$7M vs $10M

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How do you make 7M? My HHI is not much so I have invested and saved but still only at 2M

Should I invest that more aggressively for the next 15 years of working

If you make an average of 7% over the next 15 years and don’t save another dime you’re at almost 6,000,000. Relax.

5.5M and ignoring real inflation

RE keeps up with inflation. Rental RE can return profits that can outperform conservative "safe" guaranteed type of market investments. I am surprised none of you have rental RE in your portfolio, is market really this much better?

Not really. Actually majority of my NW is in RE. I'm trying to diversify into equity market.

Early Retired Biglaw Partner here. I also have a rental property as well as an English basement apartment that I rent out. Combined they generate $6k a month.

Have you all had anything major go wrong yet? Rental properties are great until.... they aren't, even if you go the property manager route.

+1

Personally don't have the guts to be a landlord. Too much can go wrong and end up costing you. Fact is tenants rarely take care of home as well as you would.
We did rent our condo for 5 years, but it was to good friends. So we knew they would take excellent care of it, and we also planned to gut it and renovate before we moved in at the end of the lease. But no way do I want to rent to someone I don't know. In our condo building, there was a renter who got pissed at multiple noise complaints and fines against them, so they turned on several faucets and closed the drains and left....they were on the 20th floor and caused major damages to at least 6 units. This is in a luxury building, one of the top 5 buildings in our city--rent for that was over $5K, so typically you'd think someone paying that would be less likely to be destructive. Oh and the tenant was a doctor, so someone that you would vet and never think twice about them going crazy and doing something as destructive as this. Yet, the owner had to along with their insurance and the HOA insurance sue the tenant for the $100k's+++++ in damages---I think it was well over $600K in damages and that was 10 years ago.

I'd rather just invest in real estate passively

Retired partner guy here. I don’t disagree with this. I have no interest in being a professional landlord. The basement is easy and we’d be crazy not to rent it (rent more than covers the mortgage) and we bought the duplex to help out a family member so there’s a relationship there.

Having said that, we’ve had success with prior rentals as well. We rented out a nice 1BR condo in Dupont for years and never had a problem. Condos are easier because they require less upkeep than houses, and higher end one commanding higher rent tend to attract tenants who take care of the place.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It really depends on your level of spending and comfort with uncertainty. For me, the difference between those numbers is the security of being able to cover my mother’s elder care and potentially my own if I live as long as she has. I’m 58 and could easily live another 40 years. The $250,000 the $7M generates is before taxes and inflation. Yes, I will certainly tap principal at some point, but still, $250,000 30-some years from now will not be a fortune. It’s crazy and cruel what decent elder care costs.

I understand. The $7M is not static, its invested in a diversified portfolio, probably yield about 3.3% plus capital appreciation in the market near S&P 500 returns. Back to my point $7M or $10M today is really immaterial. If you don't have the skill set or a financial manager to tend to this sum it is pointless. As far as elder care, my plan is to stay at home and bring in hourly workers. Much cheaper than going into a specialized care facility. You can make it complicated if you wish.

bringing in hourly workers for elder care is not cheaper than a facility. Get yourself into a CCRC by early to mid 70s, then you are covered for much less

I would rather blow my head off than go into a CCRC in my mid 70s - particularly if i have $10M liquid. I'll pay for in-home care, if/when I need it.

If your 58 today and have $10M and don't touch it, that 10M will be easily 25M + by the time you're in your late 70s. That would throw off safely $1M of cash flow, and you could spend more if needed considering at that point in time (if you need care) your life expectancy won't be too long.

+1. One of my aha moments was when I went to visit my colleague's grandfather who was at an elder care facility back in the mid '90s. We were traveling on work and the grandpa happened to be in the city we were traveling to. My colleague praised his grandpa and how he sponsors an annual cruise vacation for the extended family (20+ people), etc. When I asked why one of the kids or grandkids were not taking care or grandpa, he just laughed and said 'no f'ing way!'. The facility itself was nice, high-end but depressing. Where I come from, there are no eldercare facilities. Your family is it. Yep.. No way, I want my end of days to be in one of those places.

CcRC are not your typical elder care facility. These are ones you pay 400k+ to even enter into a regular condo/house. The memory care, assisted living and healthcare facilities an are typically 1000x better than what you are imagining. Hence why some pay close to a million entry fee.
But for that you are never charged more for the higher levels of care

But why? When you are elderly to require care you are either disabled to take care of yourself but sharp of mind or you are mentally not there with various levels of dementia. In the former case you would always prefer to have some worker come in to do cleaning, cooking, maybe light nursing assistance and live at home unless you are severely disabled. In the latter case.. depending on how "not there" you will be: would you even notice if you are in 400K a year facility or in a less expensive one or a government subsidized one? You are brain dead. I would just request to be euthanized...

