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sighthoundman t1_j14c0pa wrote

Reply to comment by Gekidami in [Image] “My goal is to build a life I don't need a vacation from." by Butterflies_Books

That has become a low bar. $1 million will generate $50,000 a year in income. (You can't eat into the principal too much our you'll run out of money.) That's certainly a livable income (you can move to somewhere that has affordable housing), but it's not the lap of luxury.

I assume you meant multimillionaire. If you have $10 million you can live anywhere, and if you have $50 million your only worries are losing your millions and whatever demons live in your head. And that the asteroid that wipes us out comes before we have the planetary defense system set up. And ....

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Canilickyourfeet t1_j14fqhm wrote

I think the general idea ppl refer to when they say millionaire is $1m/year, which is certainly not a low bar - rather than just a total savings of $1m. This can either be $250k/yr for 4 yrs, or $100k/yr for 10 yrs, or $50k/yr for 20 years. These are all very decent amounts until the 50k/yr. That wage for 20 years is indeed abysmal, at least in most first world countries.

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Semantix t1_j154vqu wrote

I wonder if this definition has slowly changed as a million dollars has gotten to be worth less and less? For "billionaire" folks are definitely referring to net worth, at least.

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Stratusfear21 t1_j16hr80 wrote

I mean what do you mean by generates that amount: Is it in a savings account and you're talking dividends? Are you doing 50k for 20 years? Let's say the average person has 30k student debt, and let's go ahead and say a full car note for 30k. I'm going a little on the high end of course. You could pay that all in full and buy another good car when this one is trashed. So 90k off. Let's buy a house. In my area the average is 250-300k. With 300k now you're -390k and have 610k left over. If you spent it only on utilities, gas, and groceries you'd be fine for decades. Get a part time job and work like 15 hours a week or something and you are completely set. It's not generational money by any means but you can make a million last a lot longer than you think and live comfortably.

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sighthoundman t1_j1768dq wrote

You invest it in the stock market. Then "on average", between dividends and capital gains, you should make 5% above inflation. (I don't remember if this is since 1900 or since 1790. US figures.) So you take your 5% and leave the rest.

With $50k you can live in the US. Pretty well in some areas, not at all in others. But because you don't have to live near your job, you don't have to live in an area where $50k won't actually support you.

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Stratusfear21 t1_j177onf wrote

With a million you could invest in most things I'm sure. I don't know how much Walmart or Raytheon stock is but still a lot of those things are still gambles if you're counting on them for the rest of your life. Walmart is a power house but anything could happen in the coming decades to crash even them. The military industrial complex is less likely for sure but even then you never know. Of course that 5% is all profit and if you need to sell you can get everything back say in 30 years and have more money than if you took my advice most likely. But you also won't own a house or any assets. I just think there are other ways to turn the million into more money per year. Or just buy a house and live comfortably for the rest of your life. Really either option isn't a bad decision. Blowing all of it is a bad decision.

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tiboodchat t1_j14smtf wrote

Well, assuming his big ticket items are all paid off, it’s really not a bad amount of money.

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RollerDude347 t1_j15donk wrote

Even then.... that would be a surplus 20k for much of the US.

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sephjnr t1_j15ex5q wrote

$1m gets $50kpa? Show me which banks are paying 5%, I need to move.

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sighthoundman t1_j16fjc0 wrote

Stock returns average about 5% above inflation. Invested conservatively (there are rules about that, how to spread your risk, but nowadays you can just buy Index Funds), that means you can take 5% per year out for living expenses.

Of course, if the market goes down, your income goes down. If it goes up more than inflation, you can give yourself a raise. There's no way to eliminate all risk, but this is relatively safe.

Banks don't make stuff. They lend money to people and companies. A loan to make stuff has to pay less than the company is making. That means that the loans the bank makes with your money have to earn less than the companies are making. You keep your money in the bank because it pays better than keeping it in a sock, but other than that it's for convenience, not return.

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