I started a small business 10 yrs ago and I finally hit $1M income. I’m 45 and want to retire. What should I do with this $1M?

[pauljamesreid1981]

I’ve been a lurker on this forum for sometime now and I understand that I need to diversify my portfolio. Besides this liquid million, I do have investments in a variety of stocks and indices of around ~300K.

These are my investment ideas so far and I am looking to better understand on how much I should invest in each category to keep a healthy balance between safe vs risky bets:

1) IRA: safest?
2) Index funds: Safe in long term, not sure which ones to look at besides S&P, Dow Jones. How much should I invest here and in which ones? I’ve heard there are a bunch of ETFs people look at, what’s a good resource that could help me understand this better besides the first few articles on google?
3) Short Term Trading: Big Tech, Big Pharma, maybe Defense? (Is this relatively safe? How short should be short term? What other kind of stocks should I invest in)
4) Angel Investing: In series D and series E startups. Is this lucrative, what is the success vs failure rate in this, where can I find out this info, approx how much should I bet here?
5) Real Estate: Something that is easy to manage. I want to retire so I want to invest in minimal effort properties, I don’t believe buying individual homes gives me this freedom and I’ve read that commercial real estate is even more complicated.
6) Small Business: I don’t want to run or manage a business but I am happy to invest as a silent partner. Should I do this? What kind of businesses should I look at for this? Is it a good idea to invest in a friends’s business? If not, how to trust strangers?
7) Day Trading: If I am able to retire, I would just do this in my free time (in addition to managing the rest of my money) to be productive but I am not sure where to start looking to gain knowledge on this.
8) Certificate Deposits, HYSA, Treasury Bonds: Are Bonds still a good idea?
9) Sell My Business: What are some factors I should use to evaluate the selling price? I have about 2000 clients to who I sell a personalized service.

My goal is to multiply the million dollars into $10M in 5-8 years. My second goal is to make atleast $300K each year in interest/dividends/gains without liquidating a lot of my investments. I have a family of 6 dependent on me so having $300K per year would help us all live comfortably while I am retired.

Appreciate any and all advice on above topics as I am a bit lost. Please feel free to recommend any resources that have helped you in your journey or if you know where I could read more about any of these topics.

Hope the above list helps others on this forum.

 

[sharkbait13]

@pauljamesreid1981 I say this as a financial planner who also has ti manage risk for my clients… I wouldn’t do hardly any of these without carving out a solid foundational amount that’s in simple liquid ETFs that are tax efficient. Then carve out a portion you’re okay with losing if things go belly up. Also be sure your tax planning is solid, as you can waste a lot of money not doing it right, same with estate planning. That’s immediate ROI without the work. I’m biased, but a great financial planner could help narrow in on all your opportunities and help you game plan.

 

[pauljamesreid1981]

@sharkbait13 I have thought about getting a financial advisor/planner. Where do I go looking for one? How do I find a good one out of the sea of people out there?

 

[sharkbait13]

@pauljamesreid1981 There are a few places to search. I would always work with a fiduciary CFP, and I’m biased toward fee-only independent advisors who are well credentialed and have nothing to sell but advice. You can find these advisors on NAPFA or the Fee-Only network. Many firms also have CPAs on staff that can handle your complex tax needs. You’re also welcome to PM me if you have specific questions, and I could refer you to someone who meets your criteria.

 

[moonkitty2]

@sharkbait13

I’m biased toward fee-only independent advisors who are well credentialed and have nothing to sell but advice

This is key. Everyone else will be acting in their own interests, not yours, OP.

 

[jash]

@moonkitty2 And OP please make sure your advisor is a fiduciary

 

[friendlyjosh]

@moonkitty2 Yes they will put you into things that they make commission on and you'll get locked in.

 

[shagsnacks]

@sharkbait13 Excellent advise.

 

[ironhold]

@pauljamesreid1981 If you know other business owners, ask around. Also ask your CPA. I’ve been a financial advisor for 15 years, but started buying various businesses and real estate so now I do more business advising than anything.

If I had to guess the majority would tell u to put it in a growth oriented ETF portfolio. That might get u to $2-2.5M in that time frame… maybe.

First thing I’d look at is if you are paying rent for your business? If yes, I might look into purchasing a property for yourself, especially if you can rent a portion and have someone else pay the majority or the cost. You still get to deduct this and an LLC that owns the property brings in income that you most likely won’t have any tax on for many years.

If you’re not well versed in the stock market, take 3,4,& 7 off the list.

If you know your business well enough, why not buy a similar business? This will help expand your business multiple. If you’re able to figure shit out on your own, maybe invest in apartments?

Being totally unbiased, here’s how I’d allocate-
500k - tax free money market with the goal of finding income producing real estate.
75k - Bitcoin, add 2k/mo from the 500k
375k - Growth oriented investment model add 6k/ mo from the 500k
50k - emergency fund

And as my family of 7 are dependent on me as well, so I can appreciate that!

 

[bonneann]

@pauljamesreid1981 I use Fisher Investments. They are a fiduciary and they get paid based on your bottom line. Give their spiel a listen, anyway.

 

[bostonman]

@pauljamesreid1981 At the casino at 4am. Everybody there at that time has the best financial advice.

 

[mavera2015]

@sharkbait13 Yeah I agree

 

[rubiojune]

@sharkbait13 Just out of curiosity, what is the best way to find a good, trustworthy financial planner?