Is it really worth it having to grind for the rest of your still healthy younger years to wait to live until your body starts giving out in hopes of being taking care of when you are a vegetable and have zero QOL anyway?

You are not "brain dead" just because you require assisted living or memory care. I have a relative who has been in "memory care" for over 2 years now and I still have meaningful Facetimes/phone calls weekly with them, 95% of the time. As long as their meds are well managed they are still doing well. This person reads books, does puzzles and plays games all the time. Yes there are people with more advanced issues in the memory care, but my relative is still definately in a position of "life is worth living" and aware of their surroundings and family. And this is after 2 years there. If anything, they are doing better in the full time care as they know there is 24 hour excellent care and they get to interact with more people which is good for them. But they did not feel "safe" at home with their memory issues, so for them it's actually better to be under the full time care and much more cost effective than care at home.

What happens to poor people who require memory care? I don't see them dying on the streets, wandering around or burning their apartments down en masse.

Medicaid nursing home.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't think I'd have any lifestyle change between those two numbers. At $25M I think I'd start incorporating a few stupid-rich things, like chartering planes for travel. But at those numbers I'd be retired, relaxed, and still focusing on preservation.

Really? I'm going to reach that net worth in a few years, the way my portfolio is going, and there's no way I'd charter a plane, unless to get somewhere a commercial route can't go. I just want a normal middle class life, and preserve wealth for my descendants.

If you are close to $25 million, the words normal middle class do not describe you

They do, and this what a lot of people don't understand. I have a middle class income. Income and assets can be VERY different things. I happen to have lucked out in my stock portfolio, but that doesn't make my job high-earning. And since I'm still quite young, there is no way I'm quitting my life to gobble up my capital. I have kids to put through college, parents to look out for and spending on luxury just isn't my thing. Maybe I will re-evaluate when my kids are finished with college. But certainly not now.

I think you some of you, who probably all out-earn me, just don't quite understand what it's like to actually have 10M+ in a stock portfolio in your early 40s. It's not "Woohoo! Free money! Let's spend it". It's "Hmm, OK. My oldest's college is 85K a year. My father has dementia. Let's wait and see."

I get what you are saying, but normal middle class can’t fund $85000 a year for their child’s college.

$1Mx2 for super premium college and grad school for 2 kids, $2M for a decade of premium memory care, for dad, another $2 for self and spouse, $2M x2 for a modest house for each kids to inherit, and boom, $10M gone. Middle class can't make it in this country. The pandemic* hit us hard.


*affluenza pandemic

This kind of silly analysis always makes it apparent that the poster doesnt have wealth and doesnt understand how wealth works. Those events transpire over time and you pay incrementally, not boom and the money is gone. If the wealth generates the cash flow to make monthly or quarterly payments toward mortgages or college or care then the capital stays intact or maybe grows or slightly erodes until the draw lessens and then it grows again. And the two million each for a decade of memory care each made mw laugh out loud... i'm picturing two grown paid off college PhD kids each with their own $2 million paid off homes coming to visit finally broke mom and dad who don't remeber the kids or themselves 10 years into care... and the kids signing the memory care eviction papers before they drop mom and dad off to live in a tent on skid row.

[Anonymous]

Anonymous wrote:I retired at 53 with a 4.5 million net worth. Nine years later my net worth is 7.5 million and I’m living large. But hey you all keep telling yourselves that ain’t enough money. It’s cool - you’ll live forever I’m sure. Have fun with all your money sitting around in diapers in your 80s and 90s!

4% rule?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't think I'd have any lifestyle change between those two numbers. At $25M I think I'd start incorporating a few stupid-rich things, like chartering planes for travel. But at those numbers I'd be retired, relaxed, and still focusing on preservation.

Really? I'm going to reach that net worth in a few years, the way my portfolio is going, and there's no way I'd charter a plane, unless to get somewhere a commercial route can't go. I just want a normal middle class life, and preserve wealth for my descendants.

If you are close to $25 million, the words normal middle class do not describe you

They do, and this what a lot of people don't understand. I have a middle class income. Income and assets can be VERY different things. I happen to have lucked out in my stock portfolio, but that doesn't make my job high-earning. And since I'm still quite young, there is no way I'm quitting my life to gobble up my capital. I have kids to put through college, parents to look out for and spending on luxury just isn't my thing. Maybe I will re-evaluate when my kids are finished with college. But certainly not now.

