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Posted: 4/28/2015 9:56:34 PM EDT
I'm a small time investor, I don't have near that amount of cash. A friend and I were having a hypothetical discussion and say you bought a penny stock for really cheap and the thing just took off and you sold all your shares and realized the gain. After taxes and whatnot you were sitting there with 5 million dollars. My friend says that amount of money would be "fuck you" money and you could quit your job and live off dividends (forget gains/losses) for the next 30 years (pending the market doesn't go belly up or any other doomsday craziness). I say it would be a nice retirement fund and you could retire say 10 years early, but far from just being able to quit your job and live off the dividends.
What says arfcom? |
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at 1% interest you should be making $50k a year (depending on compounding interest or not) minimum. I would take half though and invest it in something better, and live off the 2.5m. If you live within your means, yes, you can easily retire. If you spend like M.C. Hammer, you will be broke yesterday.
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You could put it in a mattress and live off 125k for 40 years.
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That's more than enough to retire off of, even in an expensive area - unless you have some serious expenses.
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If you had five million to invest and most people could retire. Even in today's world you can earn 3% pretty safely and that is 150k a year. I am invested conservatively and last year I was close to 20%. Do that with five million and woohoo you now have six million. The key word be keeping your spending in check and not living like you have five million. About ten years ago I went from making less than 50k to over 200k in one year. I was young and dumb and pissed it all away. I wish I would have kept living like I was making 50k.
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I'm certain I could retire on 1 million at my current age of 32. No problem. 10 year old vehicles and a small house vs a 9-5 glug glug glug fest. Pretty clear winner for me.
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Depends on your age and energy level. If I had $5mm I'd buy equity in a couple private businesses and just sit on the board and collect a dividend. Maybe buy a smaller business where I didn't have to actively manage it. Could make good money doing that and it would give me something to do. Would probably buy some farm land and do some planting. Really just depends on what opportunity you find and what you want to do. If you couldn't make at least $500k a year from a conservatively invested $5mm then I think you did something wrong. But on the other hand if you just want to put it in bonds and never worry about anything ever again then I guess you'd give up some earning potential. Either way, I'm 22 and if you gave me $5mm right now I know I'd never work as much as I do now and I'd make a lot more money. That's all I expect my retirement to be anyway, work less but work doing what I enjoy, have more freedom, make good money from some solid investments. So, yes, I'd 'retire' with $5mm right now. Actually, at this age I'd go for broke. Use the $5mm cash as a down payment on a $20mm business. Run it, grow it, be an active CEO for ten years then sell out, then scale back and have what I mentioned earlier.
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Anything beyond average mainstream stock and bond market returns takes intelligence and effort. People talk about how rich folks make better returns but it's not just because they have the money to do so. They have the money in the first place because they had the smarts and spent the effort to generate good returns.
This is why lottery winners go broke, even the ones who fancy themselves to be investors. It's also why generational private businesses have an increasingly higher failure rates as time goes by. You simply can't just be handed something and expect it to generate good returns by existing. There is no sitting back like Bruce Wayne and watching the world scramble to make your money work harder for you. That's just not how it works. The truth of the matter is that if you aren't smart and you aren't putting in the effort yourself, your most likely outcome is average or worse. |
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$5M? DNP Incom fund. $.065 per share each month. been doing it pretty consistently since 1989.
