Family blows $10M windfall in 10yrs

[Vic Vega]

All I can say is that I must be an "I can't" guy as I can't see the average US household, which makes less than $60,000, saving $57,000+ per year and getting a full 10% from it because they "want to".

So, all that I can conclude that the people who subscribe to this mean something other than "average US" and must mean "average ATOT" or something like that. This is not to mention that if every "average" US household tried (i.e. wanted to), the economy would tank like a rock and they would all end up more poor than when they started, but that's another thread.

You're definitely an I can't guy, because you assume these average people, who start out average, won't increase their income to meet the goal. Yes, you're an I can't guy.

No one gets rich by being average. But, like I said, an average family can increase their wealth if they choose to. Most won't.

 

[dullard]

Word.

The advice given by wealth-managers for the wealthy has always traditionally been that your annual expenditure should be less than 1% of your wealth.

This way, in sensible investments, your wealth should be able to exhibit capital growth (to keep up with inflation), allowing you to maintain your 'disposable income' at a consistent standard of living for as long as you live (while still enabling you to leave a legacy to your children).

The lifestyle in the OP really needed at least $100 million to fund it.

4% is a much more realistic number than 1%. Heck, with today's low interest rates, you can easilly find 1% in a savings account. True investments return more, and thus they can spend more.

4% still gives that family $400k/year (before capital gains tax) to spend. No one should have any trouble with that income. Unless they pretend they were able to spend $2M/year like they did.

 

[Engineer]

You're definitely an I can't guy, because you assume these average people, who start out average, won't increase their income to meet the goal. Yes, you're an I can't guy.

No one gets rich by being average. But, like I said, an average family can increase their wealth if they choose to. Most won't.

You must think that everyone can also get the magical 10+% on investments also. While I applaud you and your wife (I assume no kids) for doing what you are doing and having a plan, I just don't see how it is possible to take an "average US" household with 60k and, after taxes, save 57k not to mention get a full 10% (10%%%%%%%) return. Even if they move up in rank and pay, most average families have kids which aren't free. Again, your definition of average must be significantly different than the rest of the US statistical services.

Also, your real name must be Tony Robbins. :biggrin:

By the way, I bolded the above part because I do appreciate your own plan and enthusiasm on achieving it.

 

[Vic Vega]

4% is a much more realistic number than 1%. Heck, with today's low interest rates, you can easilly find 1% in a savings account. True investments return more, and thus they can spend more.

4% still gives that family $400k/year (before capital gains tax) to spend. No one should have any trouble with that income. Unless they pretend they were able to spend $2M/year like they did.

Agreed. People go crazy though. They were poor with money before winning and they will continue to be poor with it after winning.

 

[Vic Vega]

You must think that everyone can also get the magical 10+% on investments also. While I applaud you and your wife (I assume no kids) for doing what you are doing and having a plan, I just don't see how it is possible to take an "average US" household with 60k and, after taxes, save 57k not to mention get a full 10% (10%%%%%%%) return. Even if they move up in rank and pay, most average families have kids which aren't free. Again, your definition of average must be significantly different than the rest of the US statistical services.

Also, your real name must be Tony Robbins. :biggrin:

By the way, I bolded the above part because I do appreciate your own plan and enthusiasm on achieving it.

Yes, we have kids, we're older than you think, though I have yet to mention my age because it's not relevant. The biggest expense you will have with your kids is schooling them.

Again, you keep going back to the salary. Like I said, average people can do it, you assume they won't increase their income as well change their spending and saving habbits and become above average. You count them out before they even start. I don't.

You can't stay average and become wealthy. I think you're missing the point.

 

[GasX]

If I ever came into that kind of money the first thing I'd do is hire a financial adviser to make it last the rest of my life. It's astounding that people would want to work so hard to impoverish themselves when they can live a life of ease.

Buy a $500,000 house and put the rest of it in a ladder of tax free bonds. If you can't live on $250,000 tax free with no mortgage, you've got issues.

 

[Engineer]

You can't stay average and become wealthy. I think you're missing the point.

Actually, you can, it just takes longer (with discipline).

Edit: Actually, I change that. You can't as the "average" person cannot (this I agree on).

By the way, I suspect that you did ride a big wave of market booms from the 80's through 2000 which gives you a big advantage. I wonder if such a boom will come along again in the next few decades seeing how the market is gong sideways (and looking at the market after such large recessions/depressions over history, not to mention historical deficits and other world factors that effect the markets).

 

[sandorski]

And you attribute winning in a random draw to the fact that you had a number system?

Not really, but that's what happened while I tried it. The thing was that when I used the system I began playing each draw(2/week), whereas I played sporadically before. That and luck probably had more to do with it.

