$1.5M Rich But Clueless – Couple With $82K Combined Income Says 'Need Help' After Winning Big, Reddit Explodes Over What They Should Do Next - Vanguard Total Stock Market ETF (ARCA:VTI)

Winning a large sum of money is a dream come true, but for many, it quickly turns into a financial puzzle. With terms like index funds, dividend stocks, high-yield savings accounts, real estate investing, and passive income strategies swirling around, it's easy to feel lost when you’re new to this world of investing.

The stock market, in particular, attracts investors because of its historical returns and the ability to generate long-term wealth without active management.

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One Reddit user, a 30-year-old with a $30,000 salary and his wife earning $40,000, recently found themselves in this exact situation after winning $2.5 million and remaining with $1.5 million after taxes. They currently own two homes: one with a $100,000 mortgage and another generating $1,000 per month in rental income, but are unsure how to make their windfall last.

Their concerns are whether they can retire early and live off $70,000 a year without running out of money and whether they should invest in the S&P 500, keep funds in high-yield savings account accounts, or buy more rental properties. They’ve also never invested before and need guidance on safe, long-term strategies.

“We live simple lives and don't plan on changing that. We won't be telling anyone about the winnings. Long story short, the three options we are considering so far are to invest in the S&P 500 about $1 million of it and live off that if possible, live off the high-yield savings accounts if that's possible, or buy properties and be landlords. Even though that's still a working job we would be doing it together,” the poster wrote.

The r/FinancialPlanning Reddit community has jumped to the comment section with plenty of advice and recommendations for the couple, so let’s dive into those.

How to Invest $1.5 Million and Live Off Passive Income? Reddit Suggests Strategies

Invest in Low-Cost Index Funds

Many commenters urged the couple to avoid putting all their money into real estate and instead diversify in stock market index funds, which historically outperform real estate with less hassle.

“The best way to invest is total market index funds. I have preferred an 80% U.S./20% international for those 35 years. With $1.5 million, that means $1.2 million (I would use [Vanguard Total Stock Market ETF VTI]) and $300,000 international (I would use [Vanguard Total International Stock ETF VXUS]),” a Redditor advised.

Citing the 4% withdrawal rule, this commenter calculated the potential return on investment the poster would have if he invested in an index fund: “I would probably say stick it in a solid index fund. On average, your money will double every 7 to 10 years. After a few years, you could technically live off of $100,000 or so without ever touching the balance. If you take out now, you could safely withdraw $60,000 a year. Example: it grows 7%-10% a year. You pull out 4%. It will grow to $5-$10 million when you're 60. If you pulled out nothing, it could grow to $26 million.”

“A mutual index fund like [Vanguard S&P 500 ETF VOO] will grow faster than real estate and you won’t have the job of being a landlord,” a Redditor suggested.

This commenter mentioned dividend income and how there are many ETFs and closed-end funds that can generate the amount the couple aims for with their investment.

“There are plenty of ETFs and closed-end funds that pay monthly dividends and offer a very wide range of risk/reward. It wouldn’t be too difficult to assemble a portfolio of those to generate a pretty steady monthly income that would meet your goal,” he wrote.

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Avoid Lifestyle Inflation, Pay Off Debt, and Consult a Fiduciary

Several users warned against quitting jobs immediately and instead suggested paying off debt, keeping the windfall secret, and seeking professional advice.

“If you're into living simply, I'm paying off all my debt first. It gives you freedom and allows you to do whatever you want from there. Also, I'm going to keep working, maybe not as many hours, or the same jobs, but something to keep myself busy and not raise a lot of eyebrows about where I got the money for the life I'm living. Maybe you switch to doing something you've always wanted to do,” a Redditor said.

Touching on the fact that the poster should consult with a fee-only financial advisor, this commenter also suggested being aware of insurance sales.

“Talk to a financial advisor ([certified financial planner]) all [certified financial planners] are fiduciaries and will have some understanding of investing, insurance, tax, etc. Do not fall for the insurance sales. Some insurances are beneficial, but most are a huge waste,” he wrote.

“Rule 1: Don't tell a soul. (Kinda already broke that rule). Rule 2: Don't do anything different for one year,” a Reddit user suggested.

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