1.4 million cash. What do I do?
For now, park it in a mix of cash and short term bond funds like the Vanguard Short Term Investment Grade fund. The short term fund will help with the inflation issue. Make sure the cash positions are FDIC insured. Then either educate yourself about investing or start interviewing potential advisors. Look for referrals, and stay away from people peddling annuities or people who will not fully disclose how they get paid. Your goal should be to have a long-term plan within 6-12 months. You can get an investment manager through firms like Fidelity or E*Trade to manage your account. It won't be someone dedicated exclusively to you, but you're in the range where they'd take you as a managed account customer. Another option would be to get a financial planner (CFP or something) help you to identify your needs and figure out what your investments portfolio should look like. This is not a whole lot of money, but is definitely enough to have an early retirement if managed and invested properly. "I'm still recommending that you go to a professional. However, I'm going to talk about what you should probably expect the professional to be telling you. These are generalities. It sounds like you're going to keep working for a while. (If nothing else, it'll stave off boredom.) If that's the case, and you don't touch that $1.4 million otherwise, you're pretty much set for retirement and never need to save another penny, and you can afford to treat your girl to a nice dinner on the rest of your income.  If you're going to buy expensive things, though - like California real estate and boats and fancy cars and college educations and small businesses - you can dip into that money but things will get trickier. If not, then it's a question of ""how do I structure my savings?"". A typical structure: Anywho. If you can research general principles in advance, you'll be better prepared." First--congratulations!  I certainly wish I could create something worth buying for $1.4 million.  In addition to what @duffbeer703 recommended, consider putting some of the money in Treasury Inflation-Protected Securities (TIPS).  I second the advice on staying away from annuities as well.  @littleadv is right about certified financial planners.  A good one will put those funds in a mix of investments that minimize your potential tax exposure.  They will also look at whether you're properly insured.    Research what is FDIC-insured (and what isn't) here. Since you're still making a six-figure income in your salaried job, be sure not to neglect things like contributing to your 401(k)--especially if it's a matching one.  At your salary level, I think you're still eligible to contribute to a Roth IRA (taxable income goes in, so withdrawals are tax-free).  A good adviser will know which options are best. At 1.4 Million, you can definately afford a professional advisor who would give you the best advice taking into account all your goals and risk appetite. Have you considered investing in real estate? Property is cheap now and you have enough money for several properties. The income from tenants could be very helpful. If you find it's not for you, you can also sell your property and recover your initial investment, assuming house prices go up in the next few years. "For what it's worth, the distribution I'm currently using is roughly ... with about 2/3 of the money sitting in my 401(k). I should note that this is actually considered a moderately aggressive position. I need to phone my advisor (NOT a broker, so they aren't biased toward things which are more profitable for them) and check whether I've gotten close enough to retirement that I should readjust those numbers. Could I do better? Maybe, at higher risk and higher fees that would be likely to eat most of the improved returns. Or by spending far more time micromanaging my money than I have any interest in. I've validated this distribution using the various stochastic models and it seems to work well enough that I'm generally content with it. (As I noted in a comment elsewhere, many of us will want to get up into this range before we retire -- I figure that if I hit $1.8M I can probably sustain my lifestyle solely on the income, despite expected inflation, and thus be safely covered for life -- so this isn't all that huge a chunk of cash by today's standards. Cue Daffy Duck: ""I'm rich! I'm wealthy! I'm comfortably well off!"" -- $2M, these days, is ""comfortably well off."")" you should invest in a range of stock market indexes. Ex : Dow jones, S&P500, Nasdaq and keep it there until you are ready to retire. I'm invested half in SLYV and SLYG (S&P600 small cap value and S&P600 small cap growth; Respectively). It brings on average between 8-13% a year (since 1971). This is not investment advice. Talk to your broker before doing this.
