #3. I would also spend some considerable time on considering investment strategy for the 3 million and how crypto fits into your investment strategy going forward. Most people hear are going to advise you to sell it all... But obviously crypto has been good to you. I also see no personal harm in letting that 1.5million stay in crypto if you like the asset. You'll be playing with the houses money and you have 3million in the bank statement I suspect you'll be just fine if it goes to zero. Now is not the time to make any rushed decisions. Take your time

#3) Think long and hard if two houses really fits your lifestyle. Maybe consider selling both to purchase one ideal house/property. Consider selling the one that gets used less. If it is determined you want to keep both houses then you need to at least consider refinancing them to a much lower rate.
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Harry Livermore
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Harry Livermore »

GreenMan1111 wrote: Tue Sep 28, 2021 7:31 pm
Californiastate wrote: Tue Sep 28, 2021 4:54 pm Pay off your debt and get a job. 2m after debt is hardly enough to retire at 30 unless it’s Mumbai.
An option would be to sell off some of the crypto and wipe the debt, then still have 3 million leftover to invest. Could I invest that 3 million and retire comfortably? Say 100k+ per year?
I was going to suggest selling off whatever crypto it it takes to retire your debt. Let the rest ride if you like... but I would be tempted to take that profit and run. I hope that statement does not violate LadyGeek's edict above.
I defer to the bigger brains here on BH to analyze the concept of "retiring comfortably" in your mid-30s with $3MM. 2.5% might be a perpetual withdrawal rate... so you could perhaps spend $75K per year.
Me, personally? I would pay off debt with the crypto, take a one-year sabbatical that includes travel, mindfulness, perhaps some intense life-coaching if you can find a good fit, and choose a second act. If you follow this advice, you may spend much more this one year without damaging FI, since you plan to resume work and saving afterwards.
Mid 30s seems a little early to be sipping fruity drinks poolside for the next 60 years...
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by bds3 »

I would...

Sell off enough crypto to pay off the debt+LTCG on the crypto, and otherwise not touch the $3M. In order to have more favorable capital gains rates perhaps you sell some January 2022 and the rest Jan 2023, but that will depend on your income for 2021/22/23, and only you know that. Let the rest of the crypto ride. Your $200k investment will pay off 600+ in debt. That's a win.

In your current situation I would keep th 1 year of cash and put the other $3M in VTSAX+ some bond fund, to your desired risk. Hopefully 80/20, 90/10, or 100/0 at your age. I think the risk of low bond returns for 60 years is a big one for you.

I would also get a job. Maybe I'd wait 6 months and enjoy some time off, but I can't fathom retirement on only $3M, nor can I fathom retiring in my 30s. Let alone both together.
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by sfnerd »

Agree with the others.

Here's what I'd do:
- sell the crypto
- pay off the debt
- invest the entire balance in a 75% stock / 25% bond portfolio (or 80/20 or more aggressive if you intend to work eventually)
- draw 3-3.5% / year and you have 100k+ in yearly income
- never worry about your portfolio again, other than periodic rebalancing

Cheers!
Paul78
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Paul78 »

Yes I agree selling off some of the high risk investment (crypto) to at least get your investment back and lock in some profit makes sense. But I would also be tempted just to use the rest to live off of for a bit.

I mean with you wife's 20k a year you could still sell 70k a year of crypto (60k profit and 10k principal) and stay in the 0% capital gain bracket. Yes you have to pay 8.53% to Iowa but that it is. Now sure that doesn't account for what income you make off the 3 mill (assuming it won't just be sitting in the bank) but point being there is still probably some room to take a chunk of profits for basically free. I mean I would do that at least until you take your shot with the next business. And of course you have to account for how much money you are willing to risk to start your next business.
ThankYouJack
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by ThankYouJack »

GreenMan1111 wrote: Tue Sep 28, 2021 7:31 pm
Californiastate wrote: Tue Sep 28, 2021 4:54 pm Pay off your debt and get a job. 2m after debt is hardly enough to retire at 30 unless it’s Mumbai.
An option would be to sell off some of the crypto and wipe the debt, then still have 3 million leftover to invest. Could I invest that 3 million and retire comfortably? Say 100k+ per year?
I would feel comfortable with that. Plugging some numbers into firecalc.com or cfiresim.com should help give you a better feel for things. There's also this chart - https://i0.wp.com/earlyretirementnow.co ... C500&ssl=1

Congrats on your success and best of luck starting your next venture!
Californiastate
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Californiastate »

kelway wrote: Tue Sep 28, 2021 10:40 pm
Californiastate wrote: Tue Sep 28, 2021 4:54 pm Pay off your debt and get a job. 2m after debt is hardly enough to retire at 30 unless it’s Mumbai.
It most certainly is.... perhaps not in "Californiastate".
The OP has a boat and 2 mortgages. People don't change their lifestyle overnight. His spending habits won't change with money to spend. He might take a break for a bit but he will be back in the game in order to fund his lifestyle.
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kelway
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by kelway »

Californiastate wrote: Wed Sep 29, 2021 10:23 am
kelway wrote: Tue Sep 28, 2021 10:40 pm
Californiastate wrote: Tue Sep 28, 2021 4:54 pm Pay off your debt and get a job. 2m after debt is hardly enough to retire at 30 unless it’s Mumbai.
It most certainly is.... perhaps not in "Californiastate".
The OP has a boat and 2 mortgages. People don't change their lifestyle overnight. His spending habits won't change with money to spend. He might take a break for a bit but he will be back in the game in order to fund his lifestyle.
OK, I mistook "After Debt". Without a mortgage or debt, 2M should be plenty for most of us. By definition it must be considering the median family income in the US.
neverpanic
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by neverpanic »

