(HN asked me to trim this from 5k chars to 4k, but I'll try posting it here instead. I should probably get a blog...)
Thanks to the success of ML, I've recently come into a lot of money. But an alarming chunk of it has vanished almost as quickly as it's come in. Of $550k in income during 2022, today's balance is $300k. But 33% of $550k is $180k, so the final balance is going to be around $120k after the tax man comes knocking in April.
Turning $550k into $120k is an interesting magic trick, but I'd rather not practice it.
It's conventional on HN nowadays to conceal one's wealth. In 2010 you'd occasionally see a post for the wealthy, https://news.ycombinator.com/item?id=1511104 being one of my favorites. So this seems like a good opportunity for another one:
Growing up, we weren't poor – we occasionally went to Disney world, which isn't something that a poor family can claim. But one of the core aspects of the class divide is institutional knowledge. Having known a few wealthy people, they've almost universally come from families who manage money well. Not only do they know how to do their taxes, but they know where to store their money, why, and how to avoid taking risks.
In contrast, my family had the usual problems that come with divorce. It wasn't uncommon for a certain family member to blow through thousands on pseudo-luxury items, the kind that lower-middle class people get in order to feel wealthy. We had a nice grandfather clock and a nice piano, in a house that in hindsight probably shouldn't have had a piano. No one taught me a thing about how to handle money, let alone how to do one's taxes. And society wasn't any help in that regard either; you're shuttled from gradeschool to highschool, and that was the end of the road for me – I have a GED. So there wasn't much opportunity to learn from peers how to manage finances.
I revisited http://www.paulgraham.com/selfindulgence.html on how not to lose money, but surprisingly it didn't seem to apply to me. I haven't lost a lot of money with bad investments. I still drive the same crummy car. Our one luxury purchase was a $17k vacation to the Maldives – a far better investment than a fancy car, and a lot cheaper. But that $17k doesn't account for $550k becoming $120k. I haven't invested any of it; I don't even know how to buy stocks, let alone own any. It's all just sitting in the bank.
This somehow turned out to be an advantage during the recent downturn. More than one colleague has muttered about their stocks going down. But having lived through 2008, I understand that now's the time to be investing.
We also have a daughter on the way. My father worked for many, many years to bequeath $11k to me when I became an adult, which I promptly threw into Mt Gox and watched in horror as it vanished overnight. I'd like to give her the same opportunity to continue the family tradition. Putting $10k into a bank account marked "For Kess" and leaving it there is one thing, but I suspect that rich people would do much better.
There are probably ways to do it that avoid taxes, for example. But googling for "how to avoid taxes while giving your daughter money" is pretty useless; it brings up listicles like https://money.usnews.com/money/personal-finance/family-finance/articles/smart-ways-to-gift-money-to-children#:~:text=For%20tax%20year%202022%2C%20parents,filing%20a%20gift%20tax%20return but never anything comprehensive. And from the crudeness of my google phrasing, you can get a sense of just how little I know about any of this.
So, wealthy finance nerds, now's your time to shine. What are your tricks? Teach us all! Try to imagine your brain has suddenly been wiped clean of everything related to money. What would you do to re-learn it as quickly as possible? That seems like the best path to follow, so I'm hoping someone here will know.
If $120k magically appeared in your bank account, what specifically would you do with it? Leave it? ETFs? Who do you go to when you need to do your taxes? TurboTax is fine, but I worry I'll screw something up, and I imagine you do something a little more sophisticated, like hire someone. But who?
It's easy to avoid traps like "Don't put your money into dumb things." https://www.reddit.com/r/wallstreetbets/ is basically a casino, not an investment strategy. But it was strange to discover that sometimes, no one teaches you in detail what to do when you become successful. Everyone always seems to just say that a family member takes care of their finances for them. I'd like to mind meld with that hypothetical finance expert and Vulcan their knowledge from their mind to mine. But since that's not an option, can you give a better one?
Amusingly this whole time I've been thinking "I should probably ask ChatGPT," but unironically asking a computer what to do with your money feels a little to close to Silicon Valley parody. Perhaps you'll prove that humans can still give better responses, at least here.
(Thanks for your time!)