I’m 37 with $2 million to my name – should I go all-in on this startup investment in hopes of a 10x return?

There’s likely to come a point in time when you’re ready to quit the rat race and kick off your retirement. For some people, that point comes in their 60s. But if you’re in a high-pressure job, it may arrive as early as your late 30s.

Such is the case for this Reddit poster. They’re 37 years old with a net worth of $2 million. They have no kids and a comfortable lifestyle, but they’re ready to retire and are hoping an investment in a startup will be their ticket to getting there.

Specifically, they’re thinking of liquidating their retirement account and putting all of their money into a single company with the hopes of getting an $18 million net payout in a couple of years. But in a worst-case scenario, they’d get no payout and have to start over.

I can see why the idea of going all-in on an investment like this would be tempting. But I happen to think it’s a very dangerous thing to do.

When an opportunity is too good to be true

I’m always wary of investment opportunities that promise a ridiculously large payout in a relatively short period of time. And in my mind, a 10X return in two years falls into that category.

To be fair, I don’t have access to this startup’s financials, so I can’t fully judge its viability without that information. But my gut tells me that this opportunity isn’t going to be as lucrative as what the poster is being told. And my concern is that if it completely blows up, the poster will be left with nothing. Not only might that get in the way of an early retirement, but it might even force them into a late retirement.

There’s also the issue of liquidating retirement accounts at age 37. That could leave the poster paying a 10% early withdrawal penalty, which is really just wasted money.

The poster doesn’t say point blank that their $2 million is an IRA or 401(k), or another account that would be subject to such restrictions. But if so, that’s another big problem with this plan.

It’s best to diversify

I’m not opposed to the poster putting some money into this startup and getting where things go. But I wouldn’t tell them to put all of their savings into a single company and hope for the best.

And to be clear, I’m not just saying this because we’re talking about a startup. Even if it were an established company with a long history of profits, I don’t think it’s ever a good idea to invest every dollar you have in a single business.

So in this case, I’d tell the poster no, don’t go all-in. Instead, invest some money and see what happens. If the investment really pans out well, the payout may be large enough to lead to an early retirement — just not in two years.

I’d also encourage the poster to discuss this opportunity — and their broad investing strategy — with a qualified financial advisor. An advisor can help them vet the company in question to see what a realistic payout might look like.