What should you do when you strike it rich? – 7 ways to benefit from windfalls, bonuses, and other ‘found’ money!

pennys from heavenTonight’s episode of Seinfeld was a rerun from the mid-90s when Jerry receives a large check (so large that Kramer is surprised) for his performance . It’s only part one of a two-parter. But it got me wondering about what most people do when they receive a windfall. Management of your new found resources can be a problem; and it’s a problem that I share with those who get annual bonuses or special rewards, prizes, unexpected windfalls, inheritances, etc..

It’s easy to start planning what you are going to do with the money and quickly you forget how hard it was to come by, or how long you had to wait. In Seinfeld, Jerry decides to go and buy a brand-new Cadillac for his father with the money; he doesn’t even think about other options because he feels ‘rich’. Isn’t it interesting how such income can totally shape your perception of being ‘rich’?

For those of you who have been following my progress this past year, you will have realized that I have begun to accumulate something of a cash position: currently about $7,139.05 worth actually. Of course, this is the gross amount and there have been a number of deductions from the amount for various expenses including taxes, fees, hosting, equipment purchases, etc.. So the total amount isn’t exactly that much. I didn’t keep an exact tracking of the costs either, though from January 1st, I already promised to do that.

To make matters more confusing, some of the earnings are in US$ while others have been paid in the local currency here. And the money resides in several different places as well: my broker accounts, paypal accounts, and several different bank accounts. Rather than splurge on dual 24″ monitors (though I drool), I’ve taken a very much wait-and-see attitude. I’ve been slowly consolidating the money in several places only, and evaluating options for generating additional revenue.

Currently I’m considering five different ways I could spend the money, and I’ll suggest some others that I have already ruled out.

1. Stashing it in the bank: if the amount isn’t large, and the outlook is uncertain (as it is here in Taiwan, with several major elections coming, rising oil/gold prices along with jumping interest rates, it can be quite a good choice to park money in the bank for the short term. The disadvantage is that the money actually loses value as governments tend to devalue currency over the long term via interest rates that don’t keep up with rising prices (and prices are rising F-A-S-T in many parts of the world for many products).

Verdict: For smallish amounts, it’s about the only thing to do other than spend it. I’ve definitely done this.

2. A Term Deposit: A typical bank account pays a pitiful amount of interest: in Taiwan it’s about 1/4% per annum for a standard bank account. This devalues your coin faster than you can say ‘Shinkansen Bullet Train’. Parking it in some fixed term CDs or ‘term deposits’ may be a better choice: rates are approximately 2% (yes, 2%) higher and edging up gradually as inflation is rising. With a choice of fixed rates vs. floating rates, it’s always wise in an rising interest rate environment to choose floating rates to benefit from rises. I noted that today in the bank the fixed rate vs. floating rate term deposits didn’t vary for periods longer than 12 months. Wonder what that means…

Verdict: For largish amounts, it may be worthwhile for longer terms, but don’t park it too long. I’ve also done this.

3. Money market accounts have similar benefits to bank accounts, and indeed, with TDAmeritrade I’ve parked some of the capital in their money market account, which accrues a smallish interest amount every month until the money is enough to do something with. Of course, you need to check WHICH money market account offers the best and most secure deals. (See what a money market account is ).

Verdict: A good way to earn interest payments from your broker, but has its limitations and some risks. I’m doing this right now.

4. Dividend Investing: For a little more risk, though, I’ve been looking at purchasing stocks with Dividends. I’ve always been attracted to these because they are an additional way to earn money from the total stock return ever since my days as a Motley Fool member. Of course, the question of tax efficiency creeps in, it may not be a good choice for everyone. But as part of a general stock portfolio: the triple whammy of capital growth, share re-purchasing, and dividend increases is QUITE attractive. There is the big danger though that you will LOSE money in the short to long term, if you take unforeseen risks or the proverbial s**t hits the fan for the companies in your portfolio.

Verdict: Definitely more potential for earning a profit, but risks are similarly higher. Not for the faint hearted! I’ve done this for quite a long time, with varying degrees of success.

5. Investing in your business: for businesses that are expanding, capital can become scarce at times. Even our business which has been around in various guises for 7 years, sometimes needs capital to furnish expansion. We’ve been lucky as our business really is a light business – it’s service-based – so most of its non-startup capital requirements were funded by its ongoing revenue. But it’s not hard to imagine us needing money for moving to larger premises or purchasing or setting up a branch school in a nearby locale.

Verdict: Much more risk than #5, but the benefits of expanding your profits from your business can be exponential. Of course, the failure rate of new business is high. Done it once or twice.

6. Lending Money: there are a variety of methods now in which small lenders can take on private loans as individuals or syndicates through Zopa (in the UK/US), Prosper, etc.. At the moment, I’m prevented by my residence status from being able to open such accounts, but if I were relocating to either of these countries, this is one avenue I would actively pursue to create additional income. Zopa has tiers of credit markets that would allow you to spread your risk over different types of loans, and perhaps earn interest above that paid by the bank for little extra risk.

Verdict: I’d love to do this, but I’m not legally able to yet. I’ve done lending on Kiva but that’s for a totally different reason. Done it privately both successfully and not .

7. Purchasing websites: There are many quality websites, blogs and forums available on different auction sites including SitePoint and Digital Forums that offer additional options for creating additional streams of revenue. Purchasing an active and reputable website with established revenue streams (from text ads, linking, etc..) could be a risky but exciting way to increase the returns on your investment. I had actively considered purchasing one website BobMeetsWorld when that came up for sale recently. While the actual revenue was under-optimized, it was a PR5 blog that was selling for a good price. Of course, with this active blog already, I’d have been hard pressed to find the time to write challenging content.

