What would you consider a large trust fund?

[Anonymous]

Anonymous wrote:I have a $5 million trust fund. It does spin off a couple of hundred thousand a year. But that money is not there to be spent. It is, as a pp noted, there for my children and their education some day. I think it is my obligation to continue working and providing for them. If I sat around and ate bonbons all day, there would be no real wealth left for my kids. So yes, having the trust fund is wonderful and I am very grateful. But it doesn't mean I can quit my job without basically cannibalizing my children's future.

Thanks (and good for you for being a good steward of the family money!) I invest almost entirely for growth and not current income, and yet the $750K I have invested still produced $24K in taxable income last year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:5M - you can live off the interest

If you're over 55 and have near zero expenses, maybe.

C'mon you can make a couple hundred thousand in income from 5 mill.

No you can't, at least not if you plan on living off it forever (ie, invest it fairly conservatively).
I know from experience.

Just because you couldn't figure out how to generate a 4% annual return, doesn't mean it's not possible. In fact, it's pretty easy even in today's low interest environment. The 5 second method? Close your eyes, put all $5M in VWLUX, and enjoy your low risk, tax-free, growth and distributions.

Thanks, very helpful.

- pp

Not that I'm complaining AT ALL (although losing my parents young wasn't a picnic), and FWIW I do consider myself "rich" (though you wouldn't know it to look at me), but $5m inherited in your mid thirties is not, in my opinion, enough to live on forever with no additional income (obviously depending on lifestyle - of course one COULD live on it). Responses in this thread indicate that people agree with me. My brother and I both continue to work (he inherited the same amount).

Not the PP that posted the 4% comment, but I am curious how you've invested and/or how conservatively you're living if you can't create a 4% annualized return on $5mm. Some % of that should be in equities which have delivered ~8% p.a. growth over the last decade, and super high-quality core fixed income has averaged nearly 5% p.a. in the last decade. So, even if the stock/bond mix was crazy conservative (say 25% stock, 75% bonds) the portfolio would have returned close to 6% p.a. for 10 years. That's nearly $300K per year without touching the $5mm corpus ... even after cap gains / interest taxes, the $ return should be well over $200K per year.

$200K per year for expenses that don't include building a retirement pool seems like a well-above 'conservative' standard of living. Which part of this math doesn't apply to your situation ... the return or the expenditures?

I have to look at my statements to see how much the return actually is. I would guess it's in the 200k range, if not higher (one brokerage house just sent me a statement with 7.8%). It's all reinvested though, so I don't see any of it (except the mandatory IRA distributions). My point isn't that I can't / don't GET a 4% return, it is that I don't consider this amount of inheritance enough to live on long-term. I have two very young children and there will be college and any other expenses they incur - I'm more comfortable living off of our salaries and the IRA / real estate fund distributions at this point in life. I think that's in line with what OP was asking.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:5M - you can live off the interest

If you're over 55 and have near zero expenses, maybe.

C'mon you can make a couple hundred thousand in income from 5 mill.

No you can't, at least not if you plan on living off it forever (ie, invest it fairly conservatively).
I know from experience.

Just because you couldn't figure out how to generate a 4% annual return, doesn't mean it's not possible. In fact, it's pretty easy even in today's low interest environment. The 5 second method? Close your eyes, put all $5M in VWLUX, and enjoy your low risk, tax-free, growth and distributions.

Thanks, very helpful.

- pp

Not that I'm complaining AT ALL (although losing my parents young wasn't a picnic), and FWIW I do consider myself "rich" (though you wouldn't know it to look at me), but $5m inherited in your mid thirties is not, in my opinion, enough to live on forever with no additional income (obviously depending on lifestyle - of course one COULD live on it). Responses in this thread indicate that people agree with me. My brother and I both continue to work (he inherited the same amount).

