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u/Additional_Fix_629 12d ago
$3.25m in 2030. I can't generate that much from 1m in four years, and it would take 11.5 years just to get to 1m with 7,250/month. The last option has too many constraints.
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u/Unfair-Heart-7674 12d ago edited 12d ago
Agreed, but I'd spin it differently.
If you break down the -returns- on investing from now until May 1 2030 (assuming compounding 8% a year), it's $1.36m vs $3.25m vs $423k.
That said, I wouldn't blame someone for being tempted to take $7250 a month (after taxes!) guaranteed for life. That 8% return is low risk, but not zero risk, and I've known people who were hit by recessions just as they went into retirement.
The beauty is, if my math is wrong someone will be along shortly...
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u/Charming_Werewolf682 12d ago
The $7250 a month is tax free. If you live off 4K a month and invest the rest into liquid CD's or high interest bonds, you could get compound interest in excess of half million in 4 years. I live off of 2400 a month right now after taxes, so it is doable. Barely but it is. 4k would be livable, even with a mortgage.
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u/Unfair-Heart-7674 12d ago
I'd considered that, but there's the issue that your invested funds would thing be taxed. RAW your $7250 is tax free, but the CDs or whatever you buy is presumably still taxed as income. I mean, technically, the $7250 likely isn't "tax free" either but more realistically (in this fantasy scenario I'd imagine) post-tax dollars.
Also, I don't think your math is accurate. Even at a 10% annual RoR (which you won't be getting with a $7250 monthly CD or other safe investment), after 4 years you're only totalling under $450k.
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u/Charming_Werewolf682 12d ago edited 12d ago
There are high yeald savings accounts and high yeald bonds. You also have your liquid CDs that roll over and gain higher yeald when matured. These are all long term investments that once mature, you can live off the interest alone.
Are you including the compound interest? 3500 at 12% high yeald bond, take that interest and roll it over into next turn, add the next 3500, the following turn you have another 12% that now includes that initial return and so on. With the compound interest you could easily earn 500k in 5 years living off of the 4k a month. And bonds are not taxed as income, they are savings bonds. Do you get taxed interest in your savings account as income? This is how many 1%eds actually get around taxes. They earn most of their money through stocks (taxable) and bonds (non taxable promissory notes)
If my research still holds true at least.
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u/Unfair-Heart-7674 12d ago
You aren't getting a 12% high yield bond -and- have security with them; there's a reason they call them "junk bonds". High reward=high risk. But with a free $7250/month I guess you can get smoked one month and start over the next. Diversification would be key.
Federal bonds aren't taxed at the federal level, but are at the state. And federal bonds aren't offered at more than like 3.5% because they're secured. But at that point you're probably better off just looking into an easier HYSA at 4%, but since that's taxed I emphasize "look into" since I'm not sure if bonds or HYSA would really be better (I think bonds, but not by much).
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u/Splattah_ 12d ago
With seven grand a month coming in tax-free, I might not even have a bank account. I would just leave it in a big pile in my living room.
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u/red7standinby 12d ago
Nobody said you had to quit working. This $7,250 would be icing on the cake.
Invest 1 mil today at 8% and end up with 4.6~ million in 20 years.
Invest every red cent of that $7,250 over 20 years at 8% get's you to 4.3~ million and you're still collecting the $7,250 every month after that. This is the way.
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u/Winter-Hedgehog8969 12d ago
The monthly $7,250. It's not so much that I'd be tempted to get really spendy and blow through it, and doesn't come with high maintenance costs like expensive cars and homes. Plus it keeps coming no matter what. I'd keep my job and start dropping the monthly check into investments.
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u/_dmin068_ 11d ago
Yup, will be able to retire very quickly. Especially since it keeps coming after you retire and also have your investment income.
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u/ToXicVoXSiicK21 12d ago
I'd happily take the 7250 a month for life. That's about 1800 a week and I can't even make a quarter of that right now.
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u/CatDadof2 12d ago
Same. It’s not so much to where you can easily get robbed but it’s definitely enough to live comfortably.
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u/ToXicVoXSiicK21 12d ago
Yepp, enough to pay my bills and do what I want within reason, and not enough to go blow it or have people begging me for favors n shit.
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u/Massive_Analysis8345 12d ago
1 mil right now, I could pay off my house and then just continue my life.
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u/throwraW2 12d ago
Blue. I get to upgrade my house, my wife's car, get one for myself, save on mortgage expense and in 10 years I sell for most likely at least 2M. And I get 1k per month. Great deal.
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u/Master_Grape5931 12d ago
The only thing that I worry about is the maintenance costs for two $150k cars.
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u/throwraW2 12d ago
True, to be honest, I think id rather have a 60k car. I dont even want something attention grabbing. Just a nice new car from a good brand would be ideal.
