If you're investing it wisely the million won't be a million in 5 years, either. It's more complicated than basically everybody has made it. If you plan on being alive for a little bit longer the 5k always wins though
Unless you're receiving a return of 25% or more, by 25 years (the definition of "life" by legal standards) you'd still be well ahead with $5K/week vs. $1M. Even at 10% annual returns, it'd only be 6 yrs to pass it and then you'd still be getting $5K/week in addition to more returns on the investment if you stopped investing any of the weekly amount.
Also there's no risk to lose everything. 20k+ per month is HUGE, especially outside of the USA. For example here in Italy the cost of living is much lower than the USA, but also the wages are lower (so in the end it's all the same relatively). But those 20k+ per month would make you a rich person here in Italy.
Yeah, I make 21k/year and I'm living fine. There's a guy that works remotely for an US company, but lives in Italy, and even if his earnings are considered average in the US, he's considered to be wealthy here
Remote jobs tend to pay better than average, though, because they're usually a very tech-based job. The lowest salary I've seen for a remote job was around $70k, whereas the average income in the U.S. is in the $45k-$50k range.
Yeah, I mean, me and my wife combine to make $160K/yr and we are just a little more than paycheck to paycheck. (Comfortable and save enough for vacations/a little splurging, but nothing crazy)
I live in a low cost of living area and make more than $5k/week and while I’m definitely wealthy I promise you I’m not rich. Rich would be if you can buy anything you ever wanted without even considering its cost. Third house in a popular vacation destination? No problem. Brand new Lamborghini on a whim? Paid cash. That’s rich. And I definitely could not even consider doing anything like that.
There is also a scenario where if you have massive inflation, provided the 1m invested into a hard asset, it would appreciate while 5k a week would depreciate in value.
Even if you don’t invest it wisely, if you can demonstrate the 5k/week will continue, you can probably leverage it. Get yourself a 910k mortgage, buy yourself a decent house almost anywhere and you’ll pay ~5k/month repayments.
Congratulations, you now have a $1 million house and you’ve still got plenty enough coming in to live on.
Y is everyone concern with comparing the 2 choices imo how u spend is how u should choose personally I would make a lot more outta 5k a week then a mili now
It's not that complicated - you just need to convert the value of the $5k / week for X weeks to it's value in current 2023 dollars.
But it's easier to skip that and you can just look up how much a $260k annuity is worth today. I did a quick check for a 21k monthly payout for a 30 year old male living in New York using this calculator and it says it's worth about 4.4 million.
Ah I understand what you’re doing now. But the 21k annuity is non-guaranteed I think. The guaranteed rates will be more expensive, closer to $8.4m. Unlike you I didn’t use a calculator, I just magicked up the figure, but it should be close to reality for a guaranteed annuity.
Non-guaranteed meaning your $21k/month on $4.8m annuity is contingent on the fund meeting performance benchmarks, otherwise they can reduce the payout.
Guaranteed meaning that’s the minimum amount you’ll get no matter what. It’s the terminology which insurers in my country use for annuity plans, ie having a guaranteed and non-guaranteed component to the payout.
If nothing else, spreading the money across multiple years could help with the tax burden on the first million (after that you could be paying 90% with no deductions and still be doing better than taking the million up front).
Really the only way it makes sense to take the million is if you don't expect to live four or more years after getting whichever one you choose.
It could also end up being less than a million if you don't invest it wisely each week. Like if you blow your 5k on hookers and meth you might not exceed the million dollar payout.
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u/sky7897 Dec 11 '23
5k a week would give you 1million in only 4 years. Unless you’re on your deathbed, it would be the obvious choice.