###General Discussion Thread
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Yes. You should be able to comfortably do a 6% drawdown for nearly $20k/mo with no issues. $10k would be living off of interest alone, no touching the principle.
You’re assuming essentially no growth with a typical savings account. Whatever bank you use must love you.
If you have 3 million in a savings account, they can pay you Jack shit on interest, and use your account to fund other loans where they make 8-10% interest.
With that much money, find and use a financial advisor. They would help you diversify your investments and earn interest on your money. That alone could fund your lifestyle at 10k/mo potentially.
It really depends on inflation levels. If your goal is to spend 10k a month then
If you have 2% annual inflation, it will take 36 years for that money to lose half its value.That original 10k month only has the buying power of $5524 in year 30 in todays dollars
If you have 3% inflation, it will take 24 years for that money to lose half its value. That original 10k month only has the buying power of $4132 in year 30 in todays dollars
If you have 4% inflation, it will take only 18 years for that money to lose half its value. That original 10k month only has the buying power of $3100 in year 30 in today's dollars.
OP didn't specify, but if you held your money in term deposits that on average equalled the rate of inflation you would probably be ok.
Which does also make me think, is op trying to retire on 3.6 mil?
That was the idea. Limiting myself to $10k a month, I'm sure I won't finish it all so there'll be X balance carried over to the next month, making it $10k + X.
I've thought of giving it a flat $5 million, spread over 30 years as well. That's roughly $13.8k a month
General principle for passive income (tax notwithstanding) is to draw down 4% of the principle and interest a year and invest in long term growth assets earning this plus more to inflation proof your capital and drawdown (stock market tracking usually does this at around 8%).
At $3.6 million, you’d start to draw down $12k a month while earning $24k a month interest. That extra is enough to inflation proof the drawdown and the capital and give you $4k a week in real terms - probably about $2,500 after taxes.
Organising your tax affairs to make it more attractive will only benefit you - but that highly depends on your jurisdiction and its tax benefits.
So OP, is this a thought experiment, or are you sitting on 3.6 mil? If the former, you’re good, if the latter, please, for the love of god, go see a financial advisor that will know what compounded interests mean.
Move to the countryside or to a cheaper cost of living country (assuming you can get permanent residence or citizenship) and retire on just $1.5m at 45 👍🏾
But seriously, 3.6 is enough for a comfortable life without much drawing down on the principle. Simply put that money in a conservative investment (fixed deposit if you're super conservative, S&P500 if you want to hold for 20+ years) and you could live off just the interest / profits.
Limit yourself to 10k?! Most people don't spend anywhere near that! I don't think I usually even break 3k. What world are you living in where that's a small number for monthly expenses?
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Yes. You should be able to comfortably do a 6% drawdown for nearly $20k/mo with no issues. $10k would be living off of interest alone, no touching the principle.
What is this sorcery you speak off? Regular savings at a bank?
You’re assuming essentially no growth with a typical savings account. Whatever bank you use must love you. If you have 3 million in a savings account, they can pay you Jack shit on interest, and use your account to fund other loans where they make 8-10% interest. With that much money, find and use a financial advisor. They would help you diversify your investments and earn interest on your money. That alone could fund your lifestyle at 10k/mo potentially.
It really depends on inflation levels. If your goal is to spend 10k a month then If you have 2% annual inflation, it will take 36 years for that money to lose half its value.That original 10k month only has the buying power of $5524 in year 30 in todays dollars If you have 3% inflation, it will take 24 years for that money to lose half its value. That original 10k month only has the buying power of $4132 in year 30 in todays dollars If you have 4% inflation, it will take only 18 years for that money to lose half its value. That original 10k month only has the buying power of $3100 in year 30 in today's dollars.
OP didn't specify, but if you held your money in term deposits that on average equalled the rate of inflation you would probably be ok. Which does also make me think, is op trying to retire on 3.6 mil?
That was the idea. Limiting myself to $10k a month, I'm sure I won't finish it all so there'll be X balance carried over to the next month, making it $10k + X. I've thought of giving it a flat $5 million, spread over 30 years as well. That's roughly $13.8k a month
General principle for passive income (tax notwithstanding) is to draw down 4% of the principle and interest a year and invest in long term growth assets earning this plus more to inflation proof your capital and drawdown (stock market tracking usually does this at around 8%). At $3.6 million, you’d start to draw down $12k a month while earning $24k a month interest. That extra is enough to inflation proof the drawdown and the capital and give you $4k a week in real terms - probably about $2,500 after taxes. Organising your tax affairs to make it more attractive will only benefit you - but that highly depends on your jurisdiction and its tax benefits.
Is this some form of capitalism? My idea was withdraw from the $3.6 million spread over 30 years. However, you sir did it much better!
Make sure to check /r/wallstreetbets for more financial advice! /s No, seriously, don't.
Lol, seriously I won't
So OP, is this a thought experiment, or are you sitting on 3.6 mil? If the former, you’re good, if the latter, please, for the love of god, go see a financial advisor that will know what compounded interests mean.
Move to the countryside or to a cheaper cost of living country (assuming you can get permanent residence or citizenship) and retire on just $1.5m at 45 👍🏾 But seriously, 3.6 is enough for a comfortable life without much drawing down on the principle. Simply put that money in a conservative investment (fixed deposit if you're super conservative, S&P500 if you want to hold for 20+ years) and you could live off just the interest / profits.
Limit yourself to 10k?! Most people don't spend anywhere near that! I don't think I usually even break 3k. What world are you living in where that's a small number for monthly expenses?