How much is enough to retire?
This is a real-life question. I'd like a lot of opinions without detailed analyses.
Assumptions:
a) You own your home outright, and are 50 yrs old and single.
b) Property taxes/utilities/ insurance / repairs etc for the home run about $40k
c) You only need to support yourself
d) You wanrt to do some traveling for 3-6 months out of every year
e) You like nice things but don't buy indiscrimately
f) You have never budgeted in your like nor balanced a checkbook as there was always enough money in your account
g) You buy a new Lexus (or BMW, Mercedes) every 5 years
Don't do a spreadsheet...just give me a quick opinion.
I'd like to hear opinions on the amount of cash one needs to be able to invest it in a conservative (but not freakishly so) manner ---which means primarliy bonds--so as to not run out of money. I realize it's a tricky (though in fact real-life) dilemma because there are unknows like inflation.
A key question: Do you think my expenses will actually go up instead of down as most surverys indicate following retirement.?
I am looking for back-of -the -hand opinions, rough estimates. It is a real-world question, so any thoughtful ideas are appreciated. I stay away from stock and bond funds as I have enough to roll my own....so to speak.
if you are at ther beginning of a wall Street career, you prolly have some figure in mind you would like to make and think you could retire on comfortably.
I will give you a little help here as I did do a spreadsheet to try to accumulate all the expenses I could think of.
Here are expenses i came up with:
re taxes 15800
association fees at 255 3060
approximate biils elect /etc 12000
landscape 2060
health insurance 8100
pet waste 540
cable 840
satellite 1800
phone 840
gasoline 75
reserve for auto 12000
food/groceries 12000
haircuts 480
Pet Food 500
Pet Treats 500
clothing 6000
TOTAL 76595
5M
100k/yr
5% interest
-> 2M
Unfortunately I dont know any really safe 5% investment. Sure 30 yr Treasury, but i have to prepare for some risk of inflation.
Is the home really a hedge against inflation in your mind?
5% is probably reasonable for real after-tax returns.
You budgeted $75 for gasoline? That's one hell of a fuel-efficient car you're driving. I think 100k/yr sounds reasonable for after-tax income to live modestly, but you did forget to include travel expenses. Depends how lavishly you want to travel. Also, your health care costs will likely go up as you age. Do you plan to leave an inheritance for your children? That will affect the rate at which you can draw-down your capital, as will life-expectancy.
Perhaps he is assuming that in 50 years when he retires cars will be electrically powered and the price of electricity will come down. It seems reasonable, though of course it can go the opposite direction too. And if the government keeps enforcing "social justice" the massive debt will render any budgeting from today's perspective worthless.
It was already confirmed he meant 75*12...
And he is CURRENTLY 50 years old.
Anyway, I def think you should get out of cash. Why not buy some 30 year bonds (4.6% return is better than 0...), hedge against inflation, and sell the bonds if a better opportunity presents itself.
If you really get desperate for cash, just lower expenses. Cut the landscaping, cut clothing expenditure to 1K per year (plenty dude - don't you have enough suits and Pink shirts?), shop around for groceries (you can probably get those for 6K), buy a new car every 10 years rather than 5.
That lowers expenses by 20K without any huge decrease in QoL imo.
Also out of curiosity - (feel free to ignore if you don't want to answer this) - if you had to do things over would you still have been a trader? I know the grass is always greener on the other side, but I'm just curious since you are one of the few people commenting who seems to have actually spent the majority of their adult years being a trader.
not 100% on this
I've got a bit of experience with this scenario, so I'll offer my opinion for what it's worth. (I'm 40 now, retired from trading when I was 30).
I really can't answer the "what number" question because I don't know. I used to be really fixated on the number, until I discovered that cash flow was actually more important. You might say that it's just two sides of the same coin, and in a lot of ways you'd be right, but cash flow has been much easier for me to manage over the years than accumulating what I traditionally thought "the number" was. (For the record, my number was just north of $10m).
