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.
There’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]