$1,000.000.00 dollars isn’t enough !!

I see your point but if a person had 1 mill in cash and use it to live on i.e spent it day in day out until it ran out that would be suiside.
But if you invested 1 mill in the stock market thruing off a 10% return that would give a person 100k a year forever.
i would be very happy to live off that.

Just my 2 bucks worth[cap]

well said ablaze

and then, invested in property, you see the million never shrinks, it grows in value over time and so does the income, which if it’s rent, is indexed for inflation. So a million dollar block of flats returning 10 percent could be a 2 million block of flats returning 200k in 8 -10 years…isn’t that the length of time they say that property takes to double?

joy to the world

This is only good with a few additional considerations:

Firstly, your principle would need to grow by the CPI so that the real value of your return doesn’t decrease over time. $100K earned today won’t get you the same benefits as $100K earned in 2020.

Simply sticking the $1M in a 10% term deposit and living off the income WILL result in you getting less money year after year – even if the interest rate never changes. Whatever strategy you do will need to meet or exceed inflation and the cost of living by AT LEAST the amount you spend each year.

Getting 10% + capital appreciation is going to be risky and in an era of around 5% official interest rates it’s far better to look at a lower return + capital appreciation. To do that, you need to lower your expectations (say 50K per year + appreciation) or have more money than $1M.

IMO, having $1M in the stock market and expecting a 10% return means ACTIVE investing (rather than passive investing) and means increased risk. Risk of losing some or most of it and being forced back in the workforce – often with fewer skills than you had when you left it.

Next, once you’re in the ‘invest and retire’ mode, it’s better that interest rates remain higher rather than lower. Low interest rates are far better for we investors, but it’s hell to those people who rely on their investment returns. As we’ve seen recently, low interest rates are the mantra of ‘good government’, so you’re always going to need to have more money than less to be able to live comfortably.

Do you think the government would bring the IR down to, say, 2% if they could? It’s a possibility, and one that would mean your $1M is only earning $20K per year.

And finally, the last – and possibly most important thing – to consider is: is $100K enough? Once you get used to living at any ‘standard of living’ it’s very hard to go backward.

Sure $100K per year is a lot of money to most normal people now, and one that would be a dream – but once you get used to it, the natural tendancy is to push your standard of living to that amount. What happens when you get ‘forced’ to only live at $80K/year (say you’ve run up your credit cards by $30K or $40K) and need to cut back for a while? The natural human tendency would be to eat into the principal – and then that reduces your income in later years.

Not meant to be a downer, just some thoughts to consider when you think $1 Million is ‘rich’.

Editted to add (based on other comments):

– if you did have $1M could you really sit back and not risk it by trying to make it grow? Would you really be happy to remove yourself from wealth building and trying to acheive even more? Risk comes with that.

– and if you did have it in property, the actual house is a depreciating asset. While you might be able to get a good return, you’re looking at a LOT of expense if you want it to be consistant over a longer period of time. Even when you take out normal yearly expenses, you still need to do capital expenditure from time to time.

I just think if you want $100K per year – regularly and *with minimal risk* – you probably need around $3M to achieve it.