The capital gains is counted towards your income. If you cash out 1 Million dollars, you have a 1 Million dollar income for that year, which puts you at the 39.6% tax bracket. However, because that 1 Million dollars is all long term capital gains, you will only have to pay 20% of it in long term capital gains taxes. The best you can do is to cash the 1 Million dollars through several years instead of just all at once. This will put in a lower tax bracket and thus will pay lower capital gains tax. "Here's what I suggest... A few years ago, I got a chunk of change.  Not from an inheritance, but stock options in a company that was taken private.  We'd already been investing by that point.  But what I did: 1.  I took my time. 2.  I set aside a chunk of it (maybe a quarter) for taxes.  you shouldn't have this problem. 3.  I set aside a chunk for home renovations. 4.  I set aside a chunk for kids college fund 5.  I set aside a chunk for paying off the house 6.  I set aside a chunk to spend later 7.  I invested a chunk.  A small chunk directly in single stocks, a small chunk in muni bonds, but most just in Mutual Funds. I'm still spending that ""spend later"" chunk.  It's about 10 years later, and this summer it's home maintenance and a new car...  all, I figure it, coming out of some of that money I'd set aside for ""future spending.""" There are two or three issues here. One is, how quickly can you get cash out of your investments? If you had an unexpected expense, if you suddenly needed more cash than you have on hand, how long would it take to get money out of your Scott Trade account or wherever it is? I have a TD Ameritrade account which is pretty similar, and it just takes a couple of days to get money out. I'm hard pressed to think of a time when I literally needed a bunch of cash TODAY with no advance warning. What sudden bills is one likely to have? A medical bill, perhaps. But hey, just a few weeks ago I had to go to the emergency room with a medical problem, and it's not like they demanded cash on the table before they'd help me. I just got the bill, maybe 3 weeks after the event. I've never decided to move and then actually moved 2 days later. These things take SOME planning. Etc. Second, how much risk are you willing to tolerate? If you have your money in the stock market, the market could go down just as you need the cash. That's not even a worst case scenario, extreme scenario. After all, if the economy gets bad, the stock market could go down, and the same fact could result in your employer laying you off. That said, you could reduce this risk by keeping some of your money in a low-risk investment, like some high-quality bonds. Third, you want to have cash to cover the more modest, routine expenses. Like make sure you always have enough cash on hand to pay the rent or mortgage, buy food, and so on. And fourth, you want to keep a cushion against bookkeeping mistakes. I've had twice in my life that I've overdrawn a checking account, not because I was broke, but because I messed up my records and thought I had more money in the account than I really did. It's impossible to give exact numbers without knowing a lot about your income and expenses. But for myself: I keep a cushion of $1,000 to $1,5000 in my checking account, on top of all regular bills that I know I'll have to pay in the next month, to cover modest unexpected expenses and mistakes. I pay most of my bills by credit card for convenience --and pay the balance in full when I get the bill so I don't pay interest -- so I don't need a lot of cushion. I used to keep 2 to 3 months pay in an account invested in bonds and very safe stocks, something that wouldn't lose much value even in bad times. Since my daughter started college I've run this down to less than 1 months pay, and instead of replacing that money I'm instead putting my spare money into more general stocks, which is admittedly riskier. So between the two accounts I have a little over 2 months pay, which I think is low, but as I say, I'm trying to get my kids through college so I've run down my savings some. I think if I had more than 6 months pay in easily-liquidated assets, then unless I expected to need a bunch of cash for something, buying a new house or some such, I'd be transferring that to a retirement account with tax advantages. I suppose it depends on how liquid you need, and if you're willing to put forth any risk whatsoever.  The stock market can be dangerous, but there are strategies out there that will allow you to insure yourself against significant loss, while likely earning you a decent return.  You can buy and sell options along with stocks so that if the stock drops, your loss is limited, and if it goes up or even stays where it's at, you make money (a lot more than 1% annually). Of course there's risk of loss, but if you plan ahead, you can cap that risk wherever you want, maybe 5%, maybe 10%, whatever suits your needs.  