First, an opinion on investing to meet your expenses: The entire bond market scares the ever-loving shit out of me right now, and I wouldn't touch it with a 100-mile pole. Right or wrong, I went 100% to cash in late November, except for a handful of long-term options I hold on silver. I'll layer back into the market when the Dow is around 5,000 and not before. If it never gets there, I guess I'm done investing for life. It's nice not to need it.
That said, I would concentrate on generating cash flow sufficient to cover your expenses on a monthly basis. If you'll permit me an observation, your expenses are way out of whack. There is absolutely no reason a single retired guy needs $100,000 a year to get by. You're just making it harder to sustain retirement by living that way. With one simple adjustment - forgoing the purchase of a luxury automobile every 5 years - you can fund 6 months of world travel each and every year. And that's just one adjustment.
If your real estate taxes, association fees, and utilities are totaling $30,000+ per year, you're doing it wrong bro. Sell the pad, pocket the dough, and go rent a killer pad in San Diego for $1,800/month and end up paying $400 a year in utilities. Or do something even cheaper on a month to month basis and spend half the year in paradise for less than $1,500 a month all-in (except maybe booze, if you're a big drinker like I am).
Anyway, I don't want to make this any longer. The gist of what I'm saying is lower your monthly expenses and then find a stream of income to cover them. The stream can certainly come from interest on principal, but I think a more reliable (and inflation adjusted) method is to do something or create some intellectual property which generates the necessary income.
Bottom line: if you need more than $50,000 a year as a retired single guy, you probably need to trim some fat.
How much would be enough for me to retire? (Originally Posted: 06/06/2014)
I went through my expenses and found that $50k/year would be comfortable for me. How much would I need to make that safely? Inflation would become a retirement killer. Is it possible to beat it so that my standard of living would remain the same forever?
@ ED's first post
I'm really interested in the specifics of how you generate this cash flow - it seems easier said than done. If you can generate a cash flow of 50,000 so easily, why go into trading in the first place? 50,000 will let you live comfortably and travel extensively if you live in the right location.
If it were this easy to kick the 9-to-5, wouldn't everyone?
INB4 TREE FIDDY
$2M capital at the age of 65 will allow you to live comfortably for the rest of your life.
If I want to retire by 45, would $1 million be enough? I figure I could get 4.5% of that from a diversified portfolio, which is $45,000. Could that work while beating inflation?
Haha no.
Can someone break this down for me?
You can calculate this using the time value of money function in excel. Assuming you retire with $1M at age 45, you expect to live until age 80, and you get an average annualized return of 6.5%, you would have an income of $49,998 per year and you can give yourself a 3% raise each year to account for inflation.
PV $1,000,000 N 35 PMT $49,998 I 3.5% [6.5% - 3%] FV 0
Well, did me some quick math and here's what I got:
Assuming 4.5% annual growth rate on your investment, a 4% increase in your contributions per year to your retirement, a starting age of 23, an ending age of 45, and an ending value of $1 million dollars, (if my math is right) you'd have to contribute roughly $16,000 starting out at 23 to reach your goal. Now, if you take in average inflation for the last 22 years (to match the 22 year span of investment for your retirement) and apply that same rate going forward, you'll need roughly $2.5 million to equal the spending power of your $1 million today. So, realistically, taking the same parameters and aiming for an end value of $2.5 million, you'd have to up your starting contribution to $40,000 starting at 23 to reach your goal (the last contribution being $117,000 at age 45). If you can do that then you should be good to go.
FYI: Here's a little something to whet your travel appetite:
http://www.bootsnall.com/rtw/
How much in the bank would you retire with (Originally Posted: 07/21/2011)
I posted this thread in the banking forum (I'm in IBD), but I'll post it here as well:
Off the top of my head I'd say the number right now would be between 8 and 10 million in the bank. Take that and put it into some really safe investments and live off of the 3%. I would want to retire into something ie becoming an econ teacher/sportscoach at the highschool level. I'm not the kind of person who could just retire and do nothing all day. The inherent problem with this is if I did make that kind of money quick enough (say at 35), I'd have a hard time walking away from it...
One I hit 3-4MM and realize I have potential...i don't think I would stop there.
