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Meanwhile I've done the math and 2 million USD would let me live my current comfortable middle class lifestyle (single and childless) indefinitely here in Montr
by jkaplowitz 8y ago
Meanwhile I've done the math and 2 million USD would let me live my current comfortable middle class lifestyle (single and childless) indefinitely here in Montreal with excessively conservative financial assumptions, without earning income, and without drawing down the principal. That budget includes more than mere necessities, like vacations and tech purchases.
That's not my current net worth, to be sure, nor would I necessarily stop earning income if it were.
It's just a nice example to highlight of a world-class city that isn't that expensive all things considered.
- deleted 8y ago[deleted]
- manquer 8y agoIt is considerably harder to make 2 million in Montreal than say London/NY/SF etc, with the high cost of living in these locations it is easier to spend as you point out. If you already had money the perhaps settling in a Montreal is a good idea, but to make that kind of money you will need to choose to live in a place where money is easier to make.
- jkaplowitz 8y agoIn my case, I have spent most of my life so far in places like those you listed and am a new arrival in Montreal. But tech workers native to Montreal who consult remotely for SF/NYC tech companies or VCs after spending some years doing a US work stint for networking purposes can definitely build up savings rapidly. I know one such example personally.
- comboy 8y agoHow long did you assume you'd be living and how did you assume to store this value? Because if left on it's own, just 30 years from now these $2M will likely have much lower purchasing power (even if stored on savings account and even no black swan financial event happens during that time).
- milesvp 8y ago4% draw down on a stock index fund will likely pay 80k anually adjusted for inflation indefinitely. At least, this is based on historic stock data However, I was taught in undergrad econ, that this 4% return above inflation is considered the risk premium, over what a CD would get you. So there is a real risk of losing everything. Which means hedging is a good idea, some of the money to buy a reasonable house, some %age of rest in bond fund, and quarterly rebalancing can go a long way to preserve a lot of wealth in a black swan event.
- javier2 8y agoYeah, it's more like 2M will let you live confortable indefinitely in 90% of future scenarios. So there is still an y% chance you might have to go back to work again.
- jkaplowitz 8y agoEven if I get to that level of net worth - which, as I noted, I'm not at yet - I'd probably still have some earned income. I could just care much less about how much and could be a lot choosier about what work I want.
- walshemj 8y agoBut if you had $2 mill to invest you wouldn't have it all in one concentrated index fund - you would have at least 50% in wealth preservation funds and diversified investments commercial property, overseas funds/trusts etc. I have less that 10% of that in my investment portfolio and don't actually have a FTSE 100 tracker I have around 20 investment trusts and individual shares.
- jkaplowitz 8y agoI don't even have of 80k USD in after-tax inflation-adjusted expenses living here. It's a cheap city.
- jkaplowitz 8y agoYeah, needs to be invested, I agree. But can be done without too much risk. This does not involve drawing down principal, in other words it lasts truly indefinitely.