How much cash does one need to invest if they want to live a high-quality lifestyle purely off investment income. Assuming I am investing in assets that generate cash every year for me to spend (so not stocks without dividends, private equity, real estate but rather bonds, structured products, etc.), would it be realistic to generate a 5% return on a large portfolio (like 25-50mm) without taking too much risk or is that fanciful?
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whats risk mean for u? one of our portfolios returns 4% in one of the safest assets classes out there, but would need about 100m min to have a managed acct with us.
4% for a >$100mm portfolio w/ safe investments seems pretty solid. What are these asset classes? Also would it be easier to generate more return for a smaller portfolio like $50mm? Believe it gets harder to generate return the larger the capital base gets.
Look up the "Safe Withdrawal Rate" (SWR). Academic literature suggests that a 4% withdrawal rate has a 95%+ chance of success over a typical retirement period. If you are intending to retire much younger or are risk-averse you might want to target 2.5-3%. Your $50 MM portfolio could support at least $1 MM real terms annual spending almost indefinitely if deployed in low-cost globally diversified index trackers.
Let's be honest, you can live off of $5mm and not touch the principal. With RE that is 200k net of tax. It might harder with kids, but single, I don't see how you can't live in any beach town you want.
That's a good net return for $5mm. This $200k would come from rental income? Is this a typical rate of return or a conservative one?
I mean it really depends on your cost of living. After graduation I lived in Mexico for a year, and it really made me realize that in order to live like a king you can either make more or spend less.
One month of expenses in Puerto Escondido (surf town) was roughly $1,000 CAD. This was for my own AirBnB, eating out almost every meal, surf equipment rental, scooter rental, and nights out with my friends.
Makes for a nice backup plan when I get bored of trying to get rich.
Makes sense. More of a high COL guy myself.
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