A reader asks:
My wife bought some land in New Zealand a few years before we met, with vague ideas of building a house. Turns out its value has appreciated by 4-5x so she asked me if she should sell it while the prices are high. We don’t really need the money for anything, so I thought the tax burden sounds like a hassle, and I don’t know if the money would be better off in stocks. One wrinkle is that she has stage IV lung cancer and probably only has a few years, so it’s unlikely she’ll ever build on it. Should she just sell it? – Jared
George Kinder is widely recognized as the creator of life planning.
His philosophy is centered around three questions you should ask yourself before creating a financial plan. They go something like this:
1. Imagine you’re financially secure and have enough money for both now and in the future. How would this change your life?
2. Imagine your doctor tells you that you have 5-10 years left to live. You won’t feel sick but also don’t know exactly when you will go. How would this change your life?
3. Now imagine your doctor tells you that you have one day left to live. What are your biggest regrets? What do you wish you would have done differently?
The idea here is these questions can help you dig a little deeper into your dreams and goals. It starts out financially but then goes hard into the more human element.
This exercise is supposed to force you to go beyond the typical surface-level financial goals everyone talks about and get more specific about your dreams and desires.
For most people, these questions are theoretical in nature.
For Jared and his wife, this is real life. I can’t imagine what that must be like to have stage IV cancer hanging over your head.
That’s why I would approach this question from the perspective of life planning as opposed to financial planning.
Time is a finite resource for us all but when you know it’s about to run up it can put things into perspective in a way a simple questionnaire could never do.
I was the MC at our Future Proof Festival in California this week. One of my favorite discussions was about managing money for professional athletes during and after their careers.
Former NBA player Isaiah Thomas and former MLB player Dexter Fowler were joined on the stage by their financial advisor, Joe McLean.
McLean was asked how he begins his relationships managing millions of dollars for pro athletes. He said their money is generally broken down into 3 different buckets:
(1) The safety/security bucket
(2) The growth bucket
(3) The dream/entrepreneurship bucket
Understandably, everyone wants to focus on the dream bucket because that one is the most fun.
The dream bucket is where I would start when thinking about what to do with this land investment as well, especially since it sounds like the finances are stable elsewhere.
The whole point of the growth bucket is to turn that money into dreams someday, at least for part of it.
Maybe that means your wife builds her dream home in New Zealand even if it is just for a short period of time.
Maybe that means selling the land for a profit so you can take some dream vacations or shore up your finances elsewhere.
Maybe it means taking the proceeds and helping others achieve their dreams by giving some of the money to charity.
Or maybe there is something else she’s always wanted to do.
That can’t be an easy conversation to have but coming from a place of financial stability puts you in a prime position to take this windfall and use it to fulfill some of your wife’s dreams.
Isn’t that the whole point of investing your money in the first place?
We talked about this question on the latest edition of Portfolio Rescue this week:
We also answered questions about playing catch up with your savings after attending business school, young people kicking the tires on using a financial advisor, how to avoid financial scams and paying off student loans early.
Personal Finance is Personal