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I agree, which is why everyone who lives off an income rather than assets (which is ~99.5% of us) should be a leftist and support labor organization as that is

by jmyeet 4y ago

I agree, which is why everyone who lives off an income rather than assets (which is ~99.5% of us) should be a leftist and support labor organization as that is the only thing that'll actually improve their material conditions. And I mean leftist in the actual sense, not a feckless liberal in the US Democratic Party sense who still ultimately exist to defend the capital-owning class. The so-called Great Resignation and worker shortage was really the first increase in real wages many had seen in 40 years. And what's happened since? Massive inflation, particularly of essentials like housing. That's not an accident. The system is designed such that a budget shortfall is built into your existence. A workforce that is living paycheck-to-paycheck and barely hanging on is a compliant workforce. They're definitely showing up to work and not making trouble. That's the point. Working people of any race, gender, sexual orientation or age have way more in common with each other than they do with the capital-owning class who routinely create wedge issues to avoid any sort of class solidarity. But people don't want to hear that either.

gruez 4y ago
>I agree, which is why everyone who lives off an income rather than assets (which is ~99.5% of us) I think you're greatly underestimating how many people can "live off [...] assets". This page shows household net worth by percentile[1]. Based off that, you can probably live off investments starting at around the 90th percentile ($61k annual income with 5% withdraw rate), if you live modestly in a low CoL state. Once you get around the 95th percentile you can probably live comfortably in a high CoL state ($129k/year, translates to 87th percentile in california), and by the time you get to the 99th percentile, you can probably live as well as dual earner households with high paying careers ($555k). [1] https://dqydj.com/average-median-top-net-worth-percentiles/ https://dqydj.com/average-median-top-net-worth-percentiles/ [2] https://dqydj.com/income-percentile-by-state-calculator/ https://dqydj.com/income-percentile-by-state-calculator/
- deleted 4y ago
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- WalterGR 4y ago
  > Based off that, you can probably live off investments starting at around the 90th percentile ($61k annual income with 5% withdraw rate), if you live modestly in a low CoL state. I don't understand how that math works. Could you break it down for me?
  - dougSF70 4y ago
    The theory goes that a 4.5% draw rate from your capital will ensure your capital is preserved (relative to inflation average of 2.5%) for ever provided it grows at 7% a year in the long run. This is an achievable long term capital growth rate. If you can live of $61k a year then you will need 61,000 / 0.045 = $1,355,555 of investments to deliver $61k a year without degrading the value of the capital relative to inflation. I guess the 90th percentile refers to the fact that 10% of people in the US have this amount invested or more.
    - acdha 4y ago
      > I guess the 90th percentile refers to the fact that 10% of people in the US have this amount invested or more. I think the 10% number is referring to something a bit different. The stats referenced are net worth, which in most cases is significantly composed of someone’s house & other property which doesn’t easily provide a passive income and 401ks which aren’t accessible. I’d be surprised if the number of people who have $1.3M in normal investments is greater than 1%.
- jmyeet 4y ago
  > I think you're greatly underestimating how many people can "live off [...] assets" 1% of households are worth >$11m? Is that really true? I have trouble believing that but it could be true. Either way, all it does is change it so that 95% of people should be leftists. Also FWIW living off those assets at the lower percentiles that you mention doesn't factor in inflation, which is currently more than the 5% returns you mentioned. And a real return of 5% is a somewhat more aggressive strategy. It's more likely (and suggested) that at a certain point portfolios should become defensive as a amssive drop is way more impactful than a large positive gain. It's also worth noting that these net worth figures include your net house value. You're not making a return on that money. In fact it's costing you money. Sure you could not own, get a return on that money instead and rent instead but that opens you up to other risks (eg as we're seeing now with massive rent hikes).

by jmyeet 4y ago

gruez 4y ago

>I agree, which is why everyone who lives off an income rather than assets (which is ~99.5% of us) I think you're greatly underestimating how many people can "live off [...] assets". This page shows household net worth by percentile[1]. Based off that, you can probably live off investments starting at around the 90th percentile ($61k annual income with 5% withdraw rate), if you live modestly in a low CoL state. Once you get around the 95th percentile you can probably live comfortably in a high CoL state ($129k/year, translates to 87th percentile in california), and by the time you get to the 99th percentile, you can probably live as well as dual earner households with high paying careers ($555k). [1] https://dqydj.com/average-median-top-net-worth-percentiles/ https://dqydj.com/average-median-top-net-worth-percentiles/ [2] https://dqydj.com/income-percentile-by-state-calculator/ https://dqydj.com/income-percentile-by-state-calculator/

deleted 4y ago
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WalterGR 4y ago
> Based off that, you can probably live off investments starting at around the 90th percentile ($61k annual income with 5% withdraw rate), if you live modestly in a low CoL state. I don't understand how that math works. Could you break it down for me?
- dougSF70 4y ago
  The theory goes that a 4.5% draw rate from your capital will ensure your capital is preserved (relative to inflation average of 2.5%) for ever provided it grows at 7% a year in the long run. This is an achievable long term capital growth rate. If you can live of $61k a year then you will need 61,000 / 0.045 = $1,355,555 of investments to deliver $61k a year without degrading the value of the capital relative to inflation. I guess the 90th percentile refers to the fact that 10% of people in the US have this amount invested or more.
  - acdha 4y ago
    > I guess the 90th percentile refers to the fact that 10% of people in the US have this amount invested or more. I think the 10% number is referring to something a bit different. The stats referenced are net worth, which in most cases is significantly composed of someone’s house & other property which doesn’t easily provide a passive income and 401ks which aren’t accessible. I’d be surprised if the number of people who have $1.3M in normal investments is greater than 1%.
jmyeet 4y ago
> I think you're greatly underestimating how many people can "live off [...] assets" 1% of households are worth >$11m? Is that really true? I have trouble believing that but it could be true. Either way, all it does is change it so that 95% of people should be leftists. Also FWIW living off those assets at the lower percentiles that you mention doesn't factor in inflation, which is currently more than the 5% returns you mentioned. And a real return of 5% is a somewhat more aggressive strategy. It's more likely (and suggested) that at a certain point portfolios should become defensive as a amssive drop is way more impactful than a large positive gain. It's also worth noting that these net worth figures include your net house value. You're not making a return on that money. In fact it's costing you money. Sure you could not own, get a return on that money instead and rent instead but that opens you up to other risks (eg as we're seeing now with massive rent hikes).