I just won $180 million dollars. What should I do?
First and foremost: Tell no one. Not a word to anyone. I mean it.Okay, one or two exceptions: get a good lawyer first. He or she will be duty-bound to keep confidential your winning this much money. He or she can be appointed by you to go to the lottery commission to hand in your ticket, get it verified, and set up the trust or trusts to receive the money.You might have seen in news reports after an enormous jackpot was won and everyone wants to know who won it, “An attorney representing the winner claimed the prize.” And that’s usually it. They might add “The attorney said the winner is a private family in the U.S.” and no other details.You want that to be your story, too, and here’s why: You will instantly be besieged by requests from family, friends, family who might not really be family, friends who might not really be friends, charities, stockbrokers, and so on. You life could be become a living Hell once people know you’re suddenly incredibly wealthy.This doesn’t mean you can’t quietly help the people you love, support the causes and charities you believe in, and so on. All that can be done without anyone knowing where the money is coming from. You can say you had a particularly good year at work, sold an idea to someone, managed to set aside a small pile of cash over the years, etc. No one needs to know.And believe it or not, you are helping the people you love as much as you are helping you. If your name is public with this gigantic windfall, people will go to your family and say “Hey, do you think you can get your [brother/sister/son/daughter/cousin] to help me out?” And if you help a family member by giving a larger cash gift than you gave another family member, the resentment starts. It’s human nature.Unlike starting and building a company, for example, then selling it for a huge profit, there’s something different about lottery wins: people will feel like you haven’t “earned” it and don’t “deserve” it, therefore you “must” share it. It will get weird. It will get tense, and probably even ugly.Do yourself and the people you love a favor: change nothing drastically about your lifestyle, quietly help those you want to help, and silently enjoy the power of true financial independence.
Students at IITs/BITS are getting a package of 2 crores. Why do companies like Facebook, Google, etc. offer such a huge package to IITians/BITSians?
They’re not huge packages.In fact, it is very mediocre pay when you consider the places these companies are situated and the kind of taxes that they have to pay.Entry level software engineers to these companies are usually paid around $100,000 dollars an annum (which is 60 lacs). The ‘2 crore package’ news that you see is nothing but a hyperinflation, taking stock bonuses, joining bonus and relocation bonus all into one.With $100,000 in a place like San Francisco, you’ll struggle to make ends meet if you go in with a mindset of living the extravagant life. Out of the $100k, around $35–40k will go as taxes. That leaves you with around $60k.SF Bay Area has one of the highest rent rates in the world. Even to rent a hut, you’ll have to shell out at least $20k a year. A decent house with all basic amenities will cost you around $30k. And forget about getting a new house. The minimum salary that can sustain the mortgage payments for the cheapest of houses in SF is $170,000; which is 70% more than what you earn. It’ll take you at least 5 years to command that kind of salary.So, you’re left with $30k now. Labor is insanely costly in the United States. You’ll be paying people between $10 and $15 an hour for tasks such as plumbing, carpentering, mowing the lawn etc. There is no way you could afford a maid or a domestic worker with that kind of salary so expect to do all the cooking, cleaning and laundry yourself.Even if you live on a frugal diet and spend very little on third party labor, the maximum you’ll end up saving is $2–3k. And if you’re the kind of person who likes spending the weekends out partying, then you won’t be left with even that. No wonder the Americans have close to zero lifetime savings.So, if you think getting a job at one of these MNCs will make you rich beyond imagination, think again. It is only the beginning of your career. Don’t have unrealistic expectations about the kind of wealth you can accumulate at such a young age. Getting into these companies directly after college is, no doubt, a fantastic achievement but it’ll still take years before you can walk into any restaurant and order wine without gasping at the price tag.