We're in our mid to late 40s with four million, and need another 1 to 2 million, plus all college expenses paid, before we can comfortably retire so you are right.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Not the PP that posted the 4% comment, but I am curious how you've invested and/or how conservatively you're living if you can't create a 4% annualized return on $5mm. Some % of that should be in equities which have delivered ~8% p.a. growth over the last decade, and super high-quality core fixed income has averaged nearly 5% p.a. in the last decade. So, even if the stock/bond mix was crazy conservative (say 25% stock, 75% bonds) the portfolio would have returned close to 6% p.a. for 10 years. That's nearly $300K per year without touching the $5mm corpus ... even after cap gains / interest taxes, the $ return should be well over $200K per year.

$200K per year for expenses that don't include building a retirement pool seems like a well-above 'conservative' standard of living. Which part of this math doesn't apply to your situation ... the return or the expenditures?

I need to be able to buy the occasional Porsche to enjoy during my retirement. That's tough to do on a $200k yearly income if I also want to travel, eat, discover the cause of the hubbub over wine and golf, and engage in a variety of other hobbies, past times, and impromptu merry making on my impulse, due to an abundance of free time.

I've decided with the missus that to achieve the above, along with consideration for all of her worldly wants and needs, we need $500k/year in today's dollars, growing with inflation or at least tracking with the price of a good pair of pants at Neiman Marcus.

Dying to know your 2014 HHI.

[Anonymous]

10 million

[Anonymous]

Anonymous wrote:

Anonymous wrote:
I need to be able to buy the occasional Porsche to enjoy during my retirement. That's tough to do on a $200k yearly income if I also want to travel, eat, discover the cause of the hubbub over wine and golf, and engage in a variety of other hobbies, past times, and impromptu merry making on my impulse, due to an abundance of free time.

I've decided with the missus that to achieve the above, along with consideration for all of her worldly wants and needs, we need $500k/year in today's dollars, growing with inflation or at least tracking with the price of a good pair of pants at Neiman Marcus.

Dying to know your 2014 HHI.

Just over a mil, not counting unrealized gains in properties and stocks. It's not as glamorous as the zeros would lead you to believe. I still have to staple papers together by myself and my kids use my desk as the landing pad for the quad copters they received for their after-Christmas-but-before-New-Years present.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
I need to be able to buy the occasional Porsche to enjoy during my retirement. That's tough to do on a $200k yearly income if I also want to travel, eat, discover the cause of the hubbub over wine and golf, and engage in a variety of other hobbies, past times, and impromptu merry making on my impulse, due to an abundance of free time.

I've decided with the missus that to achieve the above, along with consideration for all of her worldly wants and needs, we need $500k/year in today's dollars, growing with inflation or at least tracking with the price of a good pair of pants at Neiman Marcus.

Dying to know your 2014 HHI.

Just over a mil, not counting unrealized gains in properties and stocks. It's not as glamorous as the zeros would lead you to believe. I still have to staple papers together by myself and my kids use my desk as the landing pad for the quad copters they received for their after-Christmas-but-before-New-Years present.

I would like to offer you my page stapling services, and in return, can I hang with you when you retire?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
I need to be able to buy the occasional Porsche to enjoy during my retirement. That's tough to do on a $200k yearly income if I also want to travel, eat, discover the cause of the hubbub over wine and golf, and engage in a variety of other hobbies, past times, and impromptu merry making on my impulse, due to an abundance of free time.

I've decided with the missus that to achieve the above, along with consideration for all of her worldly wants and needs, we need $500k/year in today's dollars, growing with inflation or at least tracking with the price of a good pair of pants at Neiman Marcus.

Dying to know your 2014 HHI.

Just over a mil, not counting unrealized gains in properties and stocks. It's not as glamorous as the zeros would lead you to believe. I still have to staple papers together by myself and my kids use my desk as the landing pad for the quad copters they received for their after-Christmas-but-before-New-Years present.

Ok that's why you want at least 500K, gotcha.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
I need to be able to buy the occasional Porsche to enjoy during my retirement. That's tough to do on a $200k yearly income if I also want to travel, eat, discover the cause of the hubbub over wine and golf, and engage in a variety of other hobbies, past times, and impromptu merry making on my impulse, due to an abundance of free time.

I've decided with the missus that to achieve the above, along with consideration for all of her worldly wants and needs, we need $500k/year in today's dollars, growing with inflation or at least tracking with the price of a good pair of pants at Neiman Marcus.

