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I think you're just trolling, but let's assume you really believe NYC is a representative choice for a "major metro area" and not simply one of the most expensi

I think you're just trolling, but let's assume you really believe NYC is a representative choice for a "major metro area" and not simply one of the most expensive cities in the world to live in. > After taxes that $700k turns into $450k. You're talking about capital income - taxation varies around the world. > NYC 3br apartment in a good neighborhood costs ~$3M, which roughly translates into $200k/yr If you have $10m in the bank, buy the apartment and these $200k/yr will be 0 (just maintenance/running costs) and cost you $210k of your capital income, but pre-tax. You just won $65k/year plus the yearly increase in the apartment's value. > Basic living expenses of food, clothing, utilities, is another $40k. You can't be serious. This is far from "basic".

FabHK 8y ago
Why do you assume the poster was trolling? Yes, taxation varies, but if are resident in NY, you pay taxes on worldwide income, so that's not off the mark. As for buying the apartment: The poster assumes 7% yield on the savings; can the apartment give the same yield? It's not obviously better to purchase it (though the tax shield might make it so). $40k is maybe more than basic, but it's not exactly luxurious for 5. Deduct a phone and computer, and you're left with less than $500 per person per month for food and clothes - that doesn't buy you LV and Hermes.
- lazyjones 8y ago
  > Why do you assume the poster was trolling? Because NYC isn't exactly the typical "major metro area". > As for buying the apartment: The poster assumes 7% yield on the savings; can the apartment give the same yield? That wasn't the point - they claimed it's $3m or $200k/year (which is approx. 7% yield). By buying it, you don't have to pay $200k/year and lower your pre-tax capital income by that much (7% of the $3m capital income lost), which is much less than $200k.
  - brians 8y ago
    Okay. Where else is a major metro? London. Paris. Hong Kong. Singapore. Tokyo. Chicago. Los Angeles. And maybe, maybe San Francisco or Boston. If a metro area don’t have a couple major orchestras, operas, a few major sports teams, and a world class hospital, it’s hard to take “major” seriously.
    - lazyjones 8y ago
      Vancouver, Moscow, Berlin, Madrid, Rome, Melbourne, Sydney, Amsterdam... $700k/year for a comfortable retirement with kids is just so far out of touch anywhere else than SF, NYC, maybe London. How can someting like 95%+ of the population who make less even cope? (Manhattan median household income is ~$85k).
      - speedplane 8y ago
        >> Okay. Where else is a major metro? London. Paris. Hong Kong. Singapore. Tokyo. Chicago. Los Angeles. > Vancouver, Moscow, Berlin, Madrid, Rome, Melbourne, Sydney, Amsterdam These are all great cities, but once you start arguing about amenities of specific cities, you're already making value judgments about what you would consider a good life. Further, while these cities are significantly less expensive, they are just 30% or 50% less expensive, not multiple order of magnitude. My point was to show the absurdity of the underlying article's premise: that temporarily forgoing fancy coffees, monthly luxurious dinners, and other personal indulgences can lead to long term riches. It's a fantasy. Attaining either wealth requires much more than that, or changing your definition of wealth.
        lazyjones 8y ago
        > My point was to show the absurdity of the underlying article's premise: that temporarily forgoing fancy coffees, monthly luxurious dinners, and other personal indulgences can lead to long term riches. That's not the premise of the article, you've just weaseled this into the topic. First "economic freedom", now wealth and riches. The premise of the FI movement and the subject of the article is retiring comfortably at 40 without a luxurious lifestyle. No NYC penthouse, no jet-setting. Of course you will always find an even more expensive place and lifestyle for anything someone proposes, but that's just moving the goal post and missing the point of the article and movement.
- speedplane 8y ago
  > As for buying the apartment: The poster assumes 7% yield on the savings; can the apartment give the same yield? It's not obviously better to purchase it (though the tax shield might make it so). You misunderstood me, I said you would buy the $3M apartment, but I did not say you would buy it all 100% in cash. On the contrary, the standard approach is to put 20% down (~$600k) and pay the rest off with a 30 year mortgage at ~4% interest. The interest alone comes to ~$100k/yr and with principal and building common charges, the cost can easily near $200k. Your yield calculations fail to appreciate the leverage that exists in real-estate. Even in NYC, with a fast-growing real-estate market, market value rarely grows beyond 3%/year. So purchasing an apartment in 100% cash is almost certainly worse than renting and investing. However, few people buy in all cash (except for Russian oligarchs, and they have other issues). Most put down 20% and take loans on the rest. If you put down 20% on the apartment, pay 4% interest on the loan, and the apartment's value grows 3%/year, you net 11% increase on your initial down payment investment, making it attractive when compared to renting/investing.
cimmanom 8y ago
Or just rent the apartment for < $8k/mo ($96k/yr). (And that’s for a new luxury building in a top neighborhood. Make a couple compromises and you can fairly easily bring that down to $6k.) Yeah, living on an income of less than $500k (which is what the vast majority of people - including families - do, even in NYC) requires making a compromise here or there and not having the absolute best of absolutely everything. Shocker.

