What do you do after you make a ZILLION dollars?

In the dot-com boom I made a little bit of money and then proceeded to make every mistake possible with that money. It was like reading a Stephen King horror story written in blood across your bank statement. Several years later, I included the story in the intro to one of my books and gave the book to a potential investor. He read the intro and said, “I can’t invest in you. You’re a functional idiot.”  And yet, I’ve seen the pattern repeated so many times with so many people can I at least enjoy the company of other idiots?

So to help out others who will pocket some of the $600bb in quantitative easing, I have a few simple tips for greatly improving the chances of success if you have sudden fortune thrust upon you, either through your hard work or simply by chance.

1.) The One-Year Rule. Don’t change your lifestyle at all for at least one year.

No new house or apartment. Don’t buy a fancy car. Don’t buy expensive artwork. This is not to say these things are bad. It’s just that you need to let the new wealth marinate your soul a little bit.

Get comfortable with it before you try on new clothes that might not fit yet. Once you buy some massively expensive toys or homes, it changes your whole perspective and might make you much more foolish than you were when you were first climbing the ladder of success.

Remember: One year.

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2.) The No-Friends Rule. Don’t lend money to old friends. Don’t be so quick to make new friends. Once you make money, everyone will approach you about new investments you can make. Or people will want to borrow money from you.

Don’t do either.

It’s very hard, of course, to deny a friend who says, “listen, I just need to borrow $100,000 for 90 days.” Or “I have a great new start-up that looks like Twitter but better. I’m just raising $500,000 and I left $300,000 for you to come into the round.”

But here’s what you can say, “I’d love to do it. It sounds great. Right now everything is tied up with my financial adviser and you can talk to him. I have to go by what he says because of all the legal stuff I don’t understand.” And then get some guy to pretend to be your financial adviser who can get you off the hook by denying your friend.

I know, it’s dishonest and devious. But it’s necessary in you want to keep your friends. Particularly in Year One (see previous rule).

3.) Don’t Invest. What’s the rush? You just made your money. Put it in a savings account for one year at least. Or under your mattress. No stocks. No paintings. No private investments. Try not to start a business again so quickly.

A friend of mine recently won $3 million in a poker tournament after being broke for many years (all his life). Right away he wanted to buy a hotel.

Don’t do it.

This was right before the entire housing crisis and recession that followed. Thank God he took my advice.  If you feel absolutely compelled to do some investing then follow the next rule.

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4.) The 2% Rule. If you really feel that Google is going to $5,000 per share and you have to buy some stock at $500, don’t put more than 2% of your money into it. Then, if it all goes to hell, you’ve only lost 2% of your money (or more likely, 1%, since Google will probably never go down more than 50%).

This is hard for entrepreneurs who come into sudden wealth because they are used to making their money by having most of their net worth tied up in one investment (their business).

But this is probably the most important rule on the list.

5.) The Good Health Rule. Believe it or not, your health is now at risk if you just came into sudden wealth.

A friend of mine had a very stressful business in the online gambling space. He was worried the Feds were going to outlaw him and arrest him. He was broke and the business was always in a state of running out of money.

High, high, stress.

I thought he was going to have a stroke or a heart attack but he always stayed in great health. Then he sold his business and made about $50 million. Three months later he was on a ski slope in Aspen, enjoying the fruits of his labor, when he suddenly had a major heart attack and only survived because of immediate medical care. He was essentially dead for five minutes on the operating table.

Your body, in a high adrenalin situation, will postpone punishing you until the situation is over. But don’t think when the stress is over that your body will forget. It doesn’t.

You must focus on health after achieving sudden wealth.

6.) Try Not To Burn Out. Your business was brutal. I know. I’ve been there. Clients and customers are sometimes hard to deal with. And now you might have employers who just bought your company that you have to report to.

But don’t burn out just yet. You need to be responsible and show the people around you that they all made the right decision in trusting you, in buying your business, in buying your goods and services, in working for you, etc. You have few chances in life to demonstrate that you’re made of the right stuff and this is one of them.

And what to do if you lose it all? Don’t worry.

There’s no such thing as luck. In the chess-playing world there’s a saying: “Only the good players are lucky.” That applies to business as well. People can say you were lucky. But the truth is you’ll be able to do it again and again, no matter how deeply you fall.