At today's price of $10.64, you could buy over 450000 shares and get about $30k/month in dividends. $360K/year, I think i'll be alright. This is assuming a $5M windfall situation. |
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$5M? DNP Incom fund. $.065 per share each month. been doing it pretty consistently since 1989. At today's price of $10.64, you could buy over 450000 shares and get about $30k/month in dividends. $360K/year, I think i'll be alright. This is assuming a $5M windfall situation. View Quote that seems pretty stable in price too, over the long haul I didn't see more than a dollar fluctuation. if I did my math right, it is like 7 percent interest? |
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that seems pretty stable in price too, over the long haul I didn't see more than a dollar fluctuation. if I did my math right, it is like 7 percent interest? View Quote View All Quotes View All Quotes Quoted:
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$5M? DNP Incom fund. $.065 per share each month. been doing it pretty consistently since 1989. At today's price of $10.64, you could buy over 450000 shares and get about $30k/month in dividends. $360K/year, I think i'll be alright. This is assuming a $5M windfall situation. that seems pretty stable in price too, over the long haul I didn't see more than a dollar fluctuation. if I did my math right, it is like 7 percent interest? Back in 2008, it hit between $5-$6, but everything tanked at that time, too. Yes, it is about 7% dividend right now. For full disclosure, I own some shares in my portfolio and have been getting the dividends every month like clockwork. |
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Buy some conbo of DIV SDIV & SPFF would make you 300k+ a year. Buyiing HYD would make you 250k tax free. Of course when interest rates go up you'll lose some principal.
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Interesting thoughts, thanks for sharing everyone. I do have a VERY small amount in a penny stock, probably no real chance of making anything significant, but you never know I guess. Most of my invested money is in mutual funds and blue chip dividend paying stocks.
I don't think if I hit some cash windfall though I'd invest it all in one place, I'd try to diversify and probably hire a financial planner. I also don't think i'd quit my job anytime soon, but it would be nice to have something in my back pocket to be like "i'm out" if they made me mad enough. |
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I could retire right now at 33 and make over 3 times my current salary on the interest of $5M and never touch the principle.
Yeah, I'd be ok with that. Buy a house on land and make my own hunting, fishing, and shooting fun land. |
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LoL..I guess it depends on life style, etc.
I know I only need 1500-1600 a month to live, have all my bills paid and be comfy. Some ppl have that alone in just their mortgage. |
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Interesting thoughts, thanks for sharing everyone. I do have a VERY small amount in a penny stock, probably no real chance of making anything significant, but you never know I guess. Most of my invested money is in mutual funds and blue chip dividend paying stocks. View Quote (Slightly) better odds than buying lotto tickets I suppose.. |
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(Slightly) better odds than buying lotto tickets I suppose.. View Quote View All Quotes View All Quotes Quoted:
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Interesting thoughts, thanks for sharing everyone. I do have a VERY small amount in a penny stock, probably no real chance of making anything significant, but you never know I guess. Most of my invested money is in mutual funds and blue chip dividend paying stocks. (Slightly) better odds than buying lotto tickets I suppose.. As a kid i won a online stock trading competition at school while playing along with my own money. It was a national competition with a lot of kids. I was feeling ballsy and threw a bunch of money on a tech penny stock i was convinced was going to be bought out by intel. I turned 1800ish into 20k trading that stock. Volume was so bad it took 4 days to be able to sell all of my shares. Never did that again but i was living high on the hog the summer i turned 16. I used it to buy cattle to run in a second pasture i leased and built a 30 x 36' shop for my lawn mowing equipment. Also bought a shitload of generic beer and chased loose women all summer. ![]() Luckily my economics teacher convinced me it was a fluke and i should stick to normal stocks after that. |
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(Slightly) better odds than buying lotto tickets I suppose.. View Quote View All Quotes View All Quotes Quoted:
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Interesting thoughts, thanks for sharing everyone. I do have a VERY small amount in a penny stock, probably no real chance of making anything significant, but you never know I guess. Most of my invested money is in mutual funds and blue chip dividend paying stocks. (Slightly) better odds than buying lotto tickets I suppose.. Oh yeah, I only have $50 into it, if it takes off I'll make a ton, but more than likely i'll lose $50. Not the end of the world. |
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You could buy 10 dividend stocks and make at least 165000. a year and never use the principal.
