Do you have money you don’t need? Here are 8 ways to spend it.

Sometimes people ask me how to invest money they will never need. Most often, I hear this from investors who need to withdraw the required minimum distributions from retirement accounts and don’t need the money to live on.

In many cases, they see this requirement as a problem. But instead, they might view it as an opportunity.

If the question is what to do with that money, the best answer will come from understanding what you mean by money you “will never need”. If you intend to leave the money to your heirs, that’s one thing. If you have already provided for your heirs and are sure that your own needs are being taken care of, that is another matter.

My strongest recommendation is that you treat this money – and all your money, for that matter – with respect.

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First of all, unless you set up a weird trust, that excess money won’t just sit around in cash for the next 150 years. One day it will go to someone or an organization.

Review your will (or create one) and clarify your wishes. Then examine the situation from the point of view of the final recipient. What would they want?

Most likely, they would like to get their hands on the cash right away. If you want to keep it under your control, how much risk would they take (or should they) take in the meantime?

If, after creating a sufficient emergency fund, you have money that you really and truly don’t need, and no one else needs it either, then I think you should do what seems right to you.

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Here are eight ideas to stimulate your thinking.

A: If that money will eventually go to a child or grandchild, consider giving them some of it now, while you’re there to observe what they do with it (and also so you can offer a “course correction” in the unlikely event that it I want your advice).

Of them: If you don’t want to give them the money now, but they’ve invested the money in a traditional IRA, you can suggest that they convert that IRA to Roth and offer to pay the tax. This will allow you to help them without giving them the opportunity to waste your generous donation.

Three: With the exception of either of these alternatives, you can invest the money with a stock/bond allocation suited to their risk tolerance instead of your own. A simple way to do this is to invest in a target date retirement fund with a target year close to their 65th birthday.e or 70e birthday.

Four : If the money will ever go to an organization, you could invest it the same way many long-term endowments are made: with an equity allocation of around 60%.

In this case, I see no reason to make the organization wait to get every penny from you. A well-diversified, 60/40-split portfolio will have no trouble generating 5% annual distributions, which you can donate. This will give the organization some edge right away. This will allow them to lavish their appreciation on you. Perhaps most importantly, it will give them the opportunity to demonstrate to your satisfaction (or not) that they are worthy of your money.

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Five: There are many great ways to use this money to improve your own life.

On the one hand, you could spend it on consumption by buying things: real estate, clothes, vehicles, yachts, collections of whatever interests you.

A second alternative is to spend your money on experiments (although I don’t recommend experiments involving drugs or other risky behavior).

A third option is to give your money thoughtfully. Unless you’re a curmudgeon like Ebenezer Scrooge, this could become a source of long-term satisfaction.

When I think about these three choices, it seems pretty obvious to me that in the long run, buying things will be less satisfying than the other two.

Six: Invest the money in a way that suits you and plan to withdraw 5% of the balance each year on your birthday. It’s a guaranteed birthday present for yourself. Keep this money in a separate savings account and keep track of what you do with it.

So challenge yourself to find interesting and satisfying things to do with that money over the next 12 months. It could be travel, school, an unexpected gift to someone you love, a new paint job on your home or vehicle.

Use your imagination and promise yourself to try something you’ve never done before.

For example, you can reach out to a friend or relative and offer to do something together. It can range from “a long weekend in San Francisco – and I’ll pay” to “Let’s go to New Zealand and see the sheep”.

Seven: Create something that does not exist, something that will live after you. For example, set up an endowed scholarship for youth in your hometown or church or any other population you would like to support.

These are easy to set up through a community foundation in a donor-advised fund and your donation may be tax-deductible. You can choose each year’s winners or let someone else do it. If you meet these young people, it could be very satisfying.

Eight: On your next birthday, you may have used all the money you received as a “gift from your wallet.” However, if there is any left, donate it to a person, organization or cause you wish to support.

Doing this will reinforce in your mind that you are a generous and thoughtful person with more than you need. And so, you can celebrate your birthday by giving a gift…the same day you receive your next “gift” from your portfolio.

These ideas, of course, are just the tip of the iceberg. There is no single “right” path for someone in this situation. In a world of possibilities, your job is to find what works for you.

It can turn into a very satisfying reward for a lifetime of smart saving and investing.

Richard Buck contributed to this article.

Paul Merriman and Richard Buck are the authors of We’re talking millions! 12 easy ways to boost your Rretirement. Get your free copy.

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