Dying to know your 2014 HHI.

Just over a mil, not counting unrealized gains in properties and stocks. It's not as glamorous as the zeros would lead you to believe. I still have to staple papers together by myself and my kids use my desk as the landing pad for the quad copters they received for their after-Christmas-but-before-New-Years present.

I would like to offer you my page stapling services, and in return, can I hang with you when you retire?

Adding "loyal sidekick" to my list of retirement must-haves.

[Anonymous]

I think $5mm is about where the existence of the trust fund begins to meaningfully influence behavior and life choices for the beneficiary. I got $500K when I turned 25 and expect to get a couple $mm when my parents pass, for which I am definitely blessed and the $500K helped me get a house and start investing, but this amount doesn't make me pursue a life path I ordinarily wouldn't have.

I've also worked as an advisor to family offices with huge multigenerational wealth (close to a billion$ across all the generations and family branches), and while there are always a couple great grandkids that take their $2-$3mm and immediately blow through and die destitute, I didn't see much intent to 'live off the fund' until the awarded dollars were in the $5-$10mm range. Above $10mm almost no one ever took a job based on economic reasons (lots of museum curators and horticulturalists) and their lifestyle clearly reflected the existence of a perpetual support net.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Not the PP that posted the 4% comment, but I am curious how you've invested and/or how conservatively you're living if you can't create a 4% annualized return on $5mm. Some % of that should be in equities which have delivered ~8% p.a. growth over the last decade, and super high-quality core fixed income has averaged nearly 5% p.a. in the last decade. So, even if the stock/bond mix was crazy conservative (say 25% stock, 75% bonds) the portfolio would have returned close to 6% p.a. for 10 years. That's nearly $300K per year without touching the $5mm corpus ... even after cap gains / interest taxes, the $ return should be well over $200K per year.

$200K per year for expenses that don't include building a retirement pool seems like a well-above 'conservative' standard of living. Which part of this math doesn't apply to your situation ... the return or the expenditures?

I need to be able to buy the occasional Porsche to enjoy during my retirement. That's tough to do on a $200k yearly income if I also want to travel, eat, discover the cause of the hubbub over wine and golf, and engage in a variety of other hobbies, past times, and impromptu merry making on my impulse, due to an abundance of free time.

I've decided with the missus that to achieve the above, along with consideration for all of her worldly wants and needs, we need $500k/year in today's dollars, growing with inflation or at least tracking with the price of a good pair of pants at Neiman Marcus.

You are funny and seem nice. I like your writing style and whimsical nature you convey.
Do you need an assistant?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Not the PP that posted the 4% comment, but I am curious how you've invested and/or how conservatively you're living if you can't create a 4% annualized return on $5mm. Some % of that should be in equities which have delivered ~8% p.a. growth over the last decade, and super high-quality core fixed income has averaged nearly 5% p.a. in the last decade. So, even if the stock/bond mix was crazy conservative (say 25% stock, 75% bonds) the portfolio would have returned close to 6% p.a. for 10 years. That's nearly $300K per year without touching the $5mm corpus ... even after cap gains / interest taxes, the $ return should be well over $200K per year.

$200K per year for expenses that don't include building a retirement pool seems like a well-above 'conservative' standard of living. Which part of this math doesn't apply to your situation ... the return or the expenditures?

I need to be able to buy the occasional Porsche to enjoy during my retirement. That's tough to do on a $200k yearly income if I also want to travel, eat, discover the cause of the hubbub over wine and golf, and engage in a variety of other hobbies, past times, and impromptu merry making on my impulse, due to an abundance of free time.

I've decided with the missus that to achieve the above, along with consideration for all of her worldly wants and needs, we need $500k/year in today's dollars, growing with inflation or at least tracking with the price of a good pair of pants at Neiman Marcus.

You are funny and seem nice. I like your writing style and whimsical nature you convey.
Do you need an assistant?

Heh, thanks for the kind comments. I promise you this is my "highlight reel". I am not nearly this humorous from day to day.

[Anonymous]

Don't be nice, rich guy. It ruins our image. ?