Ask HN: What did you do when you suddenly got rich?
I am moderately successful, and thankfully I have accumulated some wealth over the years, as opposed to a single big hit like in your case. Despite I can&#x27;t claim to be rich, I have been fascinated by understanding how to manage my money better, and hopefully I can offer some advice here.<p>In random order:<p>1) Take it slowly. You don&#x27;t need to rush into investing, buying stuff, getting a new house, etc, all in two weeks. Slow, thoughtful decisions will usually be better than rushed ones.<p>2) If you are not financially literate, try reading some good books on the subject, and IMHO, not necessarily the most popular ones. Picking the right ones is NOT easy. There are several lists of &quot;best financial books&quot; or &quot;best personal finance books&quot;, and reality is that you should read 15-20, and stick to the 2-3 that you really liked.<p>Financial literacy will allow you to take much more informed decisions about everything.<p>3) Depending on your age, where you live, and if you have kids or not, you might want to consider &quot;estate planning&quot;, a broad category that includes, among other things, establishing &quot;trusts&quot; (legal entities) or similar and granting some amount of money to the trust, in order to get some tax advantage, and clarify what&#x27;s going to happen to that money when you will eventually die of very very old age.<p>4) If you know a few friends who are also rich, talk to them and ask them to share their experience with you.<p>5) Don&#x27;t tell others about your wealth, or don&#x27;t be too specific about how much you have. A &gt;$5M wealth creates issues, and provides strong incentives for people to try to manipulate you.<p>6) If you are married, share this burden with your spouse - I think it&#x27;s a good idea to keep her posted, to tell him&#x2F;her NOT to share too many details with friends and family, and possibly to get both of you financially literate.<p>7) There&#x27;s a lot of BS around. Be very wary of any advice, including mine. (especially mine!)
Be really, really skeptical about any claim by anybody. Remember there&#x27;s no free lunch out there.<p>If you are considering investing in a 12% guaranteed annual return, well, let me tell you, it doesn&#x27;t exist on Earth (both guaranteed and 12% together).<p>As a rule of thumb, take inflation + GDP * (1 - long term capital gain taxation) as the threshold beyond which you should start to be wary of any claim.<p>For US, currently: 1.6% inflation + 3.10% GDP[0] * ~0.75 = 3.92%, which means: any investment that is both guaranteed and above a 4% annual return, you should start being skeptical.<p>8) Try to invest in things that you understand well, or otherwise try to invest in things that are tax-optimized and dumb-proof (e.g. investing in an index is relatively simple to understand, can be done in a tax-smart way).<p>9) understand diversification. Key to this is that diversification should apply to your goal in life, and your risk-aversion. E.g. if you&#x27;re 25, you might want to take a bit more risk, as riskier bets tend to pay slightly better over the long run, if you can take several of them (because comparatively less people are willing to play in risky territory). If you are 55, you might want to settle with a more conservative approach. Etc.<p>10) Big mistakes are usually made when investing in real estate. Try to separate the &quot;emotional&quot;, irrational purchase of your main home, with the &quot;investment&quot; part. I wrote about the &quot;rent vs buy&quot; dilemma last year, it might be a useful read to get started. [1].<p>Finally, if you want this money to make you happier, the thing is, it probably won&#x27;t, unless you&#x27;re really really disciplined about it. Mae West used to say &quot;Money isn&#x27;t everything, if you have it&quot;. Once your basic needs are met, it&#x27;s very hard to use money properly to be happier over a long period of time.<p>I personally try not to obsess too much about money, I try to use it to buy me &quot;time&quot; more than anything else, and I also try to use it to relieve me from issues that would make me anxious. I also try to remember that I won&#x27;t bring any money with me in my grave. I am not great at doing all of this, but I keep trying.<p>Hope this helped.<p>[0]: <a href="https:&#x2F;&#x2F;tradingeconomics.com&#x2F;united-states&#x2F;gdp" rel="nofollow">https:&#x2F;&#x2F;tradingeconomics.com&#x2F;united-states&#x2F;gdp</a><p>[1]: <a href="https:&#x2F;&#x2F;medium.com&#x2F;fabrica&#x2F;the-rent-versus-buy-dilemma-12-important-questions-5f5a7d1815f" rel="nofollow">https:&#x2F;&#x2F;medium.com&#x2F;fabrica&#x2F;the-rent-versus-buy-dilemma-12-im...</a>