having one or two million in silicon valley might just make you comfortable
I take it you've never been to (e.g.) Palo Alto?
I have been there.
O.k. Let me see if I can attempt to 'splain my assertion to you.
There are a lot of people who don't have shit in regards to investments or savings (even if we account for home ownership, too), and surely having any kind of investment portfolio is going to be a whole hell of a lot more than many people, even in the US of A, where we have way more access to credit and financial services than so many people on the planet. However, many of us still have a lot of difficulties building some kind of investment portfolio.
So, in that regard, even just having a mediocre investment portfolio of $1 million or $2million is going to put these kinds of people way in front of the vast majority of other people, whether we are talking about silicon valley or other places in the country. And, for sure, the cost of living for any particular area is going to hamper the extent to which the accumulated amount of wealth meets either "fuck you" status or "filthy rich" status.
There are places in the world in which $1million or $2 million, and maybe even some places in the USA (so long as a guy/gal has fairly humble needs) would allow a kind of entry level "fuck you" status, even if there might be some questions regarding future value of such dollar denominated amounts, but there still might be ways in which a BTC portfolio might have decent chances of being able to outperform the value of the dollar in terms of maintaining its value in dollar denominated terms.
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Never been to Palo Alto (been to many other places in Cali), but I imagine that I know what he is talking about as Houston also has very prosperous enclaves with houses that look like some kings ought to live there. I straddle "the great divide" of both of these arguments.
IMHO, in most of US, $1-2 mil remains a pretty good investment portfolio AS LONG as you have a steady job that pays reasonably well (or an equivalent income stream) AND your job gives you a decent health plan. If you don't have a job and you are not close to at least getting Medicare and SocSec, $1-2 mil is woefully insufficient. "Gambler" (the movie) claims that 2mil is enough (F U money), but it is not. The movie is based on the 1974 screen play. Back then, $2mil was certainly F.U. money. Not anymore.
Ok. Let's play with $2million. I was not referring to any movie, and sure of course, if you are talking about 1974 as compared to today, then you have to 3x the referred to amount in order to get somewhere close to 2020 dollars.
I do believe, however, a person can live decently well off of $2million, which would provide a passive income of $6,666 per month. That is assuming a 4% withdrawal rate that would largely allow the withdrawal of appreciation while maintaining the principle.
We have had this conversation before, and of course, you are not going to have any kind of baller lifestyle on $6,666 per month, but it should be enough to get by pretty decently as a kind of passive income, and surely, $2million is better than $1million because it is double the amount of $3,333... even $1million is doable in some parts of the USA and of course certain parts of the world will even allow for better living on that amount of passive income per month. We can agree to disagree if you believe that entry level of fuck you status is absolute more than $1million, because I know all kinds of poor fucks who live off way less than $3,333, and some of them live off less than $1k per month and are able to get by, so $3,333 is going to be much better for them, than $1k, especially passive income.
Of course, many of us consider that we want to have a cushion and all those kinds of considerations that involve volatility and making sure that we are planning based on worse case scenarios, but if we can assume either $1million or $2million in principle that is steady, then a lot of people are going to be bat shit excited by that level of principle to be able to generate their 4% per month of a withdrawal rate that would produce $3,333 per month for $1million and $6,666 for $2million.
I assume that 6.66K number came from doing 4%?
Yes. As you may likely know, 4% is considered a fair presumed withdrawal rate that allows you to withdraw while largely preserving principle because it is anticipated on average that you are going to have UP and DOWN years, but on average you should be able maintain an appreciation of your asset at least 4% that would allow for the preservation of principle.
$2million x 4% = $80,000
$80,000/12 = $6,666
Surely, you do not need to go with the traditional and widely accepted 4%, you can adjust either up or down if you are feeling either nervous or overly excited regarding the abilities of your various investment choices to gain on average 4% per year.
You can also manually choose to change your withdrawal to withdraw more or less, but the 4% should still provide you a pretty decent idea about the money earning potential of your principle and thereby how much passive income you should be able to presume to be reasonably earnable by such principle that you have accumulated.
In order to gain some confidence in the stability of the earning power of any portfolio, there might be some need to make sure that the portfolio is somewhat diversified so that it might be a bit more stable, and surely having the investment in only one asset will more likely cause less stability, even if there might be some confidence that certain assets are more likely to gain than others, and of course, if there were any kind of assurance that some assets are going to appreciate more than others, then there should be some justification to overallocate in those better bet assets.
There are traditional asset allocation recommendations too and of course the more need that there is to start withdrawing, the more need there would be for stability of the whole portfolio, but of course, what we wish for and what we are able to achieve in the real world might not be the same thing, so we can only engage in practices that we are comfortable with and attempt to garner as much stability and/or growth that we believe is feasible given our view of various assets.
Sure we may end up being wrong... and that is a risk, too, but the more assets and cushion that we have to work with, the less we might have to worry about whether we are completely correct or not. Let's say for example, we feel pretty damned comfortable that we can get by comfortably on $3,333 per month; however, we have $2million so we know that we have the ability of reasonably withdraw $6,666. We therefore have a cushion, and comfort with our choice anywhere in the range.
Let's say for example, that we have most of our investment in bitcoin, and we have slightly more than 100BTC that we have acquired and secured and we are confident in keeping our investment allocated into bitcoin... and let's stick with the same parameters, as above, and we consider $2million to be a good principle ($6,666 per month), yet we feel that we can also live fairly comfortable on $1million ($3,333 per month), so in 2017, when the BTC price went shooting up to nearly $20k, we could have asserted that we have reached our fuck you status, and proceeded to say fuck you to everyone while burning our bridges, and as we know from hindsight (and should have even known from foresight) that we should not be saying fuck you based on reliance upon exponential prices being sustained or sustainable.....
