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HOT TOPIC How would you spend $1 million dollars and get no sellable value from it?

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biophase

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I know this is an odd question, but me and a few of my friends have been pondering this question for a while now.

Here’s why. I’ve come to the conclusion that it would be pretty hard for someone worth $5M+, who is responsible to squander their money.

For example, if I had to spend $300k today, I’d probably go buy a Lambo. But in buying a Lambo you didn’t really spend $300k. The Lambo is still worth $250k. So you’ve blown $50k.

However if I put a turbo on my 4Runner and give it a chrome wrap for $15k, my 4runner’s value doesn’t go up. It probably goes down, so in this case I’ve actually spent and wasted $15k. But this is something I’d never do.

Private jets and parties are all things that you’ve actually spend on and get no equity afterwards. But that’s not something that I’d spend on. So I’ve been racking my brain on how to spend way $1m and get no equity from it afterwards.

The one thing we would all spend our money on is housekeepers, private chefs and trainers but these all cost $30-$150k a year. I thought that was kind of interesting. Vacations and travel we all agreed on, but it’s really tough to blow more than $100k on vacations in a year. You get tired of them, seriously!

We would all also buy more houses, land, ranches and vacation homes. But again that isn’t really spending. In could increase your net worth instead.

It’s an interesting mind exercise because it makes you realize that you don’t need as much as you think and that you can buy some of your wants now because you aren’t spending as much as you think.

Just to use another car example. When I pay $100k for my Mclaren, I didn’t spend $100k. I moved $100k cash from a savings account into a depreciating asset. When I sell it for $80k, I’ve lost $20k. So what I really did was pay $20k to have a Mclaren for 2-3 years. I did not lower my net worth by $100k.
 

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Kak

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This is correct. The jet comes to mind as something that would burn a lot of money. The way one must look at a jet is basically unlimited travel for your fixed operating cost per year. Just consider everything as a fixed cost. Your note on the jet, because why the hell would you pay cash for it? The flight department... Maintenance... Storage... Insurance... Fuel.

You have to just say you are OK with burning 1-3 million per year on all of the above, total, for unlimited travel. Depending on your selection of jet. It can go up from there as well.

That said, I see where you are going with this and agree. Pretty much nothing else chugs money like aviation. The depreciation isn't even close to the biggest expense in aviation.

The average person with 5 million dollars, didn't just one day get 5 million dollars dropped on them. They had to be their own form of disciplined to get there... That number rolling over in a bank account or an investment account doesn't change anything for them beyond an emotional reaction.

Invested wisely, you can play pretty hard on the capital gains of $5m and still have an ever increasing net worth. They still have no business flying privately.

YET dumb asses that win the lottery end up broke like 90% of the time. So they must have the answers you are looking for. Crowds of leech family probably plays a huge part.
 
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sparechange

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If the ''goal'' is to spend a million and have no value from it I'd have to say art, jewelry, and cosmetic surgeries.

34313



34312

But maybe it's possible to resell some jewelry at a small depreciation rate similar to a car.

High stakes gambling?


$5m could be spent in a single morning but as you said, it would be hard for someone with financial smarts to blow it away.
 

Primeperiwinkle

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I adore this thread. I shall now endeavor to be entertaining and witty. I have had caffeine!!!

I sincerely doubt if any thread on the forum more clearly highlights the differences between a wealth mindset, which puts systems in place to create more wealth, and poverty mindset which lacks any such system.

But the fact that you actually don’t know how to lose all your money makes me want to giggle hysterically. Oh dude. Yet again, I wish I could travel back to the Summit and spend another week just hanging out with everyone there until I could say without a shadow of a doubt I had made you and about 26 other people into friends for life. Thankfully, the ones I did get to hang out with were and are so wonderful I don’t feel too bad for not buying you and many, many other ppl a beer. But alas, I digress.

Here are the two ends of the spectrum with no negativity attached.

Disciplined Money Systems + Respect For their Time that Makes Money .

vs

A Casual Disregard for One’s Own Time In General + A Generous Nature

The answer to your question is in the latter equation, more specifically and practically explained, as follows... impulsive, ridiculous giving will make anyone lose a large inheritance in approximately 1.7 years.

(Don’t ask me how I know..)


Top 5 Ways To Become Desperately Poor Very, Very, Very Fast.

1. Tip every server, delivery guy, maintenance person, driver, helper, etc a full 50% every time you order, anything. Do it with a smile, your bank account is dwindling already!

2. Next up is homeless people, giving stations, and cash charities. Give to everyone, everywhere you go, with whatever you have on hand. Pretend you’re Scrooge on Christmas morning. But do that every day. The cartoon version, of course.

3. Buy houses for a few people, pay all their bills, buy them some cars as well and send large checks to multiple orphanages, missionaries, museums, etc.

4. Almost last but not least, become utterly fascinated by no less than four separate hobbies - one for each season, of course- and make sure to buy every conceivable item necessary to begin the new hobby AND every book related, even marginally, to it, in hardback. You don’t actually have to finish any projects though.

