Forums: Discussions for entrepreneurs and small business.

We`ve had a couple of threads about what you`d do with a big windfall of money. What it boils down to is your knowledge of, and relationship to investment capital, cash influx, working capital, and all kinds of other complicated words.

I grew up in a family and neighborhood that had a lot of people with invested portfolios. Many of those folks had trust funds set up, or lived off of such funds. My father drilled into us kids that you don`t spend the principal. I didn`t know what that was.

If you have $1-million and live off the interest, every year you have some small amount of money, but you still have the original million---the principal---and it`s continuing to spin off interest. Still a small amount, that interest, but it`s "new money."

If you spend that million, you can get to an all-cash basis, but you still have new living expenses. However, you have no new money...the million`s gone.

Isn`t this the same problem with $100K? Do you spend the capital, or do you invest it and use the ensuing "interest," or "return on the investment."