My uncle tried to retire at age 50 as a very successful optometrist had his own practice, sold it, and had an easy $5-6MM USD in the bank. After 2 years of getting bored out of his mind he went back to work for the same practice part-time, making full-time salary because of his demand and his clients loved him.
Unless you are a complete lazy fuck I don't see how anyone could legit retire before 50
Yeah agree with retiring into something. I've always wanted to do another degree or just learn a new subject from scratch, maybe something like History or Philosophy.
Though I don't think anybody would do nothing all day. There is so much chit I would do if I managed to retire early and young; learn new subjects, read about more maths and economics, learn new languages, read books all day, learn new martial arts, go travelling, meet new people etc. Retiring early doesn't mean you're going to sit on your ass all day.
If you like what you do you won't retire, especially if you can outsource all the boring shit to monkeys. :)
Yeah, in the office making phone calls and sending e-mails until you're 89 years old! sounds like a really rewarding and meaningful life!
Think my number would be $8mm if its before 40...and take $1mm off of that for every 5 years until age 60.
That's not to say I'd do nothing...I just wouldn't pursue typical "career" advancement anymore. would do something more entrepreneurial and try to become great at golf.
Yep, I'm assuming I won't enjoy what I do (probably extrapolating to my current experience on the job).
If I do enjoy what I do, there's not a chance I'd retire. I'm finding it hard to think of something I'd genuinely enjoy. Maybe venture capital.
I would probably go work for the World Bank or IFC if I ever had 8-10MM in the bank at age 40-45. Make a decent income, make a difference, and travel world and live a legit lifestyle.
Cash in the bank won't result in me retiring, as a wise partner from CDR told everyone at a seminar.... The first 10 mill is fuck you money haha so funny
the euro won't exist by the time the OP will be able to save that much
I guess it is very convenient then for the OP that England is still on the British Pound...
£ ≠ €
lol i had my contacts out, whoops
I guess I've already hit my number, because I will be getting a 8 digit inheritance (USD), including land investments etc. But in order to retire, I have to feel successful on my own, or work would have to be extremely dull.
-This coming from a monkey who hasn't started FT yet =P
Actually if I have between £3-4MM in the bank and make around £100k in interest per year
Isn't inflation usually >3% so making real interest rate negative.
Shit.
I haven't thought this through.
Anyone else considered inflation? Maybe compound interest if I add into the account would supersede it. I really haven't thought this through.
You would be better off moving to a different country, preferably one with a low cost of living and high interest payout. Inflation won't drastically affect day to day life there, once you have bought a house car etc.
You could be getting 7-9%, and taxed a lot less on it. Add effects of compounding (whatever you don't spend) to that and you are much better off.
You might need to know people in those countries in order to make this a reality.
Dude just buy a little bit higher yielding bonds and make your portfolio return 6%. that should make sure you have a comfortable margin.
There are severall decently rated World T Bonds that yield over 6%.
You guys need to get with the times... I've read articles saying in our generation, people will live til they're over 120 years old. If you guys retire at 40 with $6-8 million, you'd have to live 80+ years with only enough money to last you for the first 30-40 years.
^ haha
Retire at 25? how much do you need? (Originally Posted: 02/22/2008)
would you retire at 25 if you got an inheritance for 8-12 million USD?
my lucky friend (actually a friend, not lying) has this opportunity.
Thanks for the responses so far.
As to the advice, thanks to everyone. Perhaps a single guy doesn't need a 6600 sq foot luxury home with a view of the las vegas Strip from the upstairs master, but ...i think i deserve it. If I could only get rid of all the other rooms i never enter, it would save a shitpot of wasted money. problem is i just bought the place. I guess i have some time to decide...it's not like i will run out tomorrow.
I have been spending $250k per year for a number of years while working, just not really caring what stuff costs, butying the best , traveling first class, staying in 5 star hotels, and taking a crew with me to have fun (I tend to like to party with dudes 20 years younger because they don't want to go to bed at 11pm, plus I have a whole speech on partying with people my age--it's all a discussion of who is sick, who died, when your first colonoscopy should be, etc) I usually take some younger traders with me on vacation and pick up the tab. that prolly won't continue. I have enough FF miles for 5-7 international first class trips anyway.
