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A couple million dollars is a retirement nest egg. You can stop working, stretch it carefully until you die, and leave a small sum to your heirs. To be very ri

A couple million dollars is a retirement nest egg. You can stop working, stretch it carefully until you die, and leave a small sum to your heirs. To be very rich requires upwards of $100 million. Then you can access high paying investments which will generate enough income to afford a couple houses, hire help, buy a boat and a plane, and have enough left over after taxes to increase your assets to offset inflation. Actually, if you want a jet plane (with hired pilots, mechanics, hangers, etc) and a couple nice houses (>$10 million each plus staff) in the nicest places (Beverly Hills, Palm Beach, Jackson Hole), you need upwards of $1000 million.

benhurmarcel 7y ago
A couple million dollars is more than a nest egg. You can retire immediately and provide for your family and yourself your whole life with that kind of money.
- war1025 7y ago
  Only if used productively. Which, assuming you built it from more or less nothing, you probably have been doing to get to that point. Having money does not make you wealthy. Having the correct financial arrangement to consistently make more than you spend is what makes you wealthy.
- ghaff 7y ago
  Entirely dependent on location, lifestyle, family status, etc. Yes, with $2m you can retire tomorrow and get something like $100K/year in pretty much guaranteed income not pegged to inflation. (You can argue the numbers but certainly <$200K/year with moderate risk.) And you can certainly live on that amount of money but equally certainly not with an opulent lifestyle--especially if you don't own your house/condo, have college expenses, like to travel/eat out etc. ADDED: Yes, you're "rich" but not jet-setting in business class at resort hotels, multi-million dollar coastal city condo, eat at top restaurants on a regular basis etc. rich. Which is actually just fine for a lot of people who have no particular interest in those things.
  - tunesmith 7y ago
    Wait, how would you guarantee 5%? I don't see "put it in an index fund" as "pretty much guaranteed".
    - ghaff 7y ago
      Annuities, high grade corporate or muni bonds, mix in some high dividend yield blue chips, etc. I'd mix with some riskier investments that were higher return on average. Nothing is guaranteed if things go totally to hell, of course. (And I did make the qualification of not being pegged to inflation.) But unless we get to a very bad place, I think that assuming 5% on these sorts of investments is a pretty safe bet. (ADDED: But pick your own number. 3-4% probably is closer to the really very safe modulo inflation given instruments like CDs in that range. But you're reinforcing my basic point. $2M is not really the basis for a huge annual income in perpetuity or even over a multi-decade timescale if you don't have other income streams to add to that mix.)
    - syncsynchalt 7y ago
      The market return for the past century has been something like 7% (after inflation). If you're investing in time spans longer than 10 years then typically you expect something in that range. Past performance does not promise future results, and the world could end tomorrow, but it's not a bad idea to plan that you'll get an average of 5%+ on market investment. (I'll note that you're responding to someone saying "pretty much guaranteed" and dropped that qualifier in your question).
      - tunesmith 7y ago
        I know about that, I meant besides that. An average return doesn't mean a consistent return from year to year - e.g. $100,000 / year from 2 million. I was just curious how other people would invest to target a high probability of 5% each year.
- AJ007 7y ago
  That is wrong, if you live in a wealthy country. The safe rate of return right now is a few percentage points at best. If it stays like that, and we get inflation, then it is going to be even worse (wealth shrinking happening now depending on tax variables of the retiree.)
- quickthrower2 7y ago
  $2m invested with 2% real returns is $40,000/y. So you could provide for your family but I think it would need to be pretty frugal and move away from major urban areas. (Maybe buy a 500k house and live off $30,000/y)? That said I think semi-retire is the best bet. You have $30,000 for existence, and then go and do a gig every now and then for that foreign holiday or home repair or whatever.
  - sp332 7y ago
    You don't have to finish with the same amount you started with. If you aim for finishing somewhere between $2m and $0, you can spend between $40k and $100k per year.
    - quickthrower2 7y ago
      Absolutely, but if you plan on doing this from 30 to 85, say, then it probably won't make much difference, and you might as well save the lions share for medical bills, rainy days or even inheritance down the line.
xorfish 7y ago
It doesn't become easier to beat the market when you have more than $100 million. Anyone with a couple $1000 can buy cheap etfs or index funds
- ChuckNorris89 7y ago
  Yes but the $100 million guys can afford higher risks with higher returns. The $1000 guys can only play it safe with small returns.
  - whatshisface 7y ago
    The $1000 guys can afford humongous risks if they're 20 year olds saving for retirement. In fact, if they have a job to live off of, their risk tolerance is going to be far greater than a rich person living off their wealth.
- war1025 7y ago
  From what I understand, the thing that changes when you have lots of money, is you can act as an investor in individual ventures that are much riskier, but with a much higher potential payoff. If you can drop $1 million without being ruined if it doesn't pan out, you can multiply your money very quickly when things do happen to go your way. In fact, isn't that basically the entire premise behind all the VC funds that fuel Silicon Valley?
  - ghaff 7y ago
    >isn't that basically the entire premise behind all the VC funds Which often don't have especially high rates of return. I don't really disagree with your basic point. At least somewhat higher investments do give you access to a wider variety of financial instruments even if diversified through a third party.
ForHackernews 7y ago
Yes, yes, the wealth curve is essentially a vertical line at the right-hand edge. Don't pity the poor decimillionaires.
- billions 7y ago
  What if they are physically handicapped? What if they are lonely? What if they spend their time and energy investing in 3rd world countries? Consider checking your prejudice at the door.
- deleted 7y ago
  [deleted]

benhurmarcel 7y ago

A couple million dollars is more than a nest egg. You can retire immediately and provide for your family and yourself your whole life with that kind of money.

