[deleted]
Poll: What number would make you say "I am financially independent"?
51–60 of 89 posts
Re: Poll: What number would make you say "I am financially independent"?
#52$5,000,000 with a rather conservative investment strategy yielding 5%/year would give you 250k annually to play with without impacting the principal.
About 7% is the market average I often hear quoted, but I use the number 4% for guaranteed income. I know you can buy insurance annuities that guarantee about 3% and average 4%.
So, I would calculate 200k on 5Million. Planning to actually live off your interest means having to be super conservative, because, if, for instance, your first year is one of the bad years, your calculations will end up way off. Losing 20 or 30% and having to actually eat some principle would hurt a lot. That's why some people end up putting off retirement in bad years and get very conservative with investments near retirement.
So, I suppose someone could live off about 1 million at 4%, unless they have a medical emergency, but with minor inflation, I think you'd need to grow your principal to maintain the same level.
Re: Poll: What number would make you say "I am financially independent"?
#53To put it into perspective here's Felix Dennis's wealth classification table: £1m-£2m: The comfortable poor £2m-£5m: The comfortably off £5m-£15m: The comfortably wealthy £15m-£40m: The lesser rich £40m-£75m: The comfortably rich £75m-£100m: The rich £100m-£200m: The seriously rich £200m-£400m: The truly rich £400m-£999m: The filthy rich More than £999m: The super rich http://www.businesswings.co.uk/articles/Felix-De…
What percentage of people have over $1,000,000 worth of wealth? I've lived in NYC all my life and I would guess for most people their biggest source of wealth is nothing or their house, generally worth under a million.
Well, most people are serfs, and poor. I don't think you can define "rich" as a population proportion. In a lot of places in the world 100% of people are poor. I don't think it's unreasonable at all to say people with less than $4 million USD are poor. Anything less than that and you're probably still well stuck in the rat race. One catastrophe away from ruin.
Re: Poll: What number would make you say "I am financially independent"?
#54I've kinda had the number $4,000,000 in mind as my "independent" number. If I could walk away from a transaction with 4MM (net), I figure that would be enough to pay off whatever trivial debt I have now, buy a nice house and a nice car, do a few things for close family and friends, and leave enough to do some travel and exploring while living a reasonable (but not lavish) lifestyle. And, if I then decided to do anoth…
That's not quite what "independent" means. It means you'll be able to live off the interest, and not have to work for money any more. If you spend the principle, then you can't make interest.
Re: Poll: What number would make you say "I am financially independent"?
#55I'd feel more financially independent with a cast iron $5,000 of passive income per month than I would with $1,000,000 in the bank. Obviously the lump sum would probably be able to yield that sort of money in interest, but the interesting thing is that it should be much easier to secure the monthly passive income than it would the lump sum.
In today's market, $1M gets you ~$2000/month.
Re: Poll: What number would make you say "I am financially independent"?
#56[deleted]
Re: Poll: What number would make you say "I am financially independent"?
#57I'd feel more financially independent with a cast iron $5,000 of passive income per month than I would with $1,000,000 in the bank. Obviously the lump sum would probably be able to yield that sort of money in interest, but the interesting thing is that it should be much easier to secure the monthly passive income than it would the lump sum.
It would take you well over a million in assets to generate 5000 dollars of passive income.
And the higher the payout the less passive/safe it becomes (i.e., CD > Real state > businesses > web apps > ???)
Re: Poll: What number would make you say "I am financially independent"?
#58Based on the tables in http://en.wikipedia.org/wiki/Cost_of_raising_a_child for the US. I estimated that the cost of raising 2.5 children for 22 years (up to 18 plus college) as nearly $1.4 million. This may be low balling it if you invest heavily in extra educational and extra-circular activities for your children. So I said between 5-10 million as I would also need some margin for me, my wife and retirement. Howeve…
Nor did you calculate any interest.
Nope.
Re: Poll: What number would make you say "I am financially independent"?
#59I'd feel more financially independent with a cast iron $5,000 of passive income per month than I would with $1,000,000 in the bank. Obviously the lump sum would probably be able to yield that sort of money in interest, but the interesting thing is that it should be much easier to secure the monthly passive income than it would the lump sum.
Good point. If you valued a residual income stream of $5,000 at 10% per year, that would be the equivalent of having $600,000 in the bank at the same rate of return. That buys nice lifestyle in most places in the world.
Re: Poll: What number would make you say "I am financially independent"?
#60$5,000,000 with a rather conservative investment strategy yielding 5%/year would give you 250k annually to play with without impacting the principal.
Please share some details on this rather conservative 5%/year investment strategy. I'm very interested.