I would get some professional help if I had that "problem" |
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I would buy 20 rental properties. View Quote If you aren't going to buy rental properties with debt, what's the point? Every time I've ran the numbers, the rates of return are just too low for the risk and hassle when you are talking about leveraged rental property. You might as well be invested in a REIT at that point. My simplified example is as follows: Unleveraged $250,000 House $250,000 Equity $2,000 in monthly rent ($24k per year) 9.6% return on your money prior to taxes, maintenance, and vacancies. Leveraged $250,000 House $50,000 Equity $200,000 Note @ 5% Interest (-$10k per year) $2,000 in monthly rent ($24k per year) 28.0% return on your money prior to taxes, maintenance, and vacancies. No way in hell I'd suffer the anguish of dealing with renters for 9.6% tops considering the available alternatives whereas for 28%, you actually have a chance of being paid for your effort. I'd be interested to see the math from someone who owns paid off rental property to show me where I'm wrong. I don't spend that much time on my example but it's representative of my area. |
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If you aren't going to buy rental properties with debt, what's the point? Every time I've ran the numbers, the rates of return are just too low for the risk and hassle when you are talking about leveraged rental property. You might as well be invested in a REIT at that point. My simplified example is as follows: Unleveraged $250,000 House $250,000 Equity $2,000 in monthly rent ($24k per year) 9.6% return on your money prior to taxes, maintenance, and vacancies. Leveraged $250,000 House $50,000 Equity $200,000 Note @ 5% Interest (-$10k per year) $2,000 in monthly rent ($24k per year) 28.0% return on your money prior to taxes, maintenance, and vacancies. No way in hell I'd suffer the anguish of dealing with renters for 9.6% tops considering the available alternatives whereas for 28%, you actually have a chance of being paid for your effort. I'd be interested to see the math from someone who owns paid off rental property to show me where I'm wrong. I don't spend that much time on my example but it's representative of my area. View Quote View All Quotes View All Quotes Quoted:
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I would buy 20 rental properties. If you aren't going to buy rental properties with debt, what's the point? Every time I've ran the numbers, the rates of return are just too low for the risk and hassle when you are talking about leveraged rental property. You might as well be invested in a REIT at that point. My simplified example is as follows: Unleveraged $250,000 House $250,000 Equity $2,000 in monthly rent ($24k per year) 9.6% return on your money prior to taxes, maintenance, and vacancies. Leveraged $250,000 House $50,000 Equity $200,000 Note @ 5% Interest (-$10k per year) $2,000 in monthly rent ($24k per year) 28.0% return on your money prior to taxes, maintenance, and vacancies. No way in hell I'd suffer the anguish of dealing with renters for 9.6% tops considering the available alternatives whereas for 28%, you actually have a chance of being paid for your effort. I'd be interested to see the math from someone who owns paid off rental property to show me where I'm wrong. I don't spend that much time on my example but it's representative of my area. You've got the idea. I own a few multi unit properties ranging from duplexes to my biggest being a 5 plex. You can do 13 to 19 percent return after all expenses if you keep everything leveraged as much as you can. That leaves money to run a respectable operation and upgrade things over time. If you dont leverage you will run around 1 to 3 percent return which doesnt beat inflation. If you dont leverage you are pissing away money every single hour of every single day. You are almost certain to lose money unless you hit a housing boom and sell when its high. On paper i run 20 to 24 percent equity, every time i get to 23 or 24 percent i borrow more to remodel a unit or buy another. If i sold everything i think i have less than half that much equity in reality. Thats how rentals make money. |
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You've got the idea. I own a few multi unit properties ranging from duplexes to my biggest being a 5 plex. You can do 13 to 19 percent return after all expenses if you keep everything leveraged as much as you can. That leaves money to run a respectable operation and upgrade things over time. If you dont leverage you will run around 1 to 3 percent return which doesnt beat inflation. If you dont leverage you are pissing away money every single hour of every single day. You are almost certain to lose money unless you hit a housing boom and sell when its high. On paper i run 20 to 24 percent equity, every time i get to 23 or 24 percent i borrow more to remodel a unit or buy another. If i sold everything i think i have less than half that much equity in reality. Thats how rentals make money. View Quote View All Quotes View All Quotes Quoted:
