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$2m at a conservative return of 6% would get you $120k but before taking capital gains tax. Let's say you're taxes at 15%... Now you're down to $102K. Not bad,

$2m at a conservative return of 6% would get you $120k but before taking capital gains tax. Let's say you're taxes at 15%... Now you're down to $102K. Not bad, but I'm sure you could make more as a senior developer. Assuming you've come up with a different strategy that's netting better returns, would you care to share? And what is your strategy for hedging?

nathan_f77 9y ago
6% would be extremely aggressive, so I was thinking more like $4M at 3%. And you're right, I suppose a senior developer would be making ~$150k, so you'd need around $5-$6 million. 3-4% is the typical withdrawal rate that people use on the /r/financialindependence subreddit: https://www.reddit.com/r/financialindependence/wiki/faq#wiki_how_much_do_i_need_to_save_to_retire.3F https://www.reddit.com/r/financialindependence/wiki/faq#wiki... My strategy would be to just put everything in a Vanguard Target Retirement Fund: https://investor.vanguard.com/mutual-funds/target-retirement/#/ https://investor.vanguard.com/mutual-funds/target-retirement... It's cheaper and safer than a financial advisor, and you don't need to worry about rebalancing. I'd also throw a little bit of money into angel investing, but no more than 3%, and I'd expect to lose it all. For hedging, I think once a year I would just buy some OTM puts for the S&P 500. A sane number might be something like 0.2% of your assets. If you're absolutely convinced that we're on the verge of a stock market crash, then you should still use 0.2%, because you're probably wrong.
Tharkun 9y ago
Sounds like a nice US salary. Good luck netting half that in most of Europe.
Spooky23 9y ago
This is one of these scenarios where you work with an advisor and accountant, and make investment adjustments over time as rates change. I helped my dad with a scenario like this when he retired. You approach the problem so that you draw as much income as possible from tax exempt sources and use other vehicles for growth -- which preserves your cash generating capability later. When opportunity strikes, you overload. For example, buying NY tax exempt (and other municipal bonds) when they were depressed during the recession has yielded a decade of enhanced, safe, tax free income.
kayoone 9y ago
your 100k+ for a Senior developer are US only though. In Europe or Canada only very very few developers without management responsibility make that kind of money. Typical senior salaries are between 60-80k.
- Arizhel 9y ago
  In Europe or Canada, they don't have the insanely-high healthcare insurance costs that Americans have.
awinder 9y ago
You'd pay taxes on the dev salary as well so you'd need less drawing "salary" as capital gains taxes than you would income + payroll taxes.

nathan_f77 9y ago

6% would be extremely aggressive, so I was thinking more like $4M at 3%. And you're right, I suppose a senior developer would be making ~$150k, so you'd need around $5-$6 million. 3-4% is the typical withdrawal rate that people use on the /r/financialindependence subreddit: https://www.reddit.com/r/financialindependence/wiki/faq#wiki_how_much_do_i_need_to_save_to_retire.3F https://www.reddit.com/r/financialindependence/wiki/faq#wiki... My strategy would be to just put everything in a Vanguard Target Retirement Fund: https://investor.vanguard.com/mutual-funds/target-retirement/#/ https://investor.vanguard.com/mutual-funds/target-retirement... It's cheaper and safer than a financial advisor, and you don't need to worry about rebalancing. I'd also throw a little bit of money into angel investing, but no more than 3%, and I'd expect to lose it all. For hedging, I think once a year I would just buy some OTM puts for the S&P 500. A sane number might be something like 0.2% of your assets. If you're absolutely convinced that we're on the verge of a stock market crash, then you should still use 0.2%, because you're probably wrong.

Tharkun 9y ago

Sounds like a nice US salary. Good luck netting half that in most of Europe.

Spooky23 9y ago

This is one of these scenarios where you work with an advisor and accountant, and make investment adjustments over time as rates change. I helped my dad with a scenario like this when he retired. You approach the problem so that you draw as much income as possible from tax exempt sources and use other vehicles for growth -- which preserves your cash generating capability later. When opportunity strikes, you overload. For example, buying NY tax exempt (and other municipal bonds) when they were depressed during the recession has yielded a decade of enhanced, safe, tax free income.

kayoone 9y ago

your 100k+ for a Senior developer are US only though. In Europe or Canada only very very few developers without management responsibility make that kind of money. Typical senior salaries are between 60-80k.

Arizhel 9y ago
In Europe or Canada, they don't have the insanely-high healthcare insurance costs that Americans have.

awinder 9y ago

You'd pay taxes on the dev salary as well so you'd need less drawing "salary" as capital gains taxes than you would income + payroll taxes.