And as far as liquidity goes, it should be no more than a week or so to close your positions and get your money if you really need it. But even so, I would only recommend this after putting aside at least a few thousand in a cash account for emergencies. "Your only real alternative is something like T-Bills via your broker or TreasuryDirect or short-term bond funds like the Vanguard Short-Term Investment-Grade Fund.  The problem with this strategy is that these options are different animals than a money market. You're either going to subject yourself to principal risk or lose the flexibility of withdrawing the money. A better strategy IMO is to look at your overall portfolio and what you actually want. If you have $100k in a money market, and you are not going to need $100k in cash for the forseeable future -- you are ""paying"" (via the low yield) for flexibility that you don't need. If get your money into an appropriately diversified portfolio, you'll end up with a more optimal return. If the money involved is relatively small, doing nothing is a real option as well. $5,000 at 0.5% yields $25, and a 5% return yields only $250. If you need that money soon to pay tuition, use for living expenses, etc, it's not worth the trouble." "Let me summarize your question for you: ""I do not have the down payment that the lender requires for a mortgage. How can I still acquire the mortgage?"" Short answer: Find another lender or find more cash. Don't overly complicate the scenario. The correct answer is that the lender is free to do what they want. They deem it too risky to lend you $1.1M against this $1.8M property, unless they have $700k up front. You want their money, so you must accept their terms. If other lenders have the same outlook, consider that you cannot afford this house. Find a cheaper house." "Don't ignore it. If this is a non-trivial amount of money you need a lawyer. You've acknowledged that a loan exists and have personally guaranteed it, so a court can and will ultimately order you to pay. In doing so, they can put liens on your assests. Depending on the state, how the property is titled and other factors, that can include your home. If you don't have the money and are pretty much broke, try to negotiate a settlement. If they balk, you'll eventually need to start talking about bankruptcy -- that's the ""nuclear option"" and a motivator to settle. Otherwise, you need to either seriously explore bankruptcy or be prepared to lose your stuff to a judgement and having your dirty laundry aired in court. If you're not broke, but don't have liquid capital, you need to figure out a way to raise the money somehow. Again, you need to consult an attorney." You need to find a fiduciary advisor pronto. Yes, you are getting a large amount of money, but you'll probably have to deal with higher than average health expenses and lower earning potential for years to come. You need to make sure the $1.2 million lasts you, and for that you need professional advice, not something you read on the Internet. Finding a knowledgeable advisor who has your interests at heart at a reasonable rate is the key here.  These articles are a good start on what to look for: http://www.investopedia.com/articles/financialcareers/08/fiduciary-planner.asp https://www.forbes.com/sites/janetnovack/2013/09/20/6-pointed-questions-to-ask-before-hiring-a-financial-advisor/#2e2b91c489fe http://www.investopedia.com/articles/professionaleducation/11/suitability-fiduciary-standards.asp You should also consider what your earning potential is. You rule out college but at 26, you can have a long productive career and earn way more money than the $1.2 million you are going to get. Do you need to do anything special when you receive such a huge amount of money? YES, ABSOLUTELY! 1st: Hire a lawyer. Retain him. Preferably one who has experience with high net worth clients. 2nd: Hire a financial advisor/wealth manager. Similarly, one who has experience with high net worth clients. 3rd: Tell no one else that you won. I cannot stress this point enough. Do these things before you even claim your prize. Winning the lottery seems like a great thing to people who haven't won, but statistically speaking most people end up worse off. Most people, not just lottery winners, but people who come into large sums of money unexpectedly just don't know how to handle it. Hire people who do know how to handle that sort of thing and get them on your side. If you win the lottery PROTECT YOURSELF! Go here: https://www.reddit.com/r/AskReddit/comments/24vo34/whats_the_happiest_5word_sentence_you_could_hear/chb38xf and read the top comment. Borrow the overpriced bond promising to repay the lender $1000 in one year.  