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I would buy 20 rental properties. If you aren't going to buy rental properties with debt, what's the point? Every time I've ran the numbers, the rates of return are just too low for the risk and hassle when you are talking about leveraged rental property. You might as well be invested in a REIT at that point. My simplified example is as follows: Unleveraged $250,000 House $250,000 Equity $2,000 in monthly rent ($24k per year) 9.6% return on your money prior to taxes, maintenance, and vacancies. Leveraged $250,000 House $50,000 Equity $200,000 Note @ 5% Interest (-$10k per year) $2,000 in monthly rent ($24k per year) 28.0% return on your money prior to taxes, maintenance, and vacancies. No way in hell I'd suffer the anguish of dealing with renters for 9.6% tops considering the available alternatives whereas for 28%, you actually have a chance of being paid for your effort. I'd be interested to see the math from someone who owns paid off rental property to show me where I'm wrong. I don't spend that much time on my example but it's representative of my area. You've got the idea. I own a few multi unit properties ranging from duplexes to my biggest being a 5 plex. You can do 13 to 19 percent return after all expenses if you keep everything leveraged as much as you can. That leaves money to run a respectable operation and upgrade things over time. If you dont leverage you will run around 1 to 3 percent return which doesnt beat inflation. If you dont leverage you are pissing away money every single hour of every single day. You are almost certain to lose money unless you hit a housing boom and sell when its high. On paper i run 20 to 24 percent equity, every time i get to 23 or 24 percent i borrow more to remodel a unit or buy another. If i sold everything i think i have less than half that much equity in reality. Thats how rentals make money. How easy is it to take equity out of the property if its not your primary residence? I thought lenders frowned in that.. |
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Depends on your age and energy level. If I had $5mm I'd buy equity in a couple private businesses and just sit on the board and collect a dividend. Maybe buy a smaller business where I didn't have to actively manage it. Could make good money doing that and it would give me something to do. Would probably buy some farm land and do some planting. Really just depends on what opportunity you find and what you want to do. If you couldn't make at least $500k a year from a conservatively invested $5mm then I think you did something wrong. But on the other hand if you just want to put it in bonds and never worry about anything ever again then I guess you'd give up some earning potential. Either way, I'm 22 and if you gave me $5mm right now I know I'd never work as much as I do now and I'd make a lot more money. That's all I expect my retirement to be anyway, work less but work doing what I enjoy, have more freedom, make good money from some solid investments. So, yes, I'd 'retire' with $5mm right now. Actually, at this age I'd go for broke. Use the $5mm cash as a down payment on a $20mm business. Run it, grow it, be an active CEO for ten years then sell out, then scale back and have what I mentioned earlier. ![]() View Quote your plan is exactly my plan except the bolded section. If have already won the game, why get greedy. and possibly lose it all. grow a little slower and keep it all. |
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How easy is it to take equity out of the property if its not your primary residence? I thought lenders frowned in that.. View Quote View All Quotes View All Quotes Quoted:
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I would buy 20 rental properties. If you aren't going to buy rental properties with debt, what's the point? Every time I've ran the numbers, the rates of return are just too low for the risk and hassle when you are talking about leveraged rental property. You might as well be invested in a REIT at that point. My simplified example is as follows: Unleveraged $250,000 House $250,000 Equity $2,000 in monthly rent ($24k per year) 9.6% return on your money prior to taxes, maintenance, and vacancies. Leveraged $250,000 House $50,000 Equity $200,000 Note @ 5% Interest (-$10k per year) $2,000 in monthly rent ($24k per year) 28.0% return on your money prior to taxes, maintenance, and vacancies. No way in hell I'd suffer the anguish of dealing with renters for 9.6% tops considering the available alternatives whereas for 28%, you actually have a chance of being paid for your effort. I'd be interested to see the math from someone who owns paid off rental property to show me where I'm wrong. I don't spend that much time on my example but it's representative of my area. You've got the idea. I own a few multi unit properties ranging from duplexes to my biggest being a 5 plex. You can do 13 to 19 percent