war1025 7y ago
Only if used productively. Which, assuming you built it from more or less nothing, you probably have been doing to get to that point. Having money does not make you wealthy. Having the correct financial arrangement to consistently make more than you spend is what makes you wealthy.
ghaff 7y ago
Entirely dependent on location, lifestyle, family status, etc. Yes, with $2m you can retire tomorrow and get something like $100K/year in pretty much guaranteed income not pegged to inflation. (You can argue the numbers but certainly <$200K/year with moderate risk.) And you can certainly live on that amount of money but equally certainly not with an opulent lifestyle--especially if you don't own your house/condo, have college expenses, like to travel/eat out etc. ADDED: Yes, you're "rich" but not jet-setting in business class at resort hotels, multi-million dollar coastal city condo, eat at top restaurants on a regular basis etc. rich. Which is actually just fine for a lot of people who have no particular interest in those things.
- tunesmith 7y ago
  Wait, how would you guarantee 5%? I don't see "put it in an index fund" as "pretty much guaranteed".
  - ghaff 7y ago
    Annuities, high grade corporate or muni bonds, mix in some high dividend yield blue chips, etc. I'd mix with some riskier investments that were higher return on average. Nothing is guaranteed if things go totally to hell, of course. (And I did make the qualification of not being pegged to inflation.) But unless we get to a very bad place, I think that assuming 5% on these sorts of investments is a pretty safe bet. (ADDED: But pick your own number. 3-4% probably is closer to the really very safe modulo inflation given instruments like CDs in that range. But you're reinforcing my basic point. $2M is not really the basis for a huge annual income in perpetuity or even over a multi-decade timescale if you don't have other income streams to add to that mix.)
  - syncsynchalt 7y ago
    The market return for the past century has been something like 7% (after inflation). If you're investing in time spans longer than 10 years then typically you expect something in that range. Past performance does not promise future results, and the world could end tomorrow, but it's not a bad idea to plan that you'll get an average of 5%+ on market investment. (I'll note that you're responding to someone saying "pretty much guaranteed" and dropped that qualifier in your question).
    - tunesmith 7y ago
      I know about that, I meant besides that. An average return doesn't mean a consistent return from year to year - e.g. $100,000 / year from 2 million. I was just curious how other people would invest to target a high probability of 5% each year.
AJ007 7y ago
That is wrong, if you live in a wealthy country. The safe rate of return right now is a few percentage points at best. If it stays like that, and we get inflation, then it is going to be even worse (wealth shrinking happening now depending on tax variables of the retiree.)
quickthrower2 7y ago
$2m invested with 2% real returns is $40,000/y. So you could provide for your family but I think it would need to be pretty frugal and move away from major urban areas. (Maybe buy a 500k house and live off $30,000/y)? That said I think semi-retire is the best bet. You have $30,000 for existence, and then go and do a gig every now and then for that foreign holiday or home repair or whatever.
- sp332 7y ago
  You don't have to finish with the same amount you started with. If you aim for finishing somewhere between $2m and $0, you can spend between $40k and $100k per year.
  - quickthrower2 7y ago
    Absolutely, but if you plan on doing this from 30 to 85, say, then it probably won't make much difference, and you might as well save the lions share for medical bills, rainy days or even inheritance down the line.

xorfish 7y ago

It doesn't become easier to beat the market when you have more than $100 million. Anyone with a couple $1000 can buy cheap etfs or index funds

ChuckNorris89 7y ago
Yes but the $100 million guys can afford higher risks with higher returns. The $1000 guys can only play it safe with small returns.
- whatshisface 7y ago
  The $1000 guys can afford humongous risks if they're 20 year olds saving for retirement. In fact, if they have a job to live off of, their risk tolerance is going to be far greater than a rich person living off their wealth.
war1025 7y ago
From what I understand, the thing that changes when you have lots of money, is you can act as an investor in individual ventures that are much riskier, but with a much higher potential payoff. If you can drop $1 million without being ruined if it doesn't pan out, you can multiply your money very quickly when things do happen to go your way. In fact, isn't that basically the entire premise behind all the VC funds that fuel Silicon Valley?
- ghaff 7y ago
  >isn't that basically the entire premise behind all the VC funds Which often don't have especially high rates of return. I don't really disagree with your basic point. At least somewhat higher investments do give you access to a wider variety of financial instruments even if diversified through a third party.

ForHackernews 7y ago

Yes, yes, the wealth curve is essentially a vertical line at the right-hand edge. Don't pity the poor decimillionaires.

billions 7y ago
What if they are physically handicapped? What if they are lonely? What if they spend their time and energy investing in 3rd world countries? Consider checking your prejudice at the door.
deleted 7y ago
[deleted]