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Ken Jennings’ Quote of the Day and What Would You Do With $1.5 Million?

This article was written by in Banking. 16 comments.


Ken Jennings was popular for a while as a major winner on Jeopardy. In the tournament, he went home with $2.5m. A windfall like this can inspire inaction or poor decisions. Ken Jennings has advice for those in this position: “Put your money somewhere not idiotic and leave it alone as much as possible.”

What classifies as “not idiotic?” Ken said when he won, he found himself “depositing a $1.5 million check into an account that had never had more than $5,000 in it.” Seriously? I hope that Ken was exaggerating for effect, or that the was not referring to a savings account. A man of Ken’s trivial knowledge should know that bank accounts are only insured up to $100,000 by the FDIC.

Ken JenningsThere’s nothing wrong with keeping a good portion of a windfall in savings, particularly while you’re deciding how to better invest or otherwise deal with the money. If you have that much to put in banks, I would suggest diversifying amongst a variety of banks. To properly diversify $1,500,000, you only need 15 separate financial institutions.

I’d probably use $1 million to start a foundation, invest $200,000 in an index fund for retirement, and invest the most of the remainder to supplement my yearly income. I would use what little is left to take a break from the corporate world and travel, even though the dollar is low.

Update: Take a look Ken Jennings’ response to my thoughts on his own blog.

What would you do, specifically, if you received a check today for $1.5 million, representing the “after-tax” winnings from a game show or inheritance? What is the “not idiotic” decision?

Instant Fortunes, and Sudden Headaches [NY Times]

Published or updated January 8, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 16 comments… read them below or add one }

avatar Curtis

I definitely get his point though. If you’ve got 1 check for 1.5 million, it’s not like you can deposit a portion of it. Still a bit of a shock to put that much money in your account all at once. Then the waiting period for it to be available in order to start moving it around. I guess those few days would be a good chance to figure out what you need to do with it on a more permanent basis.

For me, I guess I would do exactly what he did. Hit a savings account first, then start working with a financial planner to set up investment and savings accounts elsewhere to protect the money for the long term.

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avatar Stephanie @ PoorerThanYou

Well, first of all I would knock out my student loans, and put aside what I will need to finish my bachelors and my MBA, so that will eat $150,000 right off the top.

After that, I think I would need to see a professional for help deciding what to do, especially in regards to what accounts to open. The “not idiotic” decisions is to ask for help when you need it.

I would especially take some of the money and start two scholarship programs: one for young entrepreneurs, and one for students who are having trouble affording college, but are making a dedicated effort to learn about personal finance to help themselves.

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avatar rocketc

I really like the idea of a foundation. After taking care of my obligations – all $195,000 worth – I would love to spend the rest of my life giving away the interest on the remaining balance and then leaving the money in a trust for my children.

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avatar M.B.

I would payoff all my debts first, then put aside $25,000 for an emergency/lqiuid fund.

Then, I would fully fund my daughter’s 529 (I think $65,000 or so?) so that her education would be covered, or mostly covered.

I would get an addition on the house to expand the kitchen and pay cash for it.

That would leave me with about $1.1 million, which I would park in a combination of savings and index funds and just let it grow and not touch it for ten years or so.

Also, without debt we could live on one income so either my wife or I would scale back working or retire.

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avatar Llama Money

With a cool $1.5 million check, life would instantly become very very easy. Blow a hundred grand on, well, “crap”. Fancy electronics, toys, clothes, vacation, etc. Keep about $100k around for a super-emergency fund, and fully invest the rest in a fancy diversified mix of stocks / funds. 10% average return nets me a cool $130k / year. Live on $90k pre-tax ( only 15% cap gains tax = the win ).. should be set for life.

My wife and I would quit working full-time, of course, and I could pursue my side business full-time to supplement the investment income.

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avatar The Saving Freak

I would pay off an finish renovating my house. My next step would be to purchase and fix at least 4 investment properties. This should leave me with about 1.3 left (foreclosures are great if you have the money to fix them up). I would give 150k to my church and would have fun with an additional 150k. With the remain 1 mil I would max out tax advantaged retirement accounts and put the rest in tax free bonds.