I am leaning toward mostly cash for now and biding my time till a great business deal comes along...or a dislocation in the markets.
Why not just get a sick 2000 sqft penthouse apartment and not have to deal with the constant upkeep and renovations?
Also, is your goal to run cash-flow neutral, more-or-less?
is serious dough. But i think, if he stands to inherit that much, he owes it to whom he inherited it from to work his ass off for while so that he can one day pass along a similar, or even larger amount to those he cares about...
otherwise he becomes a professional gentleman of leisure, a dilletante, and may sacrifice his standing in the eyes of many.
-my two cents,
will1220
I guess it would really depend on my situation and future prospects. If I'm generating significant income or see potential on the horizon, then no I would probably keep on chugging. I think some people underestimate the value work adds to your life and while this is less applicable on wall street, your position still adds a sense of accomplishment. People will just see you in a completely different light. If you aren't able to create value in other areas of your life, people just won't respect you or give you credit and in most cases they will probably jealous. You also won't be able to make moves with that capital if it's the only thing you are relying on. It'll be tough avoiding a vacuous rest of your life.
A situation like this allows you to pursue your true passions, to do something that is more personally rewarding than financially rewarding, one of the greatest opportunities of all. Why waste it doing nothing?
I personally would not. A nice apartment in NYC alone is 8 million.
I told my friend to go back to school. He has a degree, studied business and now works for a big 4 firm. He is good with money now, takes an active interest in the stockmarket so he's going to be responsible with his new wealth.
That being said, I told him to study something like Art History or some liberal arts subject in Europe, where he can take the opportunities to travel extensively, study abroad extensively, and just cultivate some hobbies and passions. After all that, I told him to see what he feels like doing at 30.
A nice apartment in New York City is $8 million??? Yes, if you plan to live at Central Park West, but for other areas $8 million will get you a pretty amazing place to live.
Tell him to buy a blow plantation in Colombia...safe, non-cyclical business and he gets all the blow he wants.
I wouldn't retire per se but i def. wouldnt be in banking
junkbond chill the fuck out, I am deleting your post. (wasn't the one to delete it last time)
Watch "Born Rich" to give him some ideas.
********"Babies don't cost money, they MAKE money." - Jerri Blank********
Stop deleting my posts...my response was completely relevant to the original posts. I said that one's ability to retire at 25 with $10-12 is contingent upon a variety of factors and thus the question was ridiculous. This site is going to deteriorate quickly if you delete every post that you find remotely offensive. I could delete posts as well but never would (esp not just bc a difference of opinion).
Bruce Wayne lives off of his inheritance and he took up a hobby. Maybe the Big 4 firm has a research department in the basement run by an elderly black man your friend could talk to.
if he could (feasibly) invest that money in a fund and make 10% a year on it for the rest of his life, that would be easily enough money to have a sweet life.
Personally I'd probably take 1-2m and give it to a manager and the other 10m and start a hedge fund. Of course, I find the markets fascinating in an academic way so... there's that. Also, I'd like (one day) to join the Forbes 400, so 10m would be a decent sized mustard seed.
Pursue my passions/dreams without any hesitation - too bad I'm a b*tch, am risk averse, care too much about what others think, and only think about money.
If you inherit $10M and you decide to work in investment banking as an analyst your personality is so boring and aspie it is beyond repair. (Yes that sounds harsh but it is the truth see below)
If you want to pursue your own passions (art, music, starting businesses etc) that is another thing entirely. But working for someone as a drone with $10M in the bank in your 20's is simply personality disorder.
Cash is opportunities, you can more likely than not start your own business and do much better than working for someone else.
Good to actually read a post not made by a know-nothing. So tired of these posts of "millionaire by mid-20's" and they think just jumping into finance is going to get them that. The idea of salaries/pay is so skewed on this site it's not even funny. Banana point given
Follow your passion; well said @"WallStreetPlayboys". If I inherited $10M I would start a PE fund, leverage the hell out of it, and mount a hostile take over of something I can passionate about. Then I would terminate all the people I don't like, and strip the hard assets (they would be put in a