GreenMan1111 wrote: Tue Sep 28, 2021 4:19 pm Hi all,

As the title shows, I sold my business 6 months ago and am now sitting on 3 million in my checking account. I'm looking for advice on how to invest this money. My age is mid 30s, and my retirement accounts are quite small ( I always opted to reinvest my excess money into my business ). Here are my details:

Emergency funds: have 1 year set aside in addition to the 3 million

Debt:
Car loan - 80,000 @ 1.9%
Boat loan - 70,000 @ 5.9%
Mortgage 1 - 275k @ 3.875%
Mortgage 2 - 236k @ 4%

Tax Filing Status - Married Filing Jointly

Tax Rate - 37% Fed, 8.53% State

State of Residence - Iowa

Assets:
3 million in checking account (post tax)
1.5 million in crypto currencies (I am willing to sell some of this off to de-risk a bit, but initial investment was 200k)

401k - Fidelity 62k in S&P 500 stock index
401k - Principal 34k - 90% Principal LifeTime 2030, 10% Principal US Property

Income currently $0. This may change in the future; but it's a wild card. I would like to assume for this that I might not ever work again, unless needed.

Wife's income around 20k gross yearly

Thank you for any and all suggestions!
I am not a financial advisor or tax professional. In fact, I know nothing about nothing, but I wanted to join the conversation anyway, so take this for what it's worth.

Great profile! There is some terrific advice in the thread and I especially love the counsel from Unchained above, so I'll merely add in a few general thoughts:

1) You've done exceptionally well with your crypto investment. You don't have to be good at or knowledgeable about investing to get lucky and you did it! That said, IN MY OPINION at a minimum you should take your initial investment plus a healthy percentage of your gain out and move to less risky holdings, which you can use to seed your future business venture. The suggestion to sell off enough to retire your debt is a good one. None of us knows the future, but holding until Jan 2023 to get the 0% vs paying 20% tax now is a coin flip that may be worth it.

2) Pay off the boat right away.

3) Once you pay off the boat, look into refinancing the mortgages. That may not be possible without income, but you don't know until you ask.

4) Car loan is fine.

5) During the refi process, you're probably going to really get in touch with your personal finances and will have a better picture of average annual expenses.

6) Continue to visit and engage with this forum and you'll likely learn quite a bit about intelligent investing.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
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eye.surgeon
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by eye.surgeon »

If it were me I'd pay off all my debt immediately including mortgages. Just my preference. Then I'd find a new income stream, ie a job or a business. I'd get out of the crypto game, again my preference. I'd start maxing your tax advantaged retirement options, and if you have kids fund their 529s max yearly.

You're too young and not rich enough yet to retire. but you've done well, congratulations.
"I would rather be certain of a good return than hopeful of a great one" | Warren Buffett
deltaneutral83
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by deltaneutral83 »

Not sure BH behavior is OP's style, and that's fine. Skilled enough to sell a biz for some multiple of 7 figures, $80k car, 7 fig crypto portfolio, and a vacation home all by early 30's. I just feel like someone would pay OP well for OP's knowledge and work at OP's leisure? BH's probably don't have 20% of their NW in Crypto, and would probably trade in an $80k car for 6 used Camrys.

I'd sell enough of the crypto to pay off the 5% debt, that's for sure, but again, I didn't turn a huge 7/8 bagger in that arena. I'd spend some time and figure out what I wanted to do the next 3-5 years. And errand number one is finding a rock solid CPA. Capital gains for investments in the same year as OP sold the business probably doesn't make sense. Taking a nice chunk of Crypto off the table at 12:00:01 Jan 1, 2022 is probably what I'd be interested in doing, enough to get my 200k back, pay taxes, and enough to retire the car and boat debt. What is that $450k, so not even 33% of the Crypto? If stocks/bonds is something you're interested in transitioning into, I'd spend a while on this board. It's going to be 100x more boring than OP's former life if done successfully. Realistically OP, don't you see yourself using some of this money you just got toward a new business or an aspiring business? I just don't see a large portion of your NW in equity index funds, much less bonds.
Nate7out
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Nate7out »

deltaneutral83 wrote: Wed Sep 29, 2021 2:43 pm Not sure BH behavior is OP's style, and that's fine. Skilled enough to sell a biz for some multiple of 7 figures, $80k car, 7 fig crypto portfolio, and a vacation home all by early 30's. I just feel like someone would pay OP well for OP's knowledge and work at OP's leisure? .... I just don't see a large portion of your NW in equity index funds, much less bonds.
OP did a great job getting wealthy. OP should consider that staying wealthy might take a different approach.

https://www.collaborativefund.com/blog/ ... ying-rich/
CoAndy
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by CoAndy »

Gill wrote: Tue Sep 28, 2021 4:23 pm You have $661,000 of debt, most of it at high interest rates. For a starter, I'd pay that all off tomorrow morning.
Gill
+1,000
Late2Brake
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by Late2Brake »

[/quote]

Not with a boat…
.
[/quote]

Only boat people got that one!
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willthrill81
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Re: Sold my Business and currently have no Income, but 3m in cash

Post by willthrill81 »

Californiastate wrote: Tue Sep 28, 2021 4:54 pm Pay off your debt and get a job. 2m after debt is hardly enough to retire at 30 unless it’s Mumbai.
After paying off all debt, the OP would still have over $3.8m. Using the historic 3% perpetual withdrawal rate, that's over $100k of annual income aside from the wife's $20k, cumulatively about double the median U.S. household income.
The Sensible Steward
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