Trust in this and follow these rules and sudden wealth will become permanent wealth.

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  • Nice but I wanna know the details of your Stephen King novel bank statements…perhaps a post “Learn From My Wasting $2 Million” or whatever u wasted…I’m doing a post on how i just spent $60k in Vegas in 7 days, but that wasnt a waste :) C’mon James we want details, dont be like a writer of Lost and just tease everyone…dont close your eyes jack

  • Unlike Timothy I don’t need the sordid details! Judging by my past, lifelong history when it comes to money, I’m likely to have forgotten all of this by the time I get my paws on any money, but if it happens I know who to ask!

  • RG

    Yes, there is such a thing as luck. The only people who don’t admit this are successful people who were lucky.

  • GoodBread

    7. Give 999 yillion to charity, live on the 1 yillion left.

  • James Altucher

    @RG, I honestly can’t think of one successful person I know who didn’t at least mix some skill and persistence in with a handful of luck. Can you think of one?

    @Timothy, I’ll have to save that for another blog post.

  • pjc

    Nice post — I wise I could put it into a time machine and send it to myself 3 years ago, when I came into some money. I obeyed all the rules except 3 and 4. That said, thanks to the magic of not selling, I have about the same sized stake as I started out with, but with a lot more grey hairs.

  • Great article James, keep it up.

  • James Altucher

    @pjc, congrats on hanging tough. Thats the hardest thing to do. And grey hairs give you wisdom.

  • RG

    @ James, sure but that’s a lot different than saying there’s no such thing as luck. Luck is kind of hard to quantify though. You can look at it on many levels. I mean, should I consider my father’s generation (boomers) lucky for entering the workforce right as the economy and stock market went into a long term growth phase? There’s a lot of people who have millions just from the compound growth in passively managed investments made between say, 1980 and 2000. That’s just one example. I read this book on how to make a million by 30, written by a guy who just flipped houses. The book came out right before the meltdown. He honestly thought what he did was repeatable in any historical timeframe. I think it’s easy for people who have some success to retroactively cherry-pick reasons why it was due to skill more than luck. Or they’ll drastically downplay luck’s actual effects by not critically thinking about it. Survivorship bias prevails…people look at those who are successful and note that they may have worked hard, then conclude that hard work invariably leads to success. That’s backward logic, as you should really look for the pool of people who have those traits, and see what % achieve success.

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  • Great post! You make some very good points. Luckily I haven’t made any of the mistakes past the point of no return yet. It’s been about 6 months since I got some money and I’m just back from a 6 week trip around the world by myself. It was really good to get away from it all, as you say, to get comfortable…

    It’s hard not to start something else or get involved in something because everyone you meet asks you the same question: “What are you going to do next?” I finally figured out the answer: “Work on my health” :)

  • James Altucher

    @Bart, congratulations on your success. I googled you after your comment. Sounds like you built a good company and hopefully you have your head on your shoulders. If you do start something new my only advice is to give yourself as much time as possible before you have to put serious money into it or before you raise money for it. But it sounds like you are taking the time to enjoy yourself first.

  • Steven Goff

    “A friend of mine recently won $3 million in a poker tournament after being broke for many years (all his life). Right away he wanted to buy a hotel….Don’t do it.”

    I do not concur!

  • Anonymous

    Ill remember this when I make that.

  • A great post and will good use when I make it :).

  • joe sixpack

    come’on, when you’re to stupid to stay wealthy once you are wealthy than you actually maybe don’t deserved it anyhow in the first place.

    it’s not to hard to have some fun with a billion in cash,
    and keep it that way,

  • Anonymous

    Good advice. Pretty close to the agenda I was following after the exit.

  • Saltaway

    “The harder I work; The luckier I get.”

    • Goldenkarma88

      I think the attribution is to Ben Franklin, although some attribute to either Thomas Edison or Henry Ford.

  • Interesting to hear how the other half (err, the other .01%) lives. Did you get rich a second time?

  • Independent Grandma

    God Bless You James Altucher. It’s so great to know that I’m not alone.

  • CLdaGreat

    I’ll take these words to heart when I become rich!!

  • Mahesh

    Your blog is a great discovery for me, I love reading your experiences. Thanks for sharing.
    Did you really go broke? how can you go broke with 10000 things u r involved in?

