Newly Rich or Expect to Be Soon? Paul Buchheit Has Some Tips for You
Interesting post just published by Paul Buchheit, best known for creating Gmail as Google employee no. 23, and cofounding the social network aggregator FriendFeed, acquired by Facebook last summer under undisclosed terms.
Titled “What To Do With Your Millions,” it’s Buchheit’s response to the post of someone newly rich on Hacker News who is, in Buchheit’s view, receiving crummy advice (this comment notwithstanding).
Buchheit’s first bit of advice, do not hire a financial advisor, no matter how many times friends recommend you to exactly that. “What those people don’t understand is that the only skill a financial advisor needs in order to be successful is the ability to sell you things,” writes Buchheit. “Their actual financial skills are almost irrelevant.”
What does he think step one should be? Putting those millions into a safe, fixed-income investment like short-term CDs. “You can circumvent the FDIC insurance limit by having the money spread accross multiple banks (think of it as ‘RAID for money’) — see CDARS for more info,” he writes. And “[d]on’t rush to invest it in the stock market — that’s risky and you could easily lose half of your money in a matter of months. Avoid long-term or illiquid investments, though it’s fine to put a few percent into random things such as startups, but understand that you’ll probably lose that money, so consider it an educational expense.”
For the rest of his post — worth reading if you’re burdened with more money than you know what to do with, or it’s a problem you aspire to have one day –click here.
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