Sell the bond immediately for $960.  Put $952.38 in the bank where the it will gain enough to be worth $1000 in one year.  You have +$7.62 immediate cash flow.  In one year repay the bond lender with the $1000 from the bank. "First - Welcome to Money.SE. You gave a lot of detail, and it's tough to parse out the single question. Actually, you have multiple issues. $1300 is what you need to pay the tax? In the 25% bracket plus 10% penalty, you have a 65% net amount. $1300/.65 = Exactly $2000. You withdraw $2000, have them (the IRA holder) withhold $700 in federal tax, and you're done.  All that said, don't do it. Nathan's answer - payment plan with IRS - is the way to go.  You've shared with us a important issue. Your budget is running too tight. We have a post here, ""the correct order of investing"" which provides a great guideline that applies to most visitors. You are missing the part that requires a decent sized emergency fund. In your case, calling it that, may be a misnomer, as the tax bill isn't an unexpected emergency, but something that should have been foreseeable. We have had a number of posts here that advocate the paid in full house. And I always respond that the emergency fund comes first. With $70K of income, you should have $35K or so of liquidity, money readily available. Tax due in April shouldn't be causing you this grief. Please read that post I linked and others here to help you with the budgeting issue.  Last - You are in an enviable position, A half million dollars, no mortgage, mid 40s. Easily doing better than most. So, please forgive the soapbox tone of the above, it was just my ""see, that's what I'm talking about"" moment from my tenure here." "I'd interpret it as ""Net Worth"" reached 1M where ""net worth"" = assets - liabilities." If you are going to put it into a banking system, just deposit it. Why did breaking it up even cross your mind? Like what would that even have accomplished, so you could pretend like you started moonlighting as a club bouncer if you were ever casually asked by a bank teller or federal agent? If you have to ever account for the source of your money, you will have to account for it regardless. You shouldn't worry about things that may trigger higher scrutiny on you, because it is pretty random. The financial institution may file a suspicious activity report any time they feel like it (which they routinely do without the customer's knowledge, for a wide range of reasons), and actually attempting to break it up into smaller deposits would mean the suspicious activity report would escalate into criminal charges. And regarding the IRS, if they ever audited you then you will still have to account for that $25,000 no matter what you did with it. You're off to a great start. Here are the steps I would take: 1.) Pay off any high-interest debt. 2.) Keep six to twelve months in a highly liquid emergency fund. If the banks aren't safe, also consider having one or two months of cash or cash-equivalents on the premises. 3.) Rent a larger apartment, if possible, until you've saved more. The cost of the land and construction will consume a very large portion of your net worth. Given the historical political instability in that region, mentioned by the previous comments,  I would hesitate to put such a large percentage of your wealth in to real estate.  4.) Get a brokerage account that's insured and well known. If you're willing to take the five percent hit to move assets offshore, then consider Vanguard. I'm not sure if they'll give you an account but they're generally acknowledged as an amazing broker in the US with low fees and amazing funds. Five percent (12,500) is worth it in my opinion. As you accumulate more wealth, you can stop moving cash overseas and keep a larger mix domestically.  5.) Invest in your business and yourself even more.  As far as finding new investment opportunities, I would go through the list of all the typical major asset classes and consider the pros and cons: fixed-income, stocks, currencies, real estate / REITs, own a small business, commodities etc., "If all of the money needs to be liquid, T-Bills from a broker are the way to go. Treasury Direct is a little onerous -- I'm not sure that you could actually get money out of there in a week. If you can sacrifice some liquidity, I'd recommend a mix of treasury, brokered CDs, agency and municipal securities.  The government has implicitly guaranteed that ""too big to fail"" entities are going to be backed by the faith & credit of the United States, so investments in general obligation bonds from big states like New York, California and Florida and cities like New York City will yield you better returns, come with significant tax benefits, and represent only marginal  additional short-term risk."