I just inherited $250,000. How do I invest that in a startup?

These posts are all over Reddit and Quora, and I just got asked this for the first time in real life. It's always someone young, who inherited some money or made bank unexpectedly (and to them, inexplicably, or they wouldn't be asking this question).

Whether it's $100K, or $500K, or $2M, and whether the question is what kind of startup to start with the money, or how to invest that money, the answer is the same: don't. Just don't.

I say this as someone who is staring down the latter half of my career, watching my parents age to the point where they need in home healthcare, and seeing clearly the divergence in life outcomes among the people I went to school with.

Don't, just don't.

You know what I'm most grateful about now when I look back at 20-something Other Cofounder? That the earlier version of me, despite sky high student loans, contributed to my retirement accounts, and started a savings account that was just $20 per pay period originally.

Compounding is your friend. One day not that long ago, I looked at my retirement accounts and realized that if I never save another dime for retirement, we will be fine. We have big enough balances that we will be able to draw 4% a year to live off of, and never run out of money. And I looked at the mortgage and realized there's a pittance left, and the house has appreciated beyond all expectations.

And you know what that does for my entrepreneurial energy? My friends, it is so, so incredibly freeing. Here I am, at the height of my knowledge, network, and skills, and I can take any entrepreneurial risk I want. I don't need to generate that much cash, so it frees me to take the risks that may actually add orders of magnitude to my net worth.

So, back to you, recent heir. I'm sorry for your loss. And while startups are amazing and all (do recommend!), go join one as an early employee and learn a few things. Becuase even most VCs don't get great returns, and they have a portfolio of startups. Your most likely result if you invest that money in your own or someone else's is that within a few years, all that money will be done.

Put it in a low cost index fund instead, and forget that you even have it for decades. Then go live your life the way you would have without the windfall. You'll have a great life, and a secure retirement.

So often the boring things are the right things.

I'm not your lawyer, your therapist, your advisor, or your accountant. We're just internet friends, and these are just my experiences and personal opinions. Consult professionals for advice before you make any sudden moves in your startup.

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