[finton_the_toole]

FWIW I agree with this.

I know a number of people who have run various investment strategies and have run into problems with having to draw into capital in this market.

In this market, we've seen many large caps totally trashed. Companies whose dividends seem rock solid cut it and so on.

The 50 million was based on a possible 1% annuity rate that pension funds might expect. But even that might seem generous in this market.

(06-28-2012 11:33 AM)Gringuito Wrote:  

I don't want to turn this into a silly pissing match but you're not correct that no one on this board will ever reach 500K a year for investments.

Also the investments you indicated below are not risk free, quite the opposite. If you try to pull $50k (any number will work) a year from this money you'll run into problems quickly. When you have a down year, you are so heavily equity based that your total net worth could go down 10-15%. That 50K you're pulling out that year is now a much bigger percentage then it was when your investments were flying-high. If you allow a few good years followed by bad years (all within your std deviation) you'll find that the money runs out somewhat quickly.

Let's just agree to disagree and move on.

(06-28-2012 11:07 AM)WestCoast Wrote:  

I think I'll restate the obvious. No one on this board will ever reach 500K annual risk free even at 5%. Second, to manage money does not require a "family office or a financial advisor" simply used that as an example. Let's take a realistic example, $1M

10% cash running at (1%)
15 % junk bond yield group @ (7%)
10% small cap growth @ (10% with std deviatin of 15 % annual)
15% mid cap (8 % std deviation 10% annual and 1.8% dividend yield)
20% reits (10 % yield 0% cap gain, 5% std deviation)
30% large cap (4.5% cap gain, 5% std deviation, 3.5 % dividend yield)

Put all of this on auto reinvestment, or simply log into your account once a month or quarter to reinvest the dividends, doesn't take more than 7 clicks. If you can't do that you're prob too lazy to ever make a lot of $$$.

[OSL]

I like these threads!

I also like the idea of spending my time in a bunch of different spots throughout the year.

-NYC, San Francisco
-Bangkok, Singapore, Hong Kong
-Medellin
-Barcelona/Paris

I'd do angel investing and use my acquired engineering skills to help environmental causes, particularly in urban planning and marine conservation.

I'd also love to develop non profit organizations for athletic development in emerging markets and provide study/intern abroad grants for high school and college students.

Finally, I would get involved in the e-learning field for emerging markets. I think there is a great opportunity here. Even if it doesn't become extraordinarily profitable, I believe that with the tools we have at our disposal today, we can see an enormous rise in global education. It's an idealistic dream of mine.

I'd buy my parents a house in San Diego and sock money away for children's university tuition. It might all sound bland but these are the things I'd love to do if I had cash anyway. I don't get many thrills out of balling out of control.

[thegmanifesto]

(06-26-2012 02:09 AM)Blackhawk Wrote:  

What you really do is become elitist and waste your time in hypergamy. Above a certain level (far below $500,000 annually) you can't go anywhere without a security posse.

What are you talking about?

[WestCoast]

(06-28-2012 02:09 PM)thegmanifesto Wrote:  

(06-26-2012 02:09 AM)Blackhawk Wrote:  

What you really do is become elitist and waste your time in hypergamy. Above a certain level (far below $500,000 annually) you can't go anywhere without a security posse.

What are you talking about?

Post of the day. I also hear people can read your net worth by the color of your shirt, age and hair length alone.

[MikeCF]

Let's say I can pull 50K/year in passive income.

I don't spend it all (to avoid the problem of tapping into principal in a down market).

Instead, I use dividends to pay fixed costs - rent, student loans, car, dog, gym membership, protein powder/nutrition foods. (I.e., no dining out or nights out. But some minimal measure of nutrition *is* a fixed cost.)

For me, even in an expensive city, my fixed costs are only $2,500 a month.

So I pull $2,500 a month, or $10,000 a quarter (gotta cover taxes). The other $2,500 goes back towards principal. So I'm reinvesting a net $10,000 a year.

Then I work part-time to earn cash for partying, dining out, etc. If I have good quarters, then I readjust my quarterly pull.

Unlimited free time with money on your hands is a really really really bad idea.

Even if I were sitting on a million dollars, I would not stop working. I have seen first hand what happens to "idle hands."

So I'll always work 20 hours a week doing something - even if it were a job at Whole Foods or something.

[WestCoast]

(06-28-2012 02:35 PM)MikeCF Wrote:  

Let's say I can pull 50K/year in passive income.

I don't spend it all (to avoid the problem of tapping into principal in a down market).