return after all expenses if you keep everything leveraged as much as you can. That leaves money to run a respectable operation and upgrade things over time. If you dont leverage you will run around 1 to 3 percent return which doesnt beat inflation. If you dont leverage you are pissing away money every single hour of every single day. You are almost certain to lose money unless you hit a housing boom and sell when its high. On paper i run 20 to 24 percent equity, every time i get to 23 or 24 percent i borrow more to remodel a unit or buy another. If i sold everything i think i have less than half that much equity in reality. Thats how rentals make money. How easy is it to take equity out of the property if its not your primary residence? I thought lenders frowned in that.. It can be tough. I dont understand banking much but it seems like it depends on the banks balance sheet and how bad they want to lend. They can make damn near anything work on paper if they want to get some money lent out. I have cattle, farmground, rentals and my house all tied together. Im not actually taking out equity like for a cash distribution, im just diluting equity by purchasing more. If the bank needs to scale back lending then they will stop giving you more and you have to switch banks which is very time consuming. The company i work for and owned stock in had to switch every 3 years because the bank would do that. I live in a small town and the almost weekly discussion at the town pub is a bunch of bitching from a different farmer or business owner every week, about how this bank or that bank wont lend them enough money to make it work. |
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If you aren't going to buy rental properties with debt, what's the point? Every time I've ran the numbers, the rates of return are just too low for the risk and hassle when you are talking about leveraged rental property. You might as well be invested in a REIT at that point. My simplified example is as follows: Unleveraged $250,000 House $250,000 Equity $2,000 in monthly rent ($24k per year) 9.6% return on your money prior to taxes, maintenance, and vacancies. Leveraged $250,000 House $50,000 Equity $200,000 Note @ 5% Interest (-$10k per year) $2,000 in monthly rent ($24k per year) 28.0% return on your money prior to taxes, maintenance, and vacancies. No way in hell I'd suffer the anguish of dealing with renters for 9.6% tops considering the available alternatives whereas for 28%, you actually have a chance of being paid for your effort. I'd be interested to see the math from someone who owns paid off rental property to show me where I'm wrong. I don't spend that much time on my example but it's representative of my area. View Quote View All Quotes View All Quotes Quoted:
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I would buy 20 rental properties. If you aren't going to buy rental properties with debt, what's the point? Every time I've ran the numbers, the rates of return are just too low for the risk and hassle when you are talking about leveraged rental property. You might as well be invested in a REIT at that point. My simplified example is as follows: Unleveraged $250,000 House $250,000 Equity $2,000 in monthly rent ($24k per year) 9.6% return on your money prior to taxes, maintenance, and vacancies. Leveraged $250,000 House $50,000 Equity $200,000 Note @ 5% Interest (-$10k per year) $2,000 in monthly rent ($24k per year) 28.0% return on your money prior to taxes, maintenance, and vacancies. No way in hell I'd suffer the anguish of dealing with renters for 9.6% tops considering the available alternatives whereas for 28%, you actually have a chance of being paid for your effort. I'd be interested to see the math from someone who owns paid off rental property to show me where I'm wrong. I don't spend that much time on my example but it's representative of my area. Rentals with cash makes sense when you only purchase properties at 60% to 70% of retail value on day one. I have done this twice. You make a "can close in a week with cash" offer that allows you to get a cheaper price. When you say "i'll close in a week with my bank" someone who needs money now just cannot put the same level of trust in that commitment and will therefore more often pass. Auctions are also easier. Once you rent the building out for 3 years you can sell it and pay long term capital gains instead of higher short term rates that flippers do. Paying full price for a rental and trying to make money on it is stupid. |
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You've got the idea. I own a few multi unit properties ranging from duplexes to my biggest being a 5 plex. You can do 13 to 19 percent return after all expenses if you keep everything leveraged as much as you can. That leaves money to run a respectable operation and upgrade things over time. If you dont leverage you will run around 1 to 3 percent return which doesnt beat inflation. If you dont leverage you are pissing away money every single hour of every single day. You are almost certain to lose money unless you hit a housing boom and sell when its high. On paper i run 20 to 24 percent equity, every time i get to 23 or 24 percent i borrow more to remodel a unit or buy another. If i sold everything i think i have less than half that much equity in reality. Thats how rentals make money. View Quote View All Quotes View All Quotes Quoted:
