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Poll: What number would make you say "I am financially independent"?

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Re: Poll: What number would make you say "I am financially independent"?

#81

Post by conanbatt »

LockeWatts wrote: post #76
conanbatt wrote: post #57

Earlier quoted context omitted.

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 > ???)

Not really. A hot mobile app can sell for that much, and doesn't require anything more than a laptop and some time.

But it wont last a lifetime. Buying a specific game for its returns would have a serious discount compared to almost any conventional asset.

And "time" is work. Building a house also requires just some materials and some time :). Even real state needs management (things break, rents have to be collected, risk of lawsuits, tenants that dont pay).

Re: Poll: What number would make you say "I am financially independent"?

#83

Post by spankalee »

VLM wrote: post #78
spankalee wrote: post #42

I have had a similar calculation in mind as others here: $4 million invested at a very conservative 2.5% return gives you 100k pre-tax to live on. Any returns above that will just grow the nest egg. That's pretty nice, and happens to be my retirement target. When thinking about a startup exit, lottery win, or finding out that I'm a long lost heir to a fortune though, I'd like to be able to buy a house and start or bu…

"start or buy a small local business (restaurant, cafe, club, etc.)" Looking at the life experience of local pro athletes, the most likely way to retire with a very small fortune while owning a small business is to start it with a very large fortune. There's actually a business model oriented around taking money from athletes and home equity loan cash out refinancer types, then buying the asset back for pennies on th…

Yeah, but I'm less interested in the type of place that's usually associated with pro-athletes and more into neighborhood / family type places. When I say "club" I really mean music venue.

Re: Poll: What number would make you say "I am financially independent"?

#84

Post by gw666 »

cpursley wrote: post #62
beagle3 wrote: post #55

Earlier quoted context omitted.

In today's market, $1M gets you ~$2000/month.

Well managed mutual funds / etfs yield 8 - 12% per year long term.

Yes, but with risk. Index stock and bond funds yield in that range, with much less volatility. I've been using them since 2008 and have gotten an average of over 10% annually. I suggest the book I used, _The Only Guide to a Winning Investment Strategy You'll Ever Need_, by Larry Swedroe (endorsed by John C. Bogle, founder of the Vanguard Group). Cheesy title, but it's ideas are supported by lots of data.

Re: Poll: What number would make you say "I am financially independent"?

#85

Post by idont »

Rule of thumb: not too aggressive financial investment will make 4% on average. As long as the FED continues with "free money for all", the figures will remain lower. Grab your excel and simulate your situation starting from the sum of your fixed and varying costs. Do not forget anything (retirement plan, kids, etc)

Re: Poll: What number would make you say "I am financially independent"?

#86

Post by idont »

idont wrote: post #85

Rule of thumb: not too aggressive financial investment will make 4% on average. As long as the FED continues with "free money for all", the figures will remain lower. Grab your excel and simulate your situation starting from the sum of your fixed and varying costs. Do not forget anything (retirement plan, kids, etc)

Do not trust people telling you you can make more usually 8% or plus. They are only employees who want to sell something or have an interest making you believe it is the case. The 8% is only a figure that our parents had. These days are over. Average is 4% (which also means that some years you will be negative!)

Re: Poll: What number would make you say "I am financially independent"?

#87

Post by saalweachter »

jlgreco wrote: post #61
saalweachter wrote: post #44

Earlier quoted context omitted.

Fun fact: 36% of Americans make less than $35k per year.

Oh yes, you can live on it. The question is if you can be satisfied with it. Well, you can live on it assuming that unexpected issues do not arise, plunge you into medical debt and render you unable to receive the best care you might otherwise be able to afford. That can cut short your "living on 35k a year" plan... A sad story many of those 35k/year Americans can likely talk about. Given the option of retiring now a…

If my sole assets were a moneypile of $500,000 from which $35,000 were extracted for living expenses per year ... probably not.

If I had to have a rough guess, my minimum retirement target is $300,000-600,000 of personal property, plus a moneypile or otherwise low/no-work income (if I were working an insignificant number of hours at something I could stop anytime but enjoyed doing, I would still consider myself retired in the conventional sense) yielding between $20,000 and $40,000 / year.

So, using the 7% figure from the GP, that puts my target retirement assets at around $600,000-1,200,000.

Re: Poll: What number would make you say "I am financially independent"?

#88

Post by Millennium »

joeframbach wrote: post #63
Millennium wrote: post #21

5 million. Invested at a modest, low-risk 2% (which you used to be able to get from a standard savings account), that gives you $100,000/year: quite a decent baseline.

Standard savings accounts usually give 0.5-0.85% for the first 200k or so. More than that, you should look at other investment strategies than standard savings accounts.

I said "used to" for a reason. I picked 2% and the savings account thing just as common points of reference. You're quite right that you need other investment strategies, especially nowadays, but as investment strategies go, 2% remains pretty darn modest and low-risk.

Re: Poll: What number would make you say "I am financially independent"?

#89

Post by Millennium »

VLM wrote: post #74
Millennium wrote: post #21

5 million. Invested at a modest, low-risk 2% (which you used to be able to get from a standard savings account), that gives you $100,000/year: quite a decent baseline.

At 2% you can just spend the capital and you'll be good for 50 years. Insert 13 year old HN readers looking horrified and 50 year old HN readers looking rather optimistic. It gets hard to spend lots of money, especially if you are into variety. Yes living 1st class on a cruise ship and touring the world would be expensive, but I'd pretty much sick of it for the rest of my life after about six months. Then its on to c…

I'm thinking much the same, but even though maximum lifespan isn't moving very much, average lifespan is trending upward. You never know, and so it's not a bad idea, if you can swing it, to have a strategy that doesn't depend on time.

Plus, when the time comes and you no longer need it, you've got something to pass on to your kids and/or give your favorite cause a nice big shot in the arm. Not a bad way to go, really.

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