Instead, I use dividends to pay fixed costs - rent, student loans, car, dog, gym membership, protein powder/nutrition foods. (I.e., no dining out or nights out. But some minimal measure of nutrition *is* a fixed cost.)

For me, even in an expensive city, my fixed costs are only $2,500 a month.

So I pull $2,500 a month, or $10,000 a quarter (gotta cover taxes). The other $2,500 goes back towards principal. So I'm reinvesting a net $10,000 a year.

Then I work part-time to earn cash for partying, dining out, etc. If I have good quarters, then I readjust my quarterly pull.

Unlimited free time with money on your hands is a really really really bad idea.

Even if I were sitting on a million dollars, I would not stop working. I have seen first hand what happens to "idle hands."

So I'll always work 20 hours a week doing something - even if it were a job at Whole Foods or something.

Ha sounds like my retirement plan to the T at low 30's. $25K passive, make $15-20K teaching or doing some odd job. In my favorite city in South America, luckily there is no data sheet on it just yet!

[worldwidetraveler]

(06-28-2012 02:35 PM)MikeCF Wrote:  

Then I work part-time to earn cash for partying, dining out, etc. If I have good quarters, then I readjust my quarterly pull.

Unlimited free time with money on your hands is a really really really bad idea.

Same here. I will never stop working. There seems to be a massive infatuation with passive income. Not that it is bad but what will happen if those people actually got it.

My main goal for this year is hire people to offset most of my on going tasks. That will limit my day to day operations and effectively get me working very few hours. I enjoy what I do so I don't really care if I put in 20/30 hours a week and use the rest of the time to fuck, sleep, golf, tennis, martial arts or reading.

[Jalouse]

Having a decent sized passive income gives you a huge amount of freedom so it's understandable why people want it, obviously the reality can be different just like a lot of lottery winners can attest to.

[finton_the_toole]

(06-28-2012 02:59 PM)worldwidetraveler Wrote:  

(06-28-2012 02:35 PM)MikeCF Wrote:  

Then I work part-time to earn cash for partying, dining out, etc. If I have good quarters, then I readjust my quarterly pull.

Unlimited free time with money on your hands is a really really really bad idea.

Same here. I will never stop working. There seems to be a massive infatuation with passive income. Not that it is bad but what will happen if those people actually got it.

My main point in my first post in this thread is that there is no such thing as 'passive' income in the way that people seem to think. Any income requires work to maintain. Say you have a property portfolio. The rental income is passive? No. Property is constant work, repairs, red-tape, finding tenants, maintenance. Sure you can hire people to do that, but your income will go down, in some cases considerably and then you have to manage your managers.

A stock and share portfolio needs to be managed. I just don't believe there is such a thing as a buy and forget portfolio (Warren Buffett's doesn't count for reasons I won't go into here).

Now we come to money market account...returns are SOOO low at the moment that it's almost a joke, and your money is getting eaten away by inflation.

And if you don't believe me here, how many super rich truly retire? Not many. They have constant work, think of Rupert Murdoch (he really is in the do-do at the moment), the Barclay brothers, Warren Buffett (he'll never retire), the Duke of Westminster and so on.

Having money is work.

[worldwidetraveler]

(06-28-2012 03:25 PM)finton_the_toole Wrote:  

My main point in my first post in this thread is that there is no such thing as 'passive' income in the way that people seem to think. Any income requires work to maintain. Say you have a property portfolio. The rental income is passive? No. Property is constant work, repairs, red-tape, finding tenants, maintenance. Sure you can hire people to do that, but your income will go down, in some cases considerably and then you have to manage your managers.

A stock and share portfolio needs to be managed. I just don't believe there is such a thing as a buy and forget portfolio (Warren Buffett's doesn't count for reasons I won't go into here).

Now we come to money market account...returns are SOOO low at the moment that it's almost a joke, and your money is getting eaten away by inflation.

And if you don't believe me here, how many super rich truly retire? Not many. They have constant work, think of Rupert Murdoch (he really is in the do-do at the moment), the Barclay brothers, Warren Buffett (he'll never retire), the Duke of Westminster and so on.

Having money is work.

I hear ya. You can hire someone to maintain/invest your money but I couldn't put my trust into someone like that.

Most rich people don't retire because they enjoy what they do. It isn't about becoming rich, they became rich enjoying the game they are playing.

You got to do something even if you retire so why not continue doing what you enjoy which made you rich in the first place.