 

[Mark R]

4% is a much more realistic number than 1%. Heck, with today's low interest rates, you can easilly find 1% in a savings account. True investments return more, and thus they can spend more.

4% still gives that family $400k/year (before capital gains tax) to spend. No one should have any trouble with that income. Unless they pretend they were able to spend $2M/year like they did.

But that's the point. If inflation is 3%, and your investments are returning 4% (which would require investments in the medium risk group), then you can only spend 1% - as the 3% would need to be reinvested in order to maintain the purchasing power of your wealth fund. After taxes, your investments would really need to be achieving close to 8% in order for you to have a 1% perpetual index-linked income.

If you want invest in low-risk investments which have inflation protection (e.g. Treasury TIPS), then expect to get 'interest rates' in the region of -0.5%!. Even tying your money up in TIPS for 10 years only gets you 0.7% in 'real' income.

 

[alkemyst]

Oh, and to alkemyst, Vic never said that he and his wife were going to make $16,000,000 in 10 years. He stated that by the time they were 55, which is quite possible if both started saving early and had sizable incomes, not to mention if they rode a huge stock market boom from the mid 80's through 2000 to start with.

Are you fucking serious? Where do you guys get this crap?

To have $16 million by 55 assuming he has 30 years to get there and is making 10% per year on his money would require savings of $6,000 per month starting at 25. Waiting until 35 much more...

Yes it is possible, but not how this is being stated as 'because I have discipline'. He already stated he and his wife were making less than six figures but saving an entire paycheck, netting $6000 to savings would take pretty close to $100,000 a year in income.

I am sure he has some secret sauce formula though and I have no idea where the $16million figure comes from.

 

[Jumpem]

Why do people think they need so much to retire? At that point your house and debts should be paid off, and your monthly expenses should be $2-3k.

I'm aiming for a million or so by retirement. I'm just starting out, and more concerned about the short term (paying off student loans and the mortgage) for now. I'll put a lot more thought, and money, towards retirment in my late thirties.

 

[Engineer]

Are you fucking serious? Where do you guys get this crap?

To have $16 million by 55 assuming he has 30 years to get there and is making 10% per year on his money would require savings of $6,000 per month starting at 25. Waiting until 35 much more...

Yes it is possible, but not how this is being stated as 'because I have discipline'. He already stated he and his wife were making less than six figures but saving an entire paycheck, netting $6000 to savings would take pretty close to $100,000 a year in income.

I am sure he has some secret sauce formula though and I have no idea where the $16million figure comes from.

Hmmm....I thought I had ran the numbers but I might have been wrong. Seemed like it was a much lower amount but that wasn't what I was interested in when running the numbers, I was more interested in figuring out how the average person could invest far more than they make (not including taxes, expenses, etc) and make $1 million over 10 years.

 

[alkemyst]

Hmmm....I thought I had ran the numbers but I might have been wrong. Seemed like it was a much lower amount but that wasn't what I was interested in when running the numbers, I was more interested in figuring out how the average person could invest far more than they make (not including taxes, expenses, etc) and make $1 million over 10 years.

Well to make $1million in 10 it's about the same as $16million in 30.

You'd need about $6000 per month and be yielding 10% per year.

 

[alkemyst]

Why do people think they need so much to retire? At that point your house and debts should be paid off, and your monthly expenses should be $2-3k.

I'm aiming for a million or so by retirement. I'm just starting out, and more concerned about the short term (paying off student loans and the mortgage) for now. I'll put a lot more thought, and money, towards retirment in my late thirties.

For most taxes and insurance are going to be much more than the $500 or so a month the average spends on them...so even if you own your house free and clear, it's usually going to be an older home and things like the roof, appliances and the like will start needing to be replaced. Cars don't last forever, etc.

Again though it's what your version of retirement is. Many want at least the income level they had for most of their life, not less.

 

[Jumpem]

For most taxes and insurance are going to be much more than the $500 or so a month the average spends on them...so even if you own your house free and clear, it's usually going to be an older home and things like the roof, appliances and the like will start needing to be replaced. Cars don't last forever, etc.

Again though it's what your version of retirement is. Many want at least the income level they had for most of their life, not less.

The figures I gave accounted for always having a single modest car payment, and cover the taxes and upkeep for a home. It would be nice to have more to spend, sure. But it's not needed to be comofrtable.

Your expenses should be way down in retirement from most of your working life. The mortgage will be gone, kids will be grown, etc.

 

[angry hampster]

I think buying the yellow Aston Martin is fine, but the fact that he bought all those fucking horses is stupid. Who the fuck cares about horses? Fucking idiots...

I want this money.

To be fair, if the guy had bred the horse quite a bit, it could have paid for itself and more.

 

[alkemyst]

The figures I gave accounted for always having a single modest car payment, and cover the taxes and upkeep for a home. It would be nice to have more to spend, sure. But it's not needed to be comofrtable.