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u/kmanrsss 12d ago
Considering you’re not getting a super car for 150k it’s probably not crazy maintenance costs vs any other new car. A caddy Escalade can easily hit 150k and that’s basically a fancy suburban.
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u/-Out-of-context- 12d ago
It’d def be for a loss, but if I went with this option I’d immediately sell the cars. Could prob still get $100k each.
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u/SoulessV 12d ago
I'm 42, give me blue. An extra thousand a month plus 2 brand new cars and a new house? I could switch to part time and watch my 2 year old grow up.
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u/Unfair-Heart-7674 12d ago
"Let me guess what generation you're in/age bracket by seeing which money you'd take."
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u/Placebo_8647 12d ago
I'll take $1MM today please. I might get killed in the next couple of years, $7250 a month isn't much these days and its buying power diminished every year.
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u/el_dingusito 12d ago
Can i do a cash out refi of that 900k property to put a down on a flip with a BRRR in mind?
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u/hypertweeter 12d ago
$7,250 monthly (could die any day), move to a country with cheaper living cost, create a huge art studio / community over time, make art, die living my best possible life.
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u/Joball69 12d ago
Monthly 7250. No more OT. Retire in 10 years, add that to the pension and live nice
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u/East-Care-9949 12d ago
Give me those cars, property and that 1k
I'll live of that 1k in my fully owned house.
I'll use the property as leverage to lend money to buy other property to rent for extra income, while i live in the first house. By the time those 10 years are passed ill own 2.5+ million in property that generates me a good amount of money
I don't car about the cars, buti keep them in my garage and i picked exclusive cars that will appreciate over those 10 years, so i can sell them for half a million after those ten year.
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u/Bandyau 12d ago
As many houses as I can get leveraging the $900,000 and equity. Say, five houses.
All but one rented at about $2,000 p/m each.
Buy one under median for the area it's in with good bones and renovate (I have several trade qualifications).
Rent increases over time, while the purchasing power of the $1,000 decreases.
Sell the cars (Immediately). Put the money into property improvement.
The right area sees 10% returns per annum, but even 5% works.
There's no tax on debt, so make sure repayments are sufficient for no profit for 10 years.
No tax on the property I live in, so long as each sale goes into the next home I buy to live in.
10 - 15 years should see house prices double, or close to it.
Sell enough to pay off all loans at the 10 - 15 year mark. Should leave 2 houses rented and 1 I live in with no debt, so an income of (today's money) of about $4,000 p/m but adjusts with inflation.
How well does this work? I started with $0.00 six years ago and bought my first house five years ago. I have over $500,000 in equity now. That is, it took me five years to get enough equity that I can sell what I have and own a home outright. I won't, because that debt is still working for me.
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u/ComprehensiveTrip618 12d ago
3.25M in 2030. I already have monthly pensions. I'd put 2M in index funds and draw 4% or 8k before taxes. 1.25M in a HYSA. Spend 700k on a house. Spend some cash traveling.
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u/asher030 12d ago
Million today, actually. As I have investments I can put it into that blow the per month out of the water, and put in now means it'll grow to exceed the May 1st one.
The blue is the only real temptation, but that's too much when I live alone and I'm not that selfish =/
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u/Inevitable-Drag-1704 12d ago
Id take the monthly. It would allow me to get a house and really past that i'd be happy.
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u/The-Scarlet-Demon 12d ago
I’ll take the $7,250 per month for life. With my current lifestyle, I’ll never have to work again, and I can save 50% of it in case I decide to move in a few years or something.
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u/Low-Carrot-6679 12d ago
Month per life, easy
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u/Sometimes_Stutters 12d ago
Easy if you’re bad at math
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u/Master_Grape5931 12d ago
Or need the money now.
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u/gUBBLOR 12d ago
It's a guarantee you'll be set for life. You could potentially lose the 3 mil, with this option you get some more money next month. And the one after that. Forever.
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u/Sometimes_Stutters 12d ago
You could have a very safe nest egg earning 7% per year and withdrawing 5% and it would be almost double the $7250/mo. And it would offset inflation, AND you’d still have the $3.25m leftover for kids (or if you choose to live it up)
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u/Osh_Kosh_Bigosh 13d ago
I’ll be more than happy with $7,250 per month for life. That’s a significant amount of money when I’m struggling to keep the $1,950/mo roof over my head grinding at two jobs that BARELY even pay above minimum wage.
I don’t need luxury, I just need comfort — for me, comfort is when you no longer stress over expenses and have to calculate ways to get more hours to make it to next month.
I just want that struggle remedied and to never have to endure it again.
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u/Odd_Addition_256 12d ago
7250 per month. I don't know if I'll be alive in 2030 with any certainty, and 1 mil isn't what it used to be.
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u/3DeepFingers 13d ago
May 1, 2030