[phoenix101]

I've been sitting on well over half mill for a couple years (70/30 cash/house) now. I thought life would be easy--it has gotten much easier but I'm not scot-free. I make near poverty level active income by choice since I have no debts whatsoever and no car. I thought I would sit back and collect passive income while sipping drinks on the beach. Thank God I never fully left my job, even without a lavish lifestyle and being able to coast close to retirement I would have still be eating through my money at a faster rate than I would be happy with. Fact is I can't sleep at night if I were to have so much money in stocks--market fluctuations can easily far outstrip any dividends you receive, I'm not market expert but I've been following the market at arms-length for two decades in one form or another. I made and lost 1/4 mill at 25 and had to start from scratch at that point. I've seen a small hint of what goes on in the asset management industry, it's not shady or anything but it's like playing the lottery on choosing the few professional gamblers who will do well and hoping not to get one of the many managers whose fund will blow up in their face (usually the fancy-shmancy funds..."AI trading", wild or seemingly tame option strategies, private/venture capital, seemingly bullet-proof arbitrage/long/short strategies--yes, I've seen a long/short strategy where both sides of the trade moved in the same direction and just demolished a fund).

Then also say if you have half a mill, you have to worry that you're losing say 2% in purchasing power or $10,000 in purchasing power every single year. After only 5 years in the bank that $500k only buys $450k of what it used to buy. If you're invested in a fund, you're losing around an additional 2% a year in mgmt fees + several more % in fund operating fees (~0.55% Mgmt fees if an ETF). So if you're invested (500k) in a fund that goes nowhere for 5 years, at the end of that 5 years you have $450k after management fees (being a bit generous, realistically a little bit less, maybe 400k after operating expenses); so relatively speaking 5 years ago you had $500k in purchasing, now you have an equivalent of $400k in purchasing power. No I think to start being on solid footing, you need to be in the $1-1.5 mill net worth range without a lavish lifestyle. Never mind talking about $500k passive yearly income, it's just ridiculous to even consider it.

[rudebwoy]

Phoenix - how come you don't have a car?

[phoenix101]

I used to have a car. But after I moved to the city core it really wasn't necessary as I walked minutes to work among all the other obvious reasons when you have all amenities within a brisk walking distance or short cab/bus/subway ride away. Not that I've always had it that easy, I did my time with the long commutes.

[WestIndianArchie]

(06-25-2012 10:45 PM)lurker123123 Wrote:  

If you had $500,000 a year in passive income how would you put it to use with the goal of banging women? its a lot of money and out of reach of most people, myself included, but maybe someone will have some ideas that can be useful to those with less money as well

this isnt a game vs money debate

500K yearly income to bang women?

Easy.

According to paycheck city, that would be 22K a month after taxes.

5500 a month for rent? - I'd get a spot in NYC, lower east side or the east village. Which would be a full floor in some buildings, or 3-4 bedroom in some of the newer developments.

Personal trainer - 3x a week, 75 an hour -> call it a G a month - (6500)
Personal Chef in NYC - ~ 1500 a month (8000)
Executive Car Service - Not sure how much this goes for, but call it a G - (9000)

I still have 13K to spend.

At a certain point, I would have enough furniture, gadgets, toys, and clothes. Probably rock nothing but House of London suits, Finamore shirts, Marinella Ties, and Scarpe di Bianco kicks.

The rest of the money I would use to hit the spots. Hit the door man off with a Benji, bottle service and a table is no problem if I felt like it, or hit all the foodie spots, all the nice shopping areas...

And the funny part is, 500K in NYC is still small potatoes, kinda thing the real bosses pay their underlings.

If you had that kinda paper in 2nd tier cities....or better yet in a developing nation....forget about it.

[phoenix101]

(06-29-2012 12:15 AM)WestIndianArchie Wrote:  

And the funny part is, 500K in NYC is still small potatoes, kinda thing the real bosses pay their underlings.

You need more Indians than Chiefs. I'm mixing different statistics but I'm guessing: 24% $0k-$25k, 17.1% $25k-$50k, ~23.5% $50k-$100k, 12.6% $100k-$150k, 7% $150k-$200k, 15.6% (113,462 people) >$200k.

Finance and insurance, and real estate and rental and leasing: 16.2% of population employed in this industry

Manhattan median household income $64,217
Manhattan mean household income $121,549

NYC median hh income: $48,631
NYC mean hh income: $75,809

[Rah]

I like the discussion about the nuts and bolts of where the passive income would come from. So maybe 500k is too outlandish. Let's ratchet that down some: what's the most realistic and the most passive path to 100k / year? What could 2 mil in the bank yield with minimal investment management? I'd like to have something concrete to shoot for.

