Financial Fiction Friday #23

This is the most horrific investment advice. Granted this is not actually aimed at someone who won the lottery, but rather anyone who scrolls Twitter for bite-sized investment advice. However, it’s important to differentiate between strategies designed for an elementary school teacher with 4k in the market who wants to invest and someone with $4 million, let alone $400 million. 

First off, unless you are that school teacher with $4k, you shouldn’t be investing for yourself. If you have significant wealth, especially wealth you just gained quickly, find a lawyer and find a financial advisor right away. 

Don’t want to pay an AUM fee? Find a fixed-fee advisor.  But please find someone who is a professional. Your world is about to be turned upside down. This goes for lottery winners, inheritance recipients, or anyone who suddenly came into a lot of money. 

Even if you lack the imagination to do anything other than buy index funds, at least buy muni or AMT-free bond funds and save yourself some taxes. If I was your advisor, I can easily earn my fee by saving you ~$2.5M in taxes every year by using an appropriate muni fund vs a taxable fund. 

Don’t even get me started with $40M in play money. What? Advice like this is why lottery winners go broke or get robbed. You’re advocating for someone to set aside ~$110k per day for a whole year for play money. This is unhinged.