Verdict: I’ve considered this, but the risk is considerable. Many auctions are fraught with fraudulent information and listings, esp. as sellers try to justify the higher prices for their websites. It’s even more difficult to verify the reality unless you actually know the website and the website owner. I’ve never done this.

My own decisions: It’s all personal!

I am now preferring to invest whatever money I have to create revenue, whether it is from bank accounts, loans, stocks, websites, etc.. I’m very much concerned that too much of the retail investment market is focused on gains for tomorrow that may or may never appear, and too many employees are invested heavily in stocks, funds, pension schemes that are promising rates of return that are not feasible. So I’m focused on earning income from non-work activities right now so that I will have the skill, knowledge, and income to support a much bigger program of income generation.

In reality, what have I done with the extra income so far? About $2,300 is in a money market account, earning a little interest in my broker’s account. I have been planning to invest this money by buying some Dogs of the Dow stocks to get a better return. And there are some good value stocks that have been beaten down sorely by the current problems in the property market, including Citibank and JPM. The current dogs are Citigroup; Pfizer; General Motors; Altria; Verizon; AT&T; DuPont; JP Morgan Chase; General Electric; and Home Depot .

Some more money is now being turned into a ‘term deposit’ with a term of one year based on a floating rate with current interest rates of about 2.33% for 12 months. Some of the remaining 20% will be kept in a cash position to finance growth and expenses for the website: including finding opportunities to expand my online empire! I’ll let you know how I fare.

Tell me what you did with your bonuses! I haven’t got mine yet… Chinese New Year is coming soonish! Let me know what you did! I’d be delighted to know.

eBay Suspension: It wasn’t me, I didn’t do it…!

For those of you who remember my situation with eBay, they finally answered my email, after I reposted my email through the user center (again).

Bloggers Unite - Blog Action Day

Last month, I was suspended from using eBay for no apparent reason, with a somewhat abrupt email from eBay and poor help from their customer *dis*service center.

Here’s the follow up email I got, spelling and grammar mistakes are theirs, not mine:


Thank you for taking the time to write to eBay. I am happy to assist you further.

Recently, we have detected some Taiwan accounts have the risk of taking by the third party. In order to protect the personal information of users and maintain those accounts safty, we have suspended your account.

You could choose:

1. Please reply this mail for account closure (related personal information will be deleted at the same time)

2. Please provide us scanned or digital picture of your Identity Card in attachment format to: hkappeal@ebay.com (Note: Please control the size of attachment within 100K and save it as .jpg format). Our staff will reply you within 48 to 120 hours from receipt of the requested information.

3. Needn’t reply this mail, this suspension account can’t be used till the process of option2 has been completed.Your persional information is safe with the suspension status.

Sorry for the inconvenience this may have caused, thank you for the understanding!

Thank you for your interest in helping to keep eBay Hong Kong a fun and safe place to trade!

For further contact, please reply this email with the original text. Thank you!


eBay Hong Kong Customer Support

I appreciate the long answer, and the fact that the person writing it really tried to help. But still, I wonder why I am being found guilty first then being expected to prove my innocence. It seems odd.

I didn’t do anything wrong, but I have to appeal, and have my appeal judged. Wouldn’t it be better PR to find another way to get this information such as advising us that all accounts need to be ‘upgraded’ (with additional services), but to upgrade you need to ‘verify’ who you are. Isn’t that what Paypal does?

I still can’t decide if I should bother or not. Oh, and scanning my ID and shipping it via email is REALLY secure, isn’t it? I might as well just type my credit card number in the email, too. Haven’t they heard of identity theft?

drip, drip, drip – wealth accumulation is silent!

Drip, drip, drip! Is that the sound of rainwater dripping from the guttering? Or is that the sound of your wealth dripping gradually into your account?

We’ve owned a number of different assets and asset classes over the last fifteen year: property, a business, stocks, mutual funds, bonds, bank accounts, etc.. and each of them has prospered over that time in the same fashion – Drip, drip, drip!

In Taiwan, house property is measured per ping. A ping is generally the size of a traditional Japanese tatami mat. Since we purchased our house, we’ve seen our house value increase about 50% or more per ping in seven years. In addition, we were fortunate enough to be able to buy an additional car park. More than that, we’ve spent the last seven years paying down our mortgage slowly. All of these have resulted in a net increase in our equity stake in our house to approaching 60% from the initial 20% at outset. But all of this has been achieved quietly, regularly, and opportunely.

Our business, too, rarely has much excitement, though the students making progress and developing mastery of a complex linguistic system is thrillling. As a business, the mechanics are silent: counting the bills, updating the accounts, paying the bills and taxes, figuring out our profit margin (if there is any!), and so on. There is little hype compared to working for an Internet giant, like Google.

Stocks and mutual funds, too, move up and down silently. They pay (usually) dividends that are paid quarterly into your account. There is little fuss, excitement or pzzazz over the payments, profits, or losses. The numbers just sit there mocking you if you are doing badly, teasing you if you are doing well.

Bonds, CDs and bank accounts pay interest in similar ways: you go into the bank, update your passbook, check your account or renew your CD, and suddenly the interest payments are there. Silently. Mechanically.

There are no whooshing sounds, no zaps of lightening, no cheering or clapping: just the sound of footsteps to the banking machine to pay the regular payments, and to take care of the other regular details. It’s the silent wealth effect. It’s a lot less glamorous, less fun, less attention seeking than winning at Las Vegas on the poker table, getting a jackpot at Atlantic City on the slots, or winning the Lottery.

Which would you rather have – the drip, drip, drip or the heavy thunderstorm of wealth building?