  • UraniumC

    seems to be solid advice. Hope I stumble into needing it one day. :)

  • “only the good players are lucky” wise words.

  • This is a great post. It reminds me of much of the advice (with some added bonuses and twists) about “what to do when you win the lottery.” A windfall of wealth (no matter the form), needs to be cared for delicately. I think the most important ‘rules’ you’ve talked about are a combination of not changing anything in your lifestyle and simply putting the money in a savings account. One would have to think they’d been living okay up ’til that point, so better to take the time granted by a full year to consider one’s options without rushing into anything.

    With Love and Gratitude,


  • C Pennybrown

    I’ve experienced the trouble with friends asking for money bit. Lost an old friend by saying no (she wanted trust funds set up for her kids, I thought “she’s got to kidding”. She said: “I’m not kidding.”

    After feeling hurt and sad, I’m now half philosophical/half angry. Hell, I was the one taking all the risks, having all the stress of making money. Now why was she entitled to cut of it?

    Moral: Even if having all the money doesn’t change you, it’s going to change a lot of the people around you. On guard!

  • JJ

    Ddi the poke guy get into trouble with the Feds?

  • Jim

    Spot on! Great article! Only thing I disagree with is the part about ‘luck’. From my POV I’m lucky to be where I’m at financially.

  • One comment on luck…I have seen it in my middle child. He has been lucky since the day he was born. Before he could even consider preparing and putting himself into a position to be ready for the opportunity, luck repeatedly found him and continues to do so.

    Once you see something like this year after year after year, you start to believe it. I believe in luck. But I do not believe everyone is lucky.

  • Health is always > than Wealth – you need health to enjoy life but not necessarily wealth.

  • Billy the Kid

    You definitely want to take care of your health.  That’s been my huge stumbling block.  Hard to be successful at anything when you’re in pain and you have no energy.  For those who gain wealth and lose their health afterward, you will find that wealth without health is pretty much meaningless.

  • “Only the good players are lucky.”… Excellent phrase 

  • Rachel

    Excellent article and viewpoint.

  • sullyboy

    wow. great. where were you when i made my first million at 36?? lol (yep, lost it all… see #2 & 4 above)
    folks, this is profoundly true. believe it.

  • Justgotlucky

    I’m late to the party but I want to say all this is very true. I made a lot of money and violated every single one of these rules and I regret it. It seems so stupid in retrospect, millions of dollars down the drain. Thankfully a rising market lifts even the yachts of idiots but still I am personally disappointed in myself.

    I would also add, stay away from any kind of luxury real estate, even after the one year moratorium. It’s a white elephant. If you must, buy a house, but forget about your dream house because it’s actually a nightmare, which you will discover about an hour into the movie. There’s probably another Stephen King story in there.

    Also don’t think in terms of percent. Think in real dollar terms. Gee, only one percent to manage my assets? That’s not so bad. No, it’s actually $100,000 a year and if you learn the basics of investing you can do it yourself and probably do at least as good a job. Trust me, I’ve worked with “the best” of Wall Street and came away amazed at the stupid things they’ve done with my money. Well, not really stupid; clearly we just have different agendas. Stay away. Aim for average returns. That’s pretty good if you can get it. But you probably can’t because you’re trying to get more and your name is not Warren Buffett.

    I appreciate the part about luck. I can’t help but feeling that it all came down to luck and without I wouldn’t have one percent of what I have now. But since the rest of this article is so true I will take it on faith that if I had to I could do it again, hard as that is for me to believe. I just hope I don’t have to.

  • Everett DeMorier

    All of us at one time on our life make our ‘zillion’; whether that’s a huge bonus, an inheritance or something else. At one time in our life we have this temporary upswing and most of us are unprepared for it. We don’t allow it to marinate, as you stated.
    Nicely written.
    Everett De Morier

  • mahadragon

    Depends on how many zillion. If it’s $3million then I continue to work and just go about my life as normal. My goal is to have beautiful wife, kids, house. A family of 4 can go through $3million easy by the time you are done with college and whatnot. College is not cheap, especially if the kid goes through med school or something like that.

    Housing is not cheap either. A nice good size home in Seattle area probably cost at least $400k. That’s a good chunk of the money right there gone, poof! You look at other things like weddings or down payments for the kid’s homes that parents typically help out with and ya, $3million is really not much.