5. Finally! Shop at Target.

And there you have it!
*bows
 

Lucky Lu

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That said, I see where you are going with this and agree. Pretty much nothing else chugs money like aviation. The depreciation isn't even close to the biggest expense in aviation.

Invested wisely, you can play pretty hard on the capital gains of $5m and still have an ever increasing net worth. They still have no business flying privately.
Unless my dear @Kak you are paying too much in taxes. There is nothing better in order to shrink the spread between your revenue and taxable profit, than a great maintenance program for your plane.

Also, depreciation on planes is under a special program where you can depreciate it 100% in 5 years, all deductible. And you still have the plane.


Believe me, the average G650 owner is not a dumb person at all.
But if you look at the same situation from the average yearly expense stand point, you could think it is batshit crazy. Not quite in reality most of the time.
 
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sparechange

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Unless my dear @Kak you are paying too much in taxes. There is nothing better in order to shrink the spread between your revenue and taxable profit, than a great maintenance program for your plane.

Also, depreciation on planes is under a special program where you can depreciate it 100% in 5 years, all deductible.


Believe me, the average G650 owner is not a dumb person at all.
But if you look at the same situation from the average yearly expense stand point, you could think it is batshit crazy. Not quite in reality most of the time.
Yeh don't uber wealthy just write off jet expenses ? (I have no idea how that stuff works)
 

daniel_m

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One way even a smart person can lose their money is making poor investments into companies that go nowhere or go bankrupt.

If we're talking about spending it on pleasure, well - it's as easy as looking at NBA & NFL players, lottery winners who go broke within a couple of years. Gifts to friends and family, vacations, gambling, drugs, high end clothing, foolish investments, etc.

Here's another good one - child support. I remember reading about an NBA player who had to pay something like $3 Million per year on child support. Something like that could happen to even the smartest person.

 

GigMistress

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I agree with what you're saying in general concept, but I think part of the reason you're having such difficulty getting there with the numbers is that you're thinking about things you would buy and pay for within the context of your current life. I know a couple of celebrities with personal chefs, and they certainly aren't working in the $30-150k range. And a month at the Plaza in New York would exhaust your annual $100,000 travel budget.

If your point is that no one needs a $2,200/night hotel room or a $36 bagel, I'm inclined to agree. But, some people value those things more than others. I'm not even much into material things or luxury, but if I had seemingly unlimited money lying around, I'd be very tempted to spend the winter months at the Ritz on Amelia Island--at about $700/night.

And that "seemingly unlimited" concept is part of the problem. Many of the people who manage to blow $1 million, or $5 million get there precisely because they thought it was too much to ever spend.
 

JAJT

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So I’ve been racking my brain on how to spend way $1m and get no equity from it afterwards.
I mean, if you're really trying hard to lose a million dollars on non-recoverable assets and such, you're pretty much firmly in the realm of extreme side-walker / consumer mindset stuff: Gambling (including really bad investments), drugs, high end entertainment, luxury goods, expensive experiences, etc...

That being said, if the question was "what would you spend a million dollars on, profitability or return be damned?", that opens a lot more fun and interesting options.

For example, if I had a million dollars sitting around I really didn't care whether it went to zero, I'd very likely start a really high end local arcade. I grew up loving these places and you don't see them around much anymore. I would know going in that it's likely either going to lose money, break even, or maybe cover it's own cost but all I would care about is providing a cool, fun place for community kids and adults alike to just have a fun time. To me, that would be a damn fun way to spend a million bucks. But shit - maybe it makes money, maybe the assets are worth 50-60% of what I paid for them, so if it went tits up I'd still have "something" from the endeavor but this is just an example of something I might do because I want to, with zero financial expectations from it.

I could say the same thing about opening a brewery, although the chances that I could make that successful would be significantly higher.
 

GPM

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Easy. These guys can blow tens of thousands per night at the club. Easy.
 

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minivanman

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<<<<<<<< In my thumbnail picture (mid 90's), my friend set a budget for that racecar (1BK) at $1 million for the year. With 5 weeks left in the season, he had to give the team more money to finish the season. So around 25 years later, I'd have a race team for a few months that traveled to Knoxville every week. It's very easy to blow money when you have a racecar. The quickest way to be have a million dollars in racing is to start out with 5 million.
 

Kevin88660

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Sounds like you are asking what could destroy a rich person, and try all ways to avoid that in advance.

1) Gambling. I have heard people losing all their 80 million worth of real estates and factories to it in Casino vip room.

2) Reinvesting heavily back into their business. For business that are investment heavy placing big bets on expansion could go bad quickly. A lot of business owners are self-funded still.

Spending to boost one’s ego and impress others could be a problem but no ways it kills wealth as fast as the first two.
 

wade1mil

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If this was a competition and I wanted to win, I would legally change my name in California 2,299 times with the last name change being my original name.

I could also pay artists to replicate the Egyptian pyramids in the form of ice sculptures in the Arizona desert.
 