FabHK 8y ago

Why do you assume the poster was trolling? Yes, taxation varies, but if are resident in NY, you pay taxes on worldwide income, so that's not off the mark. As for buying the apartment: The poster assumes 7% yield on the savings; can the apartment give the same yield? It's not obviously better to purchase it (though the tax shield might make it so). $40k is maybe more than basic, but it's not exactly luxurious for 5. Deduct a phone and computer, and you're left with less than $500 per person per month for food and clothes - that doesn't buy you LV and Hermes.

lazyjones 8y ago
> Why do you assume the poster was trolling? Because NYC isn't exactly the typical "major metro area". > As for buying the apartment: The poster assumes 7% yield on the savings; can the apartment give the same yield? That wasn't the point - they claimed it's $3m or $200k/year (which is approx. 7% yield). By buying it, you don't have to pay $200k/year and lower your pre-tax capital income by that much (7% of the $3m capital income lost), which is much less than $200k.
- brians 8y ago
  Okay. Where else is a major metro? London. Paris. Hong Kong. Singapore. Tokyo. Chicago. Los Angeles. And maybe, maybe San Francisco or Boston. If a metro area don’t have a couple major orchestras, operas, a few major sports teams, and a world class hospital, it’s hard to take “major” seriously.
  - lazyjones 8y ago
    Vancouver, Moscow, Berlin, Madrid, Rome, Melbourne, Sydney, Amsterdam... $700k/year for a comfortable retirement with kids is just so far out of touch anywhere else than SF, NYC, maybe London. How can someting like 95%+ of the population who make less even cope? (Manhattan median household income is ~$85k).
    - speedplane 8y ago
      >> Okay. Where else is a major metro? London. Paris. Hong Kong. Singapore. Tokyo. Chicago. Los Angeles. > Vancouver, Moscow, Berlin, Madrid, Rome, Melbourne, Sydney, Amsterdam These are all great cities, but once you start arguing about amenities of specific cities, you're already making value judgments about what you would consider a good life. Further, while these cities are significantly less expensive, they are just 30% or 50% less expensive, not multiple order of magnitude. My point was to show the absurdity of the underlying article's premise: that temporarily forgoing fancy coffees, monthly luxurious dinners, and other personal indulgences can lead to long term riches. It's a fantasy. Attaining either wealth requires much more than that, or changing your definition of wealth.
      - lazyjones 8y ago
        > My point was to show the absurdity of the underlying article's premise: that temporarily forgoing fancy coffees, monthly luxurious dinners, and other personal indulgences can lead to long term riches. That's not the premise of the article, you've just weaseled this into the topic. First "economic freedom", now wealth and riches. The premise of the FI movement and the subject of the article is retiring comfortably at 40 without a luxurious lifestyle. No NYC penthouse, no jet-setting. Of course you will always find an even more expensive place and lifestyle for anything someone proposes, but that's just moving the goal post and missing the point of the article and movement.
speedplane 8y ago
> As for buying the apartment: The poster assumes 7% yield on the savings; can the apartment give the same yield? It's not obviously better to purchase it (though the tax shield might make it so). You misunderstood me, I said you would buy the $3M apartment, but I did not say you would buy it all 100% in cash. On the contrary, the standard approach is to put 20% down (~$600k) and pay the rest off with a 30 year mortgage at ~4% interest. The interest alone comes to ~$100k/yr and with principal and building common charges, the cost can easily near $200k. Your yield calculations fail to appreciate the leverage that exists in real-estate. Even in NYC, with a fast-growing real-estate market, market value rarely grows beyond 3%/year. So purchasing an apartment in 100% cash is almost certainly worse than renting and investing. However, few people buy in all cash (except for Russian oligarchs, and they have other issues). Most put down 20% and take loans on the rest. If you put down 20% on the apartment, pay 4% interest on the loan, and the apartment's value grows 3%/year, you net 11% increase on your initial down payment investment, making it attractive when compared to renting/investing.

cimmanom 8y ago

Or just rent the apartment for < $8k/mo ($96k/yr). (And that’s for a new luxury building in a top neighborhood. Make a couple compromises and you can fairly easily bring that down to $6k.) Yeah, living on an income of less than $500k (which is what the vast majority of people - including families - do, even in NYC) requires making a compromise here or there and not having the absolute best of absolutely everything. Shocker.