[Spike]

Too bad some people are turning this into a boring investment thread. The question was what would you do if you were rich and had a 500k passive income. It doesn't matter how you got it, it's there every year.

I don't think i would really need 500K a year to live a full life. I would buy a small apartment in my hometown for when i visit family and friends and just travel around the world the rest of the year. A monthly budget of 10 to 15K would already buy baller status. Some places you might need a few thousand more or less. A place like Tokyo,Helsinki,NY or Moscow you would need maybe 5k more a month to achieve baller status.

Imagine having 10K in any South East Asian country:
You would need about :
3 to max 4K for a baller apartment/villa in the city center, we're talking swimming pool,a personal maid or two, the works here.
A driver,maybe 500 to 700 hundred a month. including the car.
Maybe 3 to 4K for restaurants and going out.

Hell, 3 to 4K a month buys you a nice pad in most cities in the world.

I would use the money to expand my personal world by hiring personal coaches and teachers for everything i want, for example languages,fitness,skills.

I think boning a new girl every night you go out could get pretty boring if you can just scoop them up without much trouble. I mean having a personal driver/bodyguard, expensive clothes,some basic gaming skills and a fat wad of cash is all you need in 95% of countries in the world. You need to do more with your life.

I would probably change countries once every one or two months after i''m done exploring everything and divide between Asia,south america and (eastern) europe.

[Spike]

(06-28-2012 02:35 PM)MikeCF Wrote:  

Let's say I can pull 50K/year in passive income.

I don't spend it all (to avoid the problem of tapping into principal in a down market).

Instead, I use dividends to pay fixed costs - rent, student loans, car, dog, gym membership, protein powder/nutrition foods. (I.e., no dining out or nights out. But some minimal measure of nutrition *is* a fixed cost.)

For me, even in an expensive city, my fixed costs are only $2,500 a month.

So I pull $2,500 a month, or $10,000 a quarter (gotta cover taxes). The other $2,500 goes back towards principal. So I'm reinvesting a net $10,000 a year.

Then I work part-time to earn cash for partying, dining out, etc. If I have good quarters, then I readjust my quarterly pull.

Unlimited free time with money on your hands is a really really really bad idea.

Even if I were sitting on a million dollars, I would not stop working. I have seen first hand what happens to "idle hands."

So I'll always work 20 hours a week doing something - even if it were a job at Whole Foods or something.

I see your point but i don't agree with it. If i had a million dollar i would never ever work again. Why work ? and for what ? I would do everything i don't have the time/money for right now.

I would divide my time over the following things:
- R & R like watching a movie, maybe even play a few (oldschool Megaman and Abe's oddysee) videogames once and while. Hitting the internet.
- learning a new language (maybe in the county of origin) so i can actually communicate with people i meet while traveling. I'd use a personal teacher.
- Learn some new skills like rock climbing,chess, mechanics,computer skills whatever.
- Learn to dance a few dancing styles with a private teacher
- Sports like fitness and self defence but with personal trainer.
- read books and enrich your knowledge
- get a personal coach on speaking, body language
- travel the world and see and experience other cultures.
- take acting classes or learn to play an instrument
- do crazy stuff like skydiving,race car driving or going to a gun range from time to time.

You can do all this during the week. Mondays this. Tuesdays that, Wednesdays some other things or just mix it up to speed up the process.

and of course gaming girls a few nights a week.

All this would give you a grand social circle and a full life. The good thing is that even if you lose your money after a while you would still be a fucking master at everything and use this as a crutch for gaming.

Well, hell you could almost be the most interesting guy in the world.

I really don't understand people who always want more and more money year after year and basically do nothing usefull with their lives. Enough is enough i say. It doesn't take that much money to do all of the above if you keep your expenses in check.
If you have a few million why need more ? Just to buy a supersports car that is losing you money everyday. Have a private jet? a trophy wife.

You can rent all this too without making a big one time investment.

[Gringuito]

You hit the nail on the head. In my case I semi-retired and I spend my time on my charity and mentoring young entrepreneurs. I also travel all over, but I haven't been to Asia yet.

(06-29-2012 04:52 AM)Neil Skywalker Wrote:  

I think boning a new girl every night you go out could get pretty boring if you can just scoop them up without much trouble. I mean having a personal driver/bodyguard, expensive clothes,some basic gaming skills and a fat wad of cash is all you need in 95% of countries in the world. You need to do more with your life.

[Deb Auchery]

I would spend my days lazy around fucking cute girls.....damn I'm already doing that, guess i'm rich hehe