Question
What do I do now that I am rich? I made seven figures last year, which is not that rich, but rich never the less. What should I do with it?
Answer
This may sound counter-intuitive, but unless you want to lose all your friends, DON'T start handing it around freely via gifts, easy loans or friendly "investments." Those are among the fastest ways known to humanity to ruin relationships. Cautiously and quietly increase generosity to strangers, and send signals that it isn't okay for friends/family to approach you for money unless it is a dire emergency. Those who actually like you and are able to deal graciously with wealth asymmetry will stick around. Others won't be able to and will retreat. You will also make a few new peer friends and get tempted into spending habits that might quickly reduce you to "wealthy poverty" so pick your new friends carefully.
In general, your biggest risk is your social life falling apart, leaving you very lonely. Your second biggest risk is losing it all to dumb investments or bad spending.
For the second risk, take your time. Establish the actual lifetime value of the wealth (7 figures can mean one celebrity lifestyle year, or never working again, depending on the lower limit of your needs). You're kinda lucky in that this is a godawful market, and cash is probably a good place to keep your money while you take your time to think through investment, early retirement, aggressive further wealth building or house-owning/rental property ideas. So take the 2-3 months to reflect. You're not going to miss any quick money-doubling opportunities right now (and if you do, more will come along). If you don't understand money well (for example, you made your stash via startup stock options by being an early employee), pick your advisors with extreme care, and make sure you're not paying them in ways that encourage them to manage risk in ways that don't fit your own risk-taking tendencies.
Overall, congrats. You now belong to the social class that is at once the most free and most trapped class in the world.
You may want to read Graeber's "Debt: the first 5000 years" to fuel some productive reflection on the psychology, sociology, politics and anthropology of wealth. Frustratingly messy book, but has a lot of startling and stimulating perspectives on money, debt, honor, relationships, violence...
You may also want to consider trying to change your metaphors around money and start to "think like a rich person." I wrote about money metaphors here:
http://www.ribbonfarm.com/2009/0...
For the record, I am not rich and based on the things I tend to get myself into, there is a very low probability of me being rich in the future. So this is all based on textbook stuff, watching friends strike it rich (and deal with it badly/well), and my own experiences of "relative" wealth (visiting a developing country like India while earning an ordinary dollar-American income is much like being rich in the US... the same risks of relationship damage and bad financial habits loom).
So take my answer with a huge pinch of salt.
In general, your biggest risk is your social life falling apart, leaving you very lonely. Your second biggest risk is losing it all to dumb investments or bad spending.
For the second risk, take your time. Establish the actual lifetime value of the wealth (7 figures can mean one celebrity lifestyle year, or never working again, depending on the lower limit of your needs). You're kinda lucky in that this is a godawful market, and cash is probably a good place to keep your money while you take your time to think through investment, early retirement, aggressive further wealth building or house-owning/rental property ideas. So take the 2-3 months to reflect. You're not going to miss any quick money-doubling opportunities right now (and if you do, more will come along). If you don't understand money well (for example, you made your stash via startup stock options by being an early employee), pick your advisors with extreme care, and make sure you're not paying them in ways that encourage them to manage risk in ways that don't fit your own risk-taking tendencies.
Overall, congrats. You now belong to the social class that is at once the most free and most trapped class in the world.
You may want to read Graeber's "Debt: the first 5000 years" to fuel some productive reflection on the psychology, sociology, politics and anthropology of wealth. Frustratingly messy book, but has a lot of startling and stimulating perspectives on money, debt, honor, relationships, violence...
You may also want to consider trying to change your metaphors around money and start to "think like a rich person." I wrote about money metaphors here:
http://www.ribbonfarm.com/2009/0...
For the record, I am not rich and based on the things I tend to get myself into, there is a very low probability of me being rich in the future. So this is all based on textbook stuff, watching friends strike it rich (and deal with it badly/well), and my own experiences of "relative" wealth (visiting a developing country like India while earning an ordinary dollar-American income is much like being rich in the US... the same risks of relationship damage and bad financial habits loom).
So take my answer with a huge pinch of salt.