I think you some of you, who probably all out-earn me, just don't quite understand what it's like to actually have 10M+ in a stock portfolio in your early 40s. It's not "Woohoo! Free money! Let's spend it". It's "Hmm, OK. My oldest's college is 85K a year. My father has dementia. Let's wait and see."

I get what you are saying, but normal middle class can’t fund $85000 a year for their child’s college.

$1Mx2 for super premium college and grad school for 2 kids, $2M for a decade of premium memory care, for dad, another $2 for self and spouse, $2M x2 for a modest house for each kids to inherit, and boom, $10M gone. Middle class can't make it in this country. The pandemic* hit us hard.


*affluenza pandemic

This kind of silly analysis always makes it apparent that the poster doesnt have wealth and doesnt understand how wealth works. Those events transpire over time and you pay incrementally, not boom and the money is gone. If the wealth generates the cash flow to make monthly or quarterly payments toward mortgages or college or care then the capital stays intact or maybe grows or slightly erodes until the draw lessens and then it grows again. And the two million each for a decade of memory care each made mw laugh out loud... i'm picturing two grown paid off college PhD kids each with their own $2 million paid off homes coming to visit finally broke mom and dad who don't remeber the kids or themselves 10 years into care... and the kids signing the memory care eviction papers before they drop mom and dad off to live in a tent on skid row.

This is so true. When I had to move my mom to memory care I was given a huge wake-up call with the sticker shock. $13k a month to start that will pretty much guarantee to increase. Her financial guy laughed at my when I expressed concerns about her outliving her money. Even with the extra money coming out she’s still making more money with her investments. Her principal has grown.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't think I'd have any lifestyle change between those two numbers. At $25M I think I'd start incorporating a few stupid-rich things, like chartering planes for travel. But at those numbers I'd be retired, relaxed, and still focusing on preservation.

Really? I'm going to reach that net worth in a few years, the way my portfolio is going, and there's no way I'd charter a plane, unless to get somewhere a commercial route can't go. I just want a normal middle class life, and preserve wealth for my descendants.

If you are close to $25 million, the words normal middle class do not describe you

They do, and this what a lot of people don't understand. I have a middle class income. Income and assets can be VERY different things. I happen to have lucked out in my stock portfolio, but that doesn't make my job high-earning. And since I'm still quite young, there is no way I'm quitting my life to gobble up my capital. I have kids to put through college, parents to look out for and spending on luxury just isn't my thing. Maybe I will re-evaluate when my kids are finished with college. But certainly not now.

I think you some of you, who probably all out-earn me, just don't quite understand what it's like to actually have 10M+ in a stock portfolio in your early 40s. It's not "Woohoo! Free money! Let's spend it". It's "Hmm, OK. My oldest's college is 85K a year. My father has dementia. Let's wait and see."

I get what you are saying, but normal middle class can’t fund $85000 a year for their child’s college.

$1Mx2 for super premium college and grad school for 2 kids, $2M for a decade of premium memory care, for dad, another $2 for self and spouse, $2M x2 for a modest house for each kids to inherit, and boom, $10M gone. Middle class can't make it in this country. The pandemic* hit us hard.


*affluenza pandemic

This kind of silly analysis always makes it apparent that the poster doesnt have wealth and doesnt understand how wealth works. Those events transpire over time and you pay incrementally, not boom and the money is gone. If the wealth generates the cash flow to make monthly or quarterly payments toward mortgages or college or care then the capital stays intact or maybe grows or slightly erodes until the draw lessens and then it grows again. And the two million each for a decade of memory care each made mw laugh out loud... i'm picturing two grown paid off college PhD kids each with their own $2 million paid off homes coming to visit finally broke mom and dad who don't remeber the kids or themselves 10 years into care... and the kids signing the memory care eviction papers before they drop mom and dad off to live in a tent on skid row.

This is so true. When I had to move my mom to memory care I was given a huge wake-up call with the sticker shock. $13k a month to start that will pretty much guarantee to increase. Her financial guy laughed at my when I expressed concerns about her outliving her money. Even with the extra money coming out she’s still making more money with her investments. Her principal has grown.

Also $2 million "modest house".

[Anonymous]

Anonymous wrote:

Anonymous wrote:I retired at 53 with a 4.5 million net worth. Nine years later my net worth is 7.5 million and I’m living large. But hey you all keep telling yourselves that ain’t enough money. It’s cool - you’ll live forever I’m sure. Have fun with all your money sitting around in diapers in your 80s and 90s!

4% rule?

Not strictly following it, no.

[Anonymous]

What portfolio structure yields 3% without sacrificing capital appreciation? Our portfolio is yielding 1.8%