5 ms·

A few thoughts: 1. The rule of thumb I've always heard is that $2 million in the bank lets you live off the interest with a salary of $50k/year. Which is all

A few thoughts: 1. The rule of thumb I've always heard is that $2 million in the bank lets you live off the interest with a salary of $50k/year. Which is all that anyone really needs. $4 million for $100k/year, etc. These are the standard "I'm set for life" numbers, as long as you don't do silly things with your money. Which many many people do (trust fund kids, professional athletes). 2. Just because you can retire doesn't mean that you're going to retire. One of the ways I like to think about it is that an extra $50k/year from my investments can turn a $20k/year job into a $70k/year job. So now all of the sudden I can take all kinds of jobs that I wouldn't have considered doing in the past due to low salary. Plus you don't need the job, so you can walk away from stressful or unpleasant situations much more easily. 3. Personally, I think the remorse that I would feel if I had lost it all due a rogue wave would outweigh the remorse that I'd feel if I had sold the business "too early" and missed out on doubling my money.

elsewhen 17y ago
i greatly appreciate your point #3.. thank you.
- greendestiny 17y ago
  I'd think the exact specifics matter a lot with #3. Just how likely is it that something can swamp you? Do you have a lot left you want to do with this company or are you just waiting for growth? Because you sound a little passive about it which is probably dangerous.
  - elsewhen 17y ago
    I mentioned in the post that the risks are low, but difficult to precisely quantify. I think there were lots of businesses in the dot-com boom that did not foresee the crash coming. I worry that some similar crash (or something else) could be around the corner, even though its not clear now. As far as growing the company... we are more aggressive now than ever. Since I have already taken a good portion of money out of the company, I feel safe to plow a larger portion back into growth. In our space, to keep doubling requires constant and accelerating ramping-up.
    - greendestiny 17y ago
      I can see why it would be very hard to get out when you're growing so aggressively. I guess I'd just say the fantasy startups of the future are blessedly free of complications and unpleasant work and that isn't going to be the reality.
    - caffeine 17y ago
      I think you really need to think about what you actually want to do with your time. In other words - if running and growing this company is more fun/exciting than not doing so, then do it and take the associated financial risk. If you're sick of running the business, then get out. Once you have a feel for who you want to be in the next couple years (i.e. harried entrepreneur growing 200% vs. just minted), it'll be much easier for you to decide what you want to have. (In particular, if you have a good idea for your next company, then exit this one) My F-U-but-keep-working-for-money: 5 mm My F-U--seriously-F-U: 10 mm The difference: a large, aging family whose health I will wind up responsible for. An extra 5 mm goes a long way toward getting live-in nurses, drivers and bribes for hospital managers (this is not the US).
baddox 17y ago
I think your employer would find you to be a rather poor employee in that #2 situation.
- nkurz 17y ago
  No, I don't think so. Or at least it depends on the job. As an employer, I know that you are working there because you love what you are doing and don't want to be doing anything else. I don't have to worry that you'll move along as soon as someone offers you another $1.50 an hour. And in a startup, I know that if we hit a rough patch we can probably come up with a way to trade you equity for salary. For creative positions, I'd view financial independence as a positive.
- swombat 17y ago
  On the other hand, it means that you can be more positively disruptive when faced with a situation where someone else might not do anything (because they're afraid of losing their job). This can be a plus as well as a minus.
- bowman 17y ago
  Who says the OP would be an employee? A lot of fun though low paying jobs involve owning your own shop/bar. A second hand bookshop. A motorbike shop. A cafe doing X for the Y demographic etc.
nopassrecover 17y ago
Bear in mind that by living off the interest you are actually spending the amount that you receive to offset the devaluation of your savings. This is to say that while you might still have $2 million in 12 years time, it might only be equivalent to $1 million by current standards and that $50k per year will be more like $25k by today's standards.
- hnal943 17y ago
  That assumes inflation will more than double its current rate of roughly 3% to around 6.5%. That's not impossible, (especially with the way the current administration is spending money) but it would represent a major change of events from the current environment.

elsewhen 17y ago

i greatly appreciate your point #3.. thank you.

greendestiny 17y ago
I'd think the exact specifics matter a lot with #3. Just how likely is it that something can swamp you? Do you have a lot left you want to do with this company or are you just waiting for growth? Because you sound a little passive about it which is probably dangerous.
- elsewhen 17y ago
  I mentioned in the post that the risks are low, but difficult to precisely quantify. I think there were lots of businesses in the dot-com boom that did not foresee the crash coming. I worry that some similar crash (or something else) could be around the corner, even though its not clear now. As far as growing the company... we are more aggressive now than ever. Since I have already taken a good portion of money out of the company, I feel safe to plow a larger portion back into growth. In our space, to keep doubling requires constant and accelerating ramping-up.
  - greendestiny 17y ago
    I can see why it would be very hard to get out when you're growing so aggressively. I guess I'd just say the fantasy startups of the future are blessedly free of complications and unpleasant work and that isn't going to be the reality.
  - caffeine 17y ago
    I think you really need to think about what you actually want to do with your time. In other words - if running and growing this company is more fun/exciting than not doing so, then do it and take the associated financial risk. If you're sick of running the business, then get out. Once you have a feel for who you want to be in the next couple years (i.e. harried entrepreneur growing 200% vs. just minted), it'll be much easier for you to decide what you want to have. (In particular, if you have a good idea for your next company, then exit this one) My F-U-but-keep-working-for-money: 5 mm My F-U--seriously-F-U: 10 mm The difference: a large, aging family whose health I will wind up responsible for. An extra 5 mm goes a long way toward getting live-in nurses, drivers and bribes for hospital managers (this is not the US).

baddox 17y ago

I think your employer would find you to be a rather poor employee in that #2 situation.

nkurz 17y ago
No, I don't think so. Or at least it depends on the job. As an employer, I know that you are working there because you love what you are doing and don't want to be doing anything else. I don't have to worry that you'll move along as soon as someone offers you another $1.50 an hour. And in a startup, I know that if we hit a rough patch we can probably come up with a way to trade you equity for salary. For creative positions, I'd view financial independence as a positive.
swombat 17y ago
On the other hand, it means that you can be more positively disruptive when faced with a situation where someone else might not do anything (because they're afraid of losing their job). This can be a plus as well as a minus.
bowman 17y ago
Who says the OP would be an employee? A lot of fun though low paying jobs involve owning your own shop/bar. A second hand bookshop. A motorbike shop. A cafe doing X for the Y demographic etc.

nopassrecover 17y ago

Bear in mind that by living off the interest you are actually spending the amount that you receive to offset the devaluation of your savings. This is to say that while you might still have $2 million in 12 years time, it might only be equivalent to $1 million by current standards and that $50k per year will be more like $25k by today's standards.

hnal943 17y ago
That assumes inflation will more than double its current rate of roughly 3% to around 6.5%. That's not impossible, (especially with the way the current administration is spending money) but it would represent a major change of events from the current environment.