Your expenses should be way down in retirement from most of your working life. The mortgage will be gone, kids will be grown, etc.

$2-3k a month will not go far in 20-25 years.


Yes you could live, but it's not going to be a nice retirement. How much do you think insurance is going to be?

You going to go without cable TV, internet, cell phone, going anywhere?

 

[Jumpem]

$2-3k a month will not go far in 20-25 years.


Yes you could live, but it's not going to be a nice retirement. How much do you think insurance is going to be?

You going to go without cable TV, internet, cell phone, going anywhere?

Well the figures were in today's dollars. With the itmes you mentioned.

I guess I need to account for inflation. But like I said earlier, I don't think much about it at this point. I just put 10% into a 401k and forget about it. I'm more concerned with short term survival and being prepared for potiential job loss. So I worry about building liquid savings, and paying off student loans and the mortgage.

 

[Engineer]

Well the figures were in today's dollars. With the itmes you mentioned.

I guess I need to account for inflation. But like I said earlier, I don't think much about it at this point. I just put 10% into a 401k and forget about it. I'm more concerned with short term survival and being prepared for potiential job loss. So I worry about building liquid savings, and paying off student loans and the mortgage.

Account for inflation but also for some deflation:

Kids will be out of the house (hopefully) which will lead to somewhat lower:

Food costs
Energy costs
Insurance (especially car) costs
Fuel (gasoline) costs
Education costs
Cleaning costs
Phone costs
Clothing costs
Entertainment costs
(damn, kids are expensive)
etc, etc, etc.

Hell, might even downsize the house and decrease costs that way.

These may not be enough to overcome inflation but they will certainly help.

Kids are expensive....I just hope mine are doing well enough to be on their own by the time I'm ready to retire, lol! 😛

 

[alkemyst]

Well the figures were in today's dollars. With the itmes you mentioned.

I guess I need to account for inflation. But like I said earlier, I don't think much about it at this point. I just put 10% into a 401k and forget about it. I'm more concerned with short term survival and being prepared for potiential job loss. So I worry about building liquid savings, and paying off student loans and the mortgage.

Well that is more or less my point. You are not preparing nor do you have a plan.

Just throwing even 10% into a 401k is not going to be enough for many people to live on later. They assume they will be set though. I have had friends to the math and they have gone from thinking they had nothing to worry about to being a bit more aggressive.

I am being very aggressive now. I put off buying a car for now because I don't want to take away from anything I am putting away going forward. I have about $3000 of income I am using to pay off some old school debt each month. My plan is to take half of that for cars in a month or so and the other half start putting into another fund.

 

[Jumpem]

Well that is more or less my point. You are not preparing nor do you have a plan.

Just throwing even 10% into a 401k is not going to be enough for many people to live on later. They assume they will be set though. I have had friends to the math and they have gone from thinking they had nothing to worry about to being a bit more aggressive.

I am being very aggressive now. I put off buying a car for now because I don't want to take away from anything I am putting away going forward. I have about $3000 of income I am using to pay off some old school debt each month. My plan is to take half of that for cars in a month or so and the other half start putting into another fund.

My plan is to pay off my wife and I's student loans by the end of 2103, and then the house by the end of 2107. After that, cut back on the liquid savings, and start dumping alot more into retirement accounts.

 

[Engineer]

Vic, you've inspired me today. My wife and kids are going to hate me from this point forward!:twisted:

 

[Jumpem]

Account for inflation but also for some deflation:

Kids will be out of the house (hopefully) which will lead to somewhat lower:

Food costs
Energy costs
Insurance (especially car) costs
Fuel (gasoline) costs
Education costs
Cleaning costs
Phone costs
Clothing costs
Entertainment costs
(damn, kids are expensive)
etc, etc, etc.

Hell, might even downsize the house and decrease costs that way.

These may not be enough to overcome inflation but they will certainly help.

Kids are expensive....I just hope mine are doing well enough to be on their own by the time I'm ready to retire, lol! 😛

They are expensive. Costs should start going down when they start school, and daycare drops. Not sure if we will be paying for their college outright, or just helping them as needed. I'm hoping to stay in the 1500sq.ft. range for a house, even with the kids.

 

[Murloc]

meh why not invest them and get 200-500k a year and be wealthy for the rest of your life without working?
I can't understand some people. I could see buying that nice car you always wanted right off the bat, and a house some time later when you know how much money you're getting, but not more than that.

 

[Engineer]

They are expensive. Costs should start going down when they start school, and daycare drops. Not sure if we will be paying for their college outright, or just helping them as needed. I'm hoping to stay in the 1500sq.ft. range for a house, even with the kids.

I assure you, it's a temporary drop! 😛