5 Things You Should Do After You Make Your Millions in Cryptocurrencies
It’s all about your decisions you make.
With Bitcoin and some cryptocurrencies at their highest levels ever, at the end of this bull run, you could walk away a millionaire. Before you pick out the color of your Lamborghini, there are some things you need to follow. Otherwise, you will end up like a broke millionaire that you have seen far too often.
As people love to rake up debt on credit cards, once you have money, you need to know how to keep your new wealth. It is very easy to blow your money if you are not careful and don’t have a plan.
Too many people have been down this road before.
Here are a few examples of people who made a lot of money and lost it all.
- Former heavyweight boxing champion Mike Tyson made over $400 million and wasted his money on jewelry, mansions, cars, and other purchases.
- Former baseball player Curt Schilling’s $50 million net worth was erased after a failed business venture that also ruined his reputation as a businessman. Then he made two racist tweets that eventually left him unemployed with ESPN.
- Actor Nicholas Cage spent over $150 million since some of his early movies such as Leaving Lost Vegas and others made him an A-list actor. Cage’s spending was similar to Mike Tyson as he bought supercars (Ferrari and a Lamborghini), a private jet, real estate, a shark, two king cobras, a dinosaur skull, jewelry, and others. Since then, Cage has been acting in a lot of B-grade movies to pay off his debt.
There are many other people who made millions (as well as billions) and lost it all but their stories will make you think twice about spending your fortune.
These are five tips to will help you make smarter decisions with your money.
- Pay your taxes
- Pay off your current debt
- Make a donation to a worthy cause
- Save for a rainy day
- Buy a rental property or two
Pay your taxes
“You don’t pay taxes — they take taxes.”
Chris Rock
When dealing with cryptocurrencies, the tax issue is always a big question. People say cryptocurrencies are not taxable if you sell them for another cryptocurrency which is incorrect. Any purchase of a cryptocurrency that leads to a sale, is a taxable event. This does not matter if you converted the cryptocurrency to fiat currency or to another cryptocurrency. A sale is a sale in the eyes of the IRS. Any gain you made on the cryptocurrency transaction must be recorded and then you have to pay your taxes.
When you make a cryptocurrency trade, make sure you receive the transaction from your exchange or record them yourself. Once you have done that, you will have to file and pay your taxes.
Pay off your current debt
“There are no shortcuts when it comes to getting out of debt.”
Dave Ramsey
If you have debt such as your credit cards, mortgage, car loan, student loan, HELOCs, and other debts, pay these off. It is better to owe no one any money if you can afford to pay off the debt.
The debt will only continue to accrue interest and take away from the money you have available. When you have no debt, this gives you more freedom with your money for other investments and to live a debt-free life.
The average debt most Americans have is about $92,000. The worst thing you can do is ignore this debt.
Make a donation to a worthy cause
“The value of a man resides in what he gives and not in what he is capable of receiving.”
Albert Einstein
Whether you tithe to a church or make a donation to a worthy cause, that is your choice. When you make a lot of money from your cryptocurrency investment, sometimes it is best to help others.
You may not immediately see the results but the feeling of giving money to a worthy cause is a good feeling because you have helped others who are in need.
This list on Forbes shows the breakdown of the top 25 charities that used their money directly for its intended purpose. Some of the charities are the United Way, Feeding America, Direct Relief, and the Salvation Army. There are other charities but make sure you do your research to ensure your money goes to a worthy cause and that the money is not wasted.
As the old saying goes, sometimes it’s better to give than receive.
Save for a rainy day
“He who does not economize will have to agonize.”
Confucius
Now that you have made your millions, you should still keep some money available for a rainy day. There is always the chance you will need money in case of an emergency.
You may have paid off some bills, spent some fun money, but you will always need money in case of an emergency.
When you have money available for emergencies such as a car repair, a last-minute trip to visit family, a medical emergency, or anything similar, this will allow you to have the money for these unplanned expenses.
Unplanned expenses happen to everyone, no matter how safe you try to be.
All of this costs money.
Buy a rental property or two
“Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth.”
Robert Kiyosaki
The last tip I recommend is to buy real estate. After you have made money in cryptocurrencies, you need money that pays you every month. I am a fan of real estate and think this is a good way to put money in your pocket every month as well as give you tax deductions.
Before you get started, you need to build your team (real estate agent, contractors, etc), find the right property, and make sure the numbers make sense. If you don’t have these, you could buy a bad property and that would only give you a big dislike for real estate.
Tax deductions are available with real estate investments that you can use to lower your tax bill. Some examples are getting tax benefits for renting your property when you pay your property manager, paying your insurance, and for repair costs.
If buying real estate is not in your future, you could consider Real Estate Investment Trusts (REITs). REITs own a basket of real estate investments and they are similar to mutual funds but trade like stocks.
A REIT pays you dividends like a real estate property does based on the amount of your investment. Some REITS you may want to consider after doing your research include Realty Income Corporation (O), New Residential Investments (NRZ), and Public Storage (PSA).
With a REIT, you won’t get the same tax advantages you would if you owned a real estate investment.
Whatever option you decide is up to you.
Final thoughts
You probably thought I would have mentioned a Lamborghini.
Why waste money on a depreciating asset? There are better alternatives unless you can really afford a Lamborghini.
If you make several millions off of cryptocurrencies, then I guess you can afford a Lamborghini. Make sure you follow the suggestions I recommended first.
Do you have any other suggestions that you can add on what to do with your millions?
Disclaimer — the writer owns cryptocurrencies, real estate investments, and REITs.
Tom Handy is a top writer on Medium, former Quora writer, and father of two kids. He retired from the Army and sits on several non-profit boards. You can find him on Twitter @tomhandy1 and Life is Like a Game.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.
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