|
|
#51
04-14-2007, 05:31 AM
|
|||
|
|||
Re: How much $ is needed to never have to work again?
[ QUOTE ]
gull, You are wrong. DUCY? [/ QUOTE ] No, I do not see why. Please explain how geometric means are the same as arithmetic means. And please explain how I am wrong. 
|
|
#52
04-14-2007, 05:37 AM
|
|||
|
|||
|
Re: How much $ is needed to never have to work again?
[ QUOTE ]
[ QUOTE ] Also, what makes you think 12-15% is a reasonable return to expect? Just curious. [/ QUOTE ] That's just over 1% a month. Even in the low volatity environment of the last few years, I've been able to find enough trades to return 1% a month. [/ QUOTE ] So what is your trading style? Do you trade long/short? Fundy/TA? long term/short term? Even a buy & hold index fund would have returned 12-15% over the last 3 to 4 years.
|
|
#53
04-14-2007, 11:35 AM
|
|||
|
|||
|
Re: How much $ is needed to never have to work again?
A general rule of thumb is that you should have 25X your yearly expenses saved up (so a 4% withdrawal rate). This of course needs to include a provision for taxes. This 25X rule is pretty safe if you retire at the traditional ages of 55+. If you retire younger, then you will need more of course. I would say that if you were 30 right now, you would need over $2 Million
|
|
#54
04-14-2007, 11:38 AM
|
|||
|
|||
|
Re: How much $ is needed to never have to work again?
[ QUOTE ]
LOL @ $2k/month. But setting that aside, back of the envelope calculation: Inflation-indexed government bonds yield something like 2%. To have $24k/year after taxes, you probably need like $35k/yr income or something. If you want money to gradually increase (in real terms, after expenses/taxes), you need like $40k/yr. At 2%, that means you need $2 million. [/ QUOTE ] $2K is reasonable. I track my expenses every few months and I come in around $1650 per month, but my mortgage is only $300. My mtge will be paid off in the next few months, so I'd be looking at $1350 per month in expenses. I live in Canada so I don't have to worry about health care at all and I'm not married or have any kids so obviously that would be higher with either. The key to retiring early is getting your monthly expenses as low as possible...no mortgage, no car or other debt payments ever. Just sock that money away every month in EFT's and low cost mutuals that have outperformed their group average for 15 years or more. Working for the man is [censored] hell and the sooner you retire the better.
|
|
#55
04-14-2007, 12:42 PM
|
|||
|
|||
|
Re: How much $ is needed to never have to work again?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] [ QUOTE ] pig4bill, please explain. [/ QUOTE ] Explain why I want someone to give me a half-million? [img]/images/graemlins/smile.gif[/img] I feel reasonably confident I can make 12 to 15 percent a year off the market, so I would take 200k and trade my usual way to make my nut. I would keep the other 300k in T-bonds in case the market got really weird or I got too aggressive and lost the stake. If I had to re-load, I would back off the aggression and would only need to make 8% because of the bigger stake. Note that taxes on $24k are nearly non-existant, so a couple percent here or there to cover taxes wouldn't matter to me. [ QUOTE ] Question for all: Is a person who is studying economics or finance of some sort automatically a lot more probably to never have to work again compared to a person who hasn't studied in this field? [/ QUOTE ] No. Who's going to be "teaching" you this stuff? Someone that needs a job. How can they teach you something they don't know? Besides, their institutionalized uncreative thinking is the type that leads them to advise everyone to buy index funds or mutual funds. [/ QUOTE ] Taxes on 24k in the US are like 3k, that is hardly nonexistant. [/ QUOTE ] It's an extra 1.5% yield on my 200k stake. As I said above, a couple percent here or there doesn't matter to me. [ QUOTE ] Also, what makes you think 12-15% is a reasonable return to expect? Just curious. [/ QUOTE ] That's just over 1% a month. Even in the low volatity environment of the last few years, I've been able to find enough trades to return 1% a month. [/ QUOTE ] Whether or not the taxes "matter" to you isn't really the point, a 1.5% change in return is significant. The fact that 12-15% is just 1%/month is nice, but doesn't really answer my question.
|
|
#56
04-14-2007, 06:44 PM
|
|||
|
|||
|
Re: How much $ is needed to never have to work again?
What he's saying is 12-15% is reasonable for HIM to achieve... it may or may not be reasonable for someone else with a different level of comfort in using the market to make $$$.
|
|
#57
04-14-2007, 07:22 PM
|
|||
|
|||
|
Re: How much $ is needed to never have to work again?