Odysseus M Jones

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I'm wondering why nobody has mentioned "Have a big wedding and get divorced" yet. That'll bleed you dry.
Because value is subjective.
Just because one person thinks in terms of tangible, durable value that can be represented on a balance sheet doesn't mean everyone does.

Why hasn't anyone said buy $1m of cut flowers?
 

Kevin88660

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I'm wondering why nobody has mentioned "Have a big wedding and get divorced" yet. That'll bleed you dry.
It is a hyperbole.

The court views assets, marriage and divorce like a business.

It is a big concern if your wife had a Phd and quit her job after having a baby to look after the children. She had made a “major sacrifice” for the union and once a divorce happens there will be surely a hell lot of ailmony to pay.

Most of the time i do not think the extreme cases apply for most couple these days.

If you made your millions before marrying your wife the court knows that she didn’t contribute to that.
 

Sethamus

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Bio is not being specific in his question, but examples show clearly he means monetized value.

Different people find value in different things. You could give everyone on the forum $1000-2000(not sure how many members there are) and blow through the million and feel great about yourself, which is value, just not a return on the money.

For an actual investment return, there are so many circumstances that could change a bad purchase into gold. The poor farmers in West Texas, at least some, became millionaires when hydraulic fracturing tech became available to produce oil on the land. Before the boom out there, this could be considered a wasted purchase as most of the smaller farming operations moved to more productive areas.

This is really hard to answer if you do not include donations and purely purchases that would be reasonably done by someone with a high net worth.
 

Ing

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I would really like to see the earth from the space. That could be about that prize.




When it should go fast :
Take a million dollar notes and throw them of a tower in a crowded town and observe the people picking them up.
Could be interesting an reveal the human nature.




Btw : you could collet the rest later.
 

Rabby

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Donate $1 million to a non-profit, get into a huge fight with the directors over control, get ousted from the organization as a permanent persona non grata, and later discover that your money is being used to fund communists, terrorists, or something else you don't like.
 

theag

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Taxes.
 

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biophase

biophase

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Thanks for all your replies. I know that many of them are meant to be jokes, but this goes to show that it is really hard to do.

What I'm really looking for is something that you would actually pay for. You don't need to have $1M, but what are some things that are kind of expensive that you realistically would purchase if you were making decent money that had no value afterwards?

Actually, we were just chatting now and overbidding on PPC is a quick way to do this LOL.

We actually talked about bad investments. Investing is the only time you write huge 5-6 figure checks and give them to other people. I've lost plenty of money investing with others. This is one reason I do all my own investing now.

Here are some of the things that I've spent big chunks of money on
Exotic cars, I know that I lose $5k-$10k in equity on these each year.
Vacations, been on some pricey $1k+ a day vacations. But only one of these per year totaling $10k.
Real estate, I like my second home and vacations homes!
Ecommerce businesses, I start new businesses with around $20k once every 2 years.

That's it. I can't think of anything else that I spend more than $5k on. So based on this pattern of spending, it would be difficult for my net worth to decrease.
 

Dwight Schrute

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Fun fact:
Lots of adult actresses are also available as escorts, even the ones that don't advertise it if you ask nicely and open your wallet wide enough. I'm just going to leave this here...
 

csalvato

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I know that many of them are meant to be jokes, but this goes to show that it is really hard to do.
I think it's actually really easy to do. I think a problem with your original assertion is that you are implicitly time boxing to a short time period.

In your example you use the example of an exotic car, then selling it 2-3 years later.

But, let's say you buy that Lambo for $300k and keep it for 10 years. It will be worth, at most, 80-90k at that time, assuming you've taken amazing care of it and haven't wrapped it around a pole without insurance. This isn't something that wealthy or responsible people are immune to - Elon even did this with his first super car.

Within a year or two, it won't be worth 0, but cars are depreciating assets. So, as time goes to infinity the value will be zero (vs. real estate, which *should* appreciate as time goes to infinity).

You're also putting a subjective constraint on it - that the person who is accountable is also "reasonable". Even "responsible" people do crazy, wacky things (refer up to the example of Elon wrecking a $500k car without insurance within his first week of ownership). And a lot of people with 5M+ are far from responsible (think about musicians who got their big break or pro athletes).

If it wasn't so easy to do this, generational wealth wouldn't be so hard (most future generations squander previous generations wealth within 1 generation!), nor would we hear about epic rises and falls from grace where net worth shoots up to multi-millions and the person in question ultimately dies penniless, even if they are extremely intelligent (e.g. Nikola Tesla, tons of pro athletes, etc.)
 
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csalvato

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Another concrete example of how a responsible, driven, ambitious person can squander money: repeatedly taking risks on R&D projects or new businesses that ultimately never result in a meaningful asset (IP, business value, etc.)
 

AnneC

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Here’s the actual question, translated into layman's terms:

@biophase has $1 million burning a hole in his pocket. What else can he spend it on, other than exotic cars, more real estate, and luxury vacations? He's already burned through his hookers and blow allowance for this year, too. Ideas welcome!
 

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