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avatar Yana

The check would have to deposited to one bank initially, so the point would be to use the one that gives me the most privacy. This means a non-local bank which happens to pay 4 percent annual yield interest. I would then deposit portions from there into my other financial institutions. I would have an account for medical costs as well as one for automotive-related combined with money to pay income taxes. We would shop for a home, and live comfortably and conservatively forevermore :) We’d be especially happy that our refusal to ever pay interest would be far less challenging.

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avatar Heidi

I wouldn’t worry too much about FDIC limits – you’d be amazed at how many individuals and businesses have millions in a single bank.

I’d pay off my $260k in debt, put $100,000 in a high-yield savings or money market, buy an acreage for my private residence, and start a youth camp on some property my family owns.

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avatar Melanie

I would definitely start with paying off my debts — it isn’t much of the total 1.5, only about 30k, so I would have plenty left over. I would probably buy at least one property (as I currently rent), probably something where I would be able to rent it or part of it out for continuing income. Then I would buy my friend a plane ticket and make her come and visit me, as it has been almost 2 years since I last saw her.

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avatar Lily

I thought Ken Jennings tithed 10% of his winnings to the Mormon Church? I hope he used a giant check for the hand-over. I’m a complete sucker for giant checks.

$1.5MM is such a large amount (not for some people, I guess) that I’d have to just carve little parts out ($5,000 for my IRA to start), see what’s left ($1,495,000?), and repeat.

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avatar That One Caveman

Assuming one’s debts are not too high and paying them off left you with $1.2 million, why not just invest the rest? That way you could retire immediately.

Assuming that $1.2 only gains a modest 5% annually, you’re bringing in a “free” $60,000 every year. If you’re retired and live frugally and with no debts, $60K should be plenty. And if your investments gain more than 5%, you will have the benefit of not only being retired, but also getting richer every day.

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avatar Brian

A minor quibble, but if you just split the $1.5 million into 15 different accounts, none of your interest will be FDIC-insured, negating the effort you made to split it up.
The difference in effort between 15 accounts and 17 accounts is minute and would be worth it.
However, I would invest the majority of it in mutual funds anyways, which aren’t FDIC insured and therefore this quibble was purely academic ;).

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avatar Mrs. Micah

Can one even find 15-17 different banks anymore?

I’ve thought about this…I’d pay off our debts ($120k), put $20,000 in an emergency account, put about $200,000k in an index fund for retirement, max out my IRA (and while I know the money has to be earned…technically we’d be earning money at our real jobs), put some in a house fund ($250,000 in 3 banks I guess), put some in a college fund ($100,000 to grow) and give the rest away. Oh, maybe pay off the rest of my parents’ mortgage….

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avatar J.C.'s Money

Wow, I feel like we’re all in the movie Office Space, and I’ve got to be Michael Bolton telling all you Samirs that you’re missing the point of the exercise…but I guess in this case it really is the point.

I would start my foundation for scholarships, since thats my life goal anyway. I would be 1% done achieving it then…

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avatar Kirk

FDIC insurance is over-rated. It is nice to have if one bank fails, but if we ever have a major banking crisis, like the one in 1929, this insurance is worthless. It wouldn’t be able to cover everyone.

Of course, as many folks mentioned, they would invest inside a brokerage account so FDIC insurance really isn’t a factor.

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avatar Jonathan

It is likely I will be in this situation in just a few years. But I try not to think about it too much. I think obsessing over it can only lead to dissapointment, and doesn’t help one to make the right financial decisions about one has *now*. (Or very grateful for what one has, for that matter). And making the right decisions *now* has the greatest impact on whether I make good decisions in the future.

I think a much better approach is a transparant managing your finances at the present, which you do on this blog, and I appreciate.

If Ken Jennings is responsible in the way he manages his Jeopardy! winnings, it is probably because he was responsible in the way he managed his income when his net worth was a lot smaller.

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