[ QUOTE ]
so if we assume r is something like 5%, i is close to 3%, and initial year expenses of $24k, your starting endowment should be a_0 = (24000*1.05)/(.05-.03) = 25200/.02 = $1.26M edit: note: this assumes a tax-free world, so r should be after-tax return and e_0 should be the amount of pre-tax income one would need to net living expenses in year 0. adjusting the numbers above for an effective tax rate of 30% gives a_0 = (25200/.7)/(.05*.7-.03) = 36000/.005 = $7.2M which is a big difference. [/ QUOTE ] Is the second formula correct? Wouldn't it be this? a_0 = (25200/.7)/(.05-.03)*.7 = 36000/.014 = $2.57M
|
|
#58
04-14-2007, 08:45 PM
|
|||
|
|||
|
Re: How much $ is needed to never have to work again?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] Also, what makes you think 12-15% is a reasonable return to expect? Just curious. [/ QUOTE ] That's just over 1% a month. Even in the low volatity environment of the last few years, I've been able to find enough trades to return 1% a month. [/ QUOTE ] So what is your trading style? Do you trade long/short? [/ QUOTE ] Yeah. [ QUOTE ] Fundy/TA? [/ QUOTE ] Yeah, both. [ QUOTE ] long term/short term? [/ QUOTE ] Short term. I hate being in anything over a month. Turnover, baby. Get the product in the door and out. That's what got Walmart where it is today. [ QUOTE ] Even a buy & hold index fund would have returned 12-15% over the last 3 to 4 years. [/ QUOTE ] I can't remember when I last did an index fund trade. Over 10 years ago at least.
|
|
#59
04-14-2007, 08:52 PM
|
|||
|
|||
|
Re: How much $ is needed to never have to work again?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] [ QUOTE ] [ QUOTE ] pig4bill, please explain. [/ QUOTE ] Explain why I want someone to give me a half-million? [img]/images/graemlins/smile.gif[/img] I feel reasonably confident I can make 12 to 15 percent a year off the market, so I would take 200k and trade my usual way to make my nut. I would keep the other 300k in T-bonds in case the market got really weird or I got too aggressive and lost the stake. If I had to re-load, I would back off the aggression and would only need to make 8% because of the bigger stake. Note that taxes on $24k are nearly non-existant, so a couple percent here or there to cover taxes wouldn't matter to me. [ QUOTE ] Question for all: Is a person who is studying economics or finance of some sort automatically a lot more probably to never have to work again compared to a person who hasn't studied in this field? [/ QUOTE ] No. Who's going to be "teaching" you this stuff? Someone that needs a job. How can they teach you something they don't know? Besides, their institutionalized uncreative thinking is the type that leads them to advise everyone to buy index funds or mutual funds. [/ QUOTE ] Taxes on 24k in the US are like 3k, that is hardly nonexistant. [/ QUOTE ] It's an extra 1.5% yield on my 200k stake. As I said above, a couple percent here or there doesn't matter to me. [ QUOTE ] Also, what makes you think 12-15% is a reasonable return to expect? Just curious. [/ QUOTE ] That's just over 1% a month. Even in the low volatity environment of the last few years, I've been able to find enough trades to return 1% a month. [/ QUOTE ] Whether or not the taxes "matter" to you isn't really the point, a 1.5% change in return is significant. [/ QUOTE ] You can keep harping on this like a nit if you want, but the OP's stated goal will be met by 12% return on my initial stake of 200k, so when I said I'm confident of making 12 to 15 percent, taxes are insignificant and irrelevant to the question at hand. If it makes you any happier, my T-bonds in the backup 300k stake, that I also mentioned in my first post, will be pulling down 5%.
|
|
#60
04-14-2007, 09:43 PM
|
|||
|
|||
|
Re: How much $ is needed to never have to work again?
[ QUOTE ]
[ QUOTE ] so if we assume r is something like 5%, i is close to 3%, and initial year expenses of $24k, your starting endowment should be a_0 = (24000*1.05)/(.05-.03) = 25200/.02 = $1.26M edit: note: this assumes a tax-free world, so r should be after-tax return and e_0 should be the amount of pre-tax income one would need to net living expenses in year 0. adjusting the numbers above for an effective tax rate of 30% gives a_0 = (25200/.7)/(.05*.7-.03) = 36000/.005 = $7.2M which is a big difference. [/ QUOTE ] Is the second formula correct? Wouldn't it be this? a_0 = (25200/.7)/(.05-.03)*.7 = 36000/.014 = $2.57M [/ QUOTE ] depends ... i think of inflation as an after-tax return, in which case mine is correct ... if the inflation rate used needed to be adjusted for taxes, yours would be correct. this does point out how sensitive this model is to your assumptions, though.
|
 |
|
|
Linear Mode
