Using a throwaway. Call it a humblebrag if you want, but the core idea is that I have had an amazing windfall, and don't want to screw it up. Long time Boglehead/FIRE aficionado, although I do my own thing: I'm semi-retired, spouse still works and provides our benefits. Want to keep some specifics out of this, but within that late 40s/early 50s period, two kids in VHCOL area. I spend our taxable brokerage dividends* to supplement my spouse's take home, and presume I will not work for $$ again. (I know spending dividends is heresy to some, it's my way).
Windfall: A $1M gift outright. Not kidding. My head is still spinning. Basically a pre-estate gift from a parent who wants to give, and see it used, while they are still alive, as opposed to after probate.
Currently have about $5.1M in savings/retirement brokerages, but most is actually in taxable, probably about $1M in pre-tax retirement accounts. Virtually all equity, foot on the gas. I do have additional cash on the sidelines, low six figures, which I do not consider long term savings.
Plan for the Windfall is to use $500,000-$600,000 to bump up my debt/bond ballast. Between Vanguard Total Bond, a little in International, and also some in VWETX (long term good corporate bonds). Between age, the world/market exuberance, etc., I think it's time to go mostly defensive at this point, but also putting 25% into equity (but diversifying into international). Remaining balance for home/capital projects, and some fun. I may put some more of this, and existing cash, to work in 2026 after dust settles.
Finally, for the analysis, I have a deferred compensation windfall set to hit in late 2027, probably about $2.5M. Most of that will (likely) go into equity at that point, but I am focused on the current big bond purchase strategy for the current windfall, given the info I have provided. I concede *some* of this is psychological, but my AA ratio currently is well over 95% equity, and the windfall allows me to diversify that without selling any equity.
Thoughts? TIA.
(and yes, this deliberately does not factor in a future inheritance from a parent who is wealthy enough to give $1M now)
Please peer review my plan in light of a windfall
byu/Dontwanttomessup2025 infinancialindependence
Posted by Dontwanttomessup2025
4 Comments
There is nowhere near enough information provided to give any useful feedback and as a “longtime FIRE aficionado” you should know that.
No one is against “spending dividends” as far as I know. You may be conflating that with preference to focus on total returns and SWR but that is obviously not the same as being against spending dividends.
Are they really going to see that $1M being used if you spend more than half of it on paper assets? This is a FIRE sub, so our natural inclination is to stack and squirrel away (it’s what I would do), but I have a feeling that’s not what the giver here has in mind.
Considering that you already have $5m and $2.5m more coming, this extra $1m makes pretty much zero difference to your life. Maybe split it between your own children to give them a head start.
Yes, I would be conservative with a gift from a parent. Mix of bonds and cash.
I would do this until the windfall is in. At that point I would consider passing along $500k each to the young adult kids. Start letting them in on the plan as they near graduation.
If the gifter is able to keep a secret let them know that is how you want to use the gift