What would you do with TEN MILLION dollars?

Introduction

At work, someone asked me, “If someone were to give you $10 million, and said they wanted a 10% return on it, but you could keep the rest, what would you do?”  This is slightly different than winning a $10M lottery since in that scneario, I would either a) blow it all in Vegas or b) move to a tiny island and sell coconuts all day.  Oh who am I kidding?  I wouldn’t do choice A since my wife would kill me and then divorce me (or is it the other way around?)  Choice B I considered for a millisecond when I was in Phuket, Thailand back in 2004 (you know, a week before the tsunami hit.)  There I was on this beautiful day on the beach drinking coconuts…life couldn’t be better right?  Then I realized a) holy crap, there is no internet here, b) there’s probably no air conditioning here, and c) I am ALREADY BORED OUT OF MY MIND JUST THINKING ABOUT ALL THIS.   So for that, you can scratch off choice B.

Option A – Start a company and be the next Zuck

I have some readers who are in startups right now.  This has always intrigued me since we just all assume they will sell their startups to Facebook/Google/Microsoft in 5 years and be Instagram billionaires.  I’m sure we don’t think about the 95% of startups that failed (I pulled that out of ass; please correct me if you spent the time Wikipedia-ing the answer).  So this option clearly is the highest risk/reward possible.  In 3 years, the company could be worth ZERO or it could be worth $100M, right?  I’m a little too risk averse in my life right now to do this.

Option B – Invest the money

You could go the route of investing the money in either stocks, bonds, or even other companies.  If we go conservative, you may be able to average a 5% return if you invested it in the S&P.  The problem with this is that you’re under 10%.

Option C – Manufacture spend $100 million

I don’t know what this option is.  I just pulled it out of my ass.  Even the most seasoned MS’ers will tell you that there are inherent limits to MS (stores shut you down, banks shut you down, etc).  You certainly can’t buy $10M of stuff from Bloomingdale’s to resell, although Sears/Kmart may let you do that.  Or maybe you start your private labeling business and buy $1M of re-badged selfie sticks… this is really option A at that point.

Option D – Real Estate

There are actually subsets of this as well – you could buy and rent, build from scratch, or fix and flip.  This isn’t as risky as option A but certainly riskier than option B.  I actually attended a local real estate group a year or so ago and learned a couple of things there that I may share down the road.  I think your average margin with real estate is 20-30% depending on which avenue you go down.

Conclusion

So what would you do with the $10M to get a 10% return?  Did I leave out any choices?