Our $2 million would have shrunk down to just a bit over $300k, and we would have been kind of fucked to be trying to live off of a principle that had diminished too much and we had not sufficiently diversified and we had not sufficiently accounted for volatility in both directions. We can complain all that we like regarding that we did not know or we could NOT have known how extreme the correction could have been blah blah blah... and that would have been pie in the sky detachment from reality. When we are making these kinds of plans, we need to plan for extremes, and there are a variety of measures that we can take in order to diversify or to prepare for extremes and to be realistic with how much of a cushion we are going to need.
Assume that you are doing this 4%, suddenly, a health issue. No job, no insurance and you are billed $500K.
You better fucking prepare for these kinds of contingencies. Your plan should include what is your budget and also being prepared for various kinds of emergencies that could happen, and sure there might be some scenarios that will cause you to have to withdraw your principle rather than just living off the income. So, for example, if you thought that you had a 20 year or so expected life span, but surprisingly, you come to learn that you only have 6 months to live, then maybe in those circumstances you would withdraw all or most of your principle, and sure, your life is much shorter than you had anticipated, yet it could reasonably be considered to be way better to have that option to withdraw your principle rather than NOT having anything, even if perhaps, your life might have unexpectedly taken a turn for the worse and you are not really able to enjoy the money because of your deteriorated health condition, and sure those kinds of possibilities would justify spending some of your wealth early rather than waiting and waiting and waiting and then coming across actual physical meat space reality that you are not able to actually enjoy such wealth.
Plus, subtract taxes on RE, etc, etc.
Of course, you better be taking account of all your expenses, and there are many people who choose to have their house completely paid off by the time that they enter into a kind of retirement status, but of course there are still going to be expenses related to lodging whether those are taxes and maintenance or the cost of renting or other reasonable living expenses that should be accounted.
6.6K and moving to less expensive place like Spain or Portugal-maybe.
$6.6k continues to be a pretty damned decent passive income, whether we are talking about cheap places or even more expensive places.
Like I mentioned, I know quite a few people who have worked all of their lives, failed to save and even failed/refused to pay into social security benefits, so by the time it comes to retirement, they don't have shit, including their social security benefit might be only a few hundred a month because they failed/refused to pay into it based on a variety of short sighted reasons. Compared to those folks who are getting less than $1k per month, you are likely to be balling with $6.6k, even in more expensive areas.
Of course, with the money printer go brrrrr, it is likely that ongoing devaluation of the dollar is likely to erode the fuck out of the meaning of $6.6k, and 3-5 years people might be saying, what the fuck? A peedily $6.6k per month, I can barely buy groceries with that.
Of course, if you have not yet pulled any fuck you lever, then of course, you can continue to plan how much you believe is going to be necessary, and if you have already pulled it, then you might be scrambling to make sure that what you have is enough and if you either need to cut some of your expenses or if you need to figure out ways to earn more money, and surely I doubt that very many people want to be forced into either of those choices of cutting expenses or the having to look for more income sources once you have already pulled the fuck you lever.
We know that people are going to choose differently based on the amount and based on a variety of factors, and surely I have had posts that go both ways in terms of both suggesting that people make sure that they are adequately prepared by the time that they pull the fuck you lever, but also, I am still concerned if people have been living off of $4k to $6k per month for many years, and they have been saving 10% to 20% if their income and doing all kinds of activities including vacations and buying cars and houses and other consumption goods, and then all of a sudden they come to a belief that they need way more monthly income in their retirement even though they have paid off their house and car and they have a good boat and the various accessories, and they somehow still believe that they need the same income, even though they cannot even eat close to half as much as they were able to eat when they were younger, and they surely do not drink as much because they cannot tolerate that much alcohol... Anyhow, their fictitious believe that they need the same income may or may not be be based on realistic assessments because there might be fewer needs to put aside 10% to 20% for savings (even though maintaining some cushion might still be prudent), and of course, there can be a lot of value to having $4k to $6k that is earned passively, as compared to having to work your ass off every month for that $4k to $6k.
So, I remain concerned that if anyone believes that they have to have everything perfect, and if you believe like that, you might end up working until you are 70 and not be able to really enjoy as much, such as if you were in your 50s or even younger, perhaps (if doable.. of course, the younger, then the longer the timeline and the more likely that inflation is going to eat away at the value of your principle and thus the value of your passive income that is based on such principle value).
As far as some people getting excited-sure..it turned out that meager donation of $600/wk from CARES act increased "earnings" for more than 60% people on UE ABOVE their previous pay.
Of course, there are smart and dumb ways to utilize extra income and then deciding where you might be at personally in terms of your abilities to continue to generate cashflow, whether in current times or in future times, and whether you might need to build or change your skills. Of course, if you are already close to being able to pull the fuck you lever, then you might not be as concerned about some of the cashflow sources that might depend upon your future labor, so of course, the circumstances of people are going to be different, even if the amount of cash that has been pumped into the economy has a good chance of causing a lot of things to go up in price, and of course, the supply chain issues are far from being resolved any time in the near future, also. So, of course, certain kinds of expenses are going to go up, but the price to take a walk or go for a ride on your bike might not change as much as the price to buy a nice juicy steak (even if you are only able eat half of a steak because of elderly status... hahahahaha)...
Poll
