Wealth Stocks

This post is about what I would buy if I won the lottery in terms of investments. The overall purpose is to have stock in the things I would use if wealthy so that my spending would come back to me in more wealth.

Of course, there is some house cleaning to get out of the way before the stock spending spree commences. The first thing to do is to pay off the existing credit card and IRS debt, the student loans and enough of the mortgage on the existing condo so that when it sells, we can walk away without paying anything (since we are currently under water).

The second task is to find a house in the same complex where my wife's boss lives and works from home, assuming she still wants to keep busy. If not, then we'd buy something in Alexandria, Virginia, probably in the Del Ray neighborhood.

Now to the the purchase of financial instruments. The first thing to buy is enough Alexandria or Fairfax County munipal bonds to pay for both the property taxes and water bills on the house and to pay for the increase in these taxes over time. These should fund an escrow account which pays these bills automatically. Stocks in the local utility and telecommunication companies, as well as stock in Home Depot and Lowes, will also be purchased, with enough dividend reinvestment to grow the account for inflation and enough in distributions to fund current services, home repairs and the replacement of furniture and appliances. Also, don't forget that what used to be purchased at the video and record store is now purchased online or via the TV itself. These funds will also be deposited in the escrow account with automatic payment provisions. There must be enough of a cushion in the account to pay all obligations in advance of dividend and interest distributions.

The next thing to do is to take care of shopping, both for food and clothing. The same rules apply. We make sure we'll have enough so that you can reinvest to deal with inflation and make sure we have stock in every food store we shop at (Harris Teeter, Giant, Whole Foods and Safeway) as well as where we buy clothing - especially if we use their credit cards (Macy's). It is also worth it to buy stock in some of the products as well, especially in the clothing sector. Let's also not forget presents, since lottery winners must be generous to the relatives. These funds should go to normal checking, again with a cushion and probably a line of credit, just in case.

Entertainment comes next. There should be enough dividend return after reinvestment to cover eating out three or four times a week for dinner, as well as money for lunches and coffee (Outback, Fudruckers, Starbucks, etc.). Since some places are privately held, it is best to overinvest in the sector to get the required payout. The more you eat out, the more you must invest. The other reason to overinvest is for eating out on vacation. Also, don't forget the movies. Invest in both theaters and studios. Don't forget that rich people sometimes have to pick up the check, so include enough for guests.

Speaking of vacations, if you plan on one vacation a quarter - and if you are rich, why wouldn't you - you must cover enough for airlines and hotels - including international carriers. This may also involve getting a beach house, which requires a separate set of utility and local bond investments. Rental car and credit card company stocks are also a must, since these folks all profiteer off of vacationers. We also need to get the right kind of credit card to avoid paying for rental car insurance and currency conversion fees - and there should be come kind of kickback for frequent flier miles.

Personal transportation is also to be saved for. The amount of the investment depends on how often we want a new car and how many cars are needed. Replacing a car every three years and having two of them, both in the luxury zone, will require a significant investment - although it is fine to figure trade in allowances, so it's not as bad as it could be. We also must add oil company stocks to buy gas, insurance company stocks and stocks in someplace to get repairs and maintenance, even if we use a local garage.

When you are rich, private school is a must. It is probably better to pre-pay tuition than to rely on investment accounts that may or may not hold their value. We'll pay for college, but Catie is on her own for graduate school. Wedding expenses will be covered under the entertainment fund. After she goes away to school, food and enterainment costs will be less, although she will need spending money for the same kind of thing.

After we cost out all of these expenses and the stocks required, its time to plan for paying taxes. Taxes will be withheld automatically from the lottery winnings, however this is not enough. We must also plan to pay taxes on the dividends received to pay bills, since there is a limit to what you can put in a Roth IRA (although this should be utilized to the greatest extent possible). To pay these taxes, buy the highest yield US Treasury paper possible and make sure, like above, that enough is reinvested for inflation, with the remainder to pay taxes.

Finally, don't forget God. If you are rich, this is expected. In each category above, add enough padding so that we can give in charity an amount equal to 10% of whatever we spend on ourselves and others.