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I would buy 20 rental properties. If you aren't going to buy rental properties with debt, what's the point? Every time I've ran the numbers, the rates of return are just too low for the risk and hassle when you are talking about leveraged rental property. You might as well be invested in a REIT at that point. My simplified example is as follows: Unleveraged $250,000 House $250,000 Equity $2,000 in monthly rent ($24k per year) 9.6% return on your money prior to taxes, maintenance, and vacancies. Leveraged $250,000 House $50,000 Equity $200,000 Note @ 5% Interest (-$10k per year) $2,000 in monthly rent ($24k per year) 28.0% return on your money prior to taxes, maintenance, and vacancies. No way in hell I'd suffer the anguish of dealing with renters for 9.6% tops considering the available alternatives whereas for 28%, you actually have a chance of being paid for your effort. I'd be interested to see the math from someone who owns paid off rental property to show me where I'm wrong. I don't spend that much time on my example but it's representative of my area. You've got the idea. I own a few multi unit properties ranging from duplexes to my biggest being a 5 plex. You can do 13 to 19 percent return after all expenses if you keep everything leveraged as much as you can. That leaves money to run a respectable operation and upgrade things over time. If you dont leverage you will run around 1 to 3 percent return which doesnt beat inflation. If you dont leverage you are pissing away money every single hour of every single day. You are almost certain to lose money unless you hit a housing boom and sell when its high. On paper i run 20 to 24 percent equity, every time i get to 23 or 24 percent i borrow more to remodel a unit or buy another. If i sold everything i think i have less than half that much equity in reality. Thats how rentals make money. There it is. That's the post I was looking to see. I only came to this conclusion by mathing it, but not from actual experience so your post is relevant to my interests. |
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Rentals with cash makes sense when you only purchase properties at 60% to 70% of retail value on day one. I have done this twice. You make a "can close in a week with cash" offer that allows you to get a cheaper price. When you say "i'll close in a week with my bank" someone who needs money now just cannot put the same level of trust in that commitment and will therefore more often pass. Auctions are also easier. Once you rent the building out for 3 years you can sell it and pay long term capital gains instead of higher short term rates that flippers do. Paying full price for a rental and trying to make money on it is stupid. View Quote View All Quotes View All Quotes Quoted:
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I would buy 20 rental properties. If you aren't going to buy rental properties with debt, what's the point? Every time I've ran the numbers, the rates of return are just too low for the risk and hassle when you are talking about leveraged rental property. You might as well be invested in a REIT at that point. My simplified example is as follows: Unleveraged $250,000 House $250,000 Equity $2,000 in monthly rent ($24k per year) 9.6% return on your money prior to taxes, maintenance, and vacancies. Leveraged $250,000 House $50,000 Equity $200,000 Note @ 5% Interest (-$10k per year) $2,000 in monthly rent ($24k per year) 28.0% return on your money prior to taxes, maintenance, and vacancies. No way in hell I'd suffer the anguish of dealing with renters for 9.6% tops considering the available alternatives whereas for 28%, you actually have a chance of being paid for your effort. I'd be interested to see the math from someone who owns paid off rental property to show me where I'm wrong. I don't spend that much time on my example but it's representative of my area. Rentals with cash makes sense when you only purchase properties at 60% to 70% of retail value on day one. I have done this twice. You make a "can close in a week with cash" offer that allows you to get a cheaper price. When you say "i'll close in a week with my bank" someone who needs money now just cannot put the same level of trust in that commitment and will therefore more often pass. Auctions are also easier. Once you rent the building out for 3 years you can sell it and pay long term capital gains instead of higher short term rates that flippers do. Paying full price for a rental and trying to make money on it is stupid. This also makes sense. I can follow that train of thought. |
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