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Even when money is just sitting in the bank account it's not useless. The bank turns around and loans out and invests most of that money.
by marcoperaza 10y ago
Even when money is just sitting in the bank account it's not useless. The bank turns around and loans out and invests most of that money.
- ChuckMcM 10y agoAt those levels it isn't in a depository account, it will be in either a managed account (where the bank is managing the funds in existing equities and bonds) or a self directed account where the account holder is directing it. In my directed IRA account any cash generated is "swept" into a 'double tax free' (aka California bonds that are specifically both California and Federally tax exempt) until I decide where to put it. It isn't something the bankers have any say in where it goes. If I had a billion I would no doubt be making some bets with it that were speculative (I'm a big fan of fusion and the industrialization of low earth orbit) but that would not put the rest of the portfolio at risk of loss.
- matt_wulfeck 10y agoI'm thinking to myself I wouldn't have much of an appetite for risk with $1B. At that point a measly 2% a year in interest is $20M. I'd have a comfortable life not working.
- ChuckMcM 10y agoAnd a number of people I've known have stopped working long before a billion dollars was in their portfolio. The consensus these days seems to be $6 million. That much being managed by a decent finance person would give you an income equivalent to being paid $200K/year[1] and you can can vacation somewhere for a couple of weeks a year and spend $6 - $10K on your vacations. [1] it gets tricky since when you're being "paid 200K/year" you probably pay 40% in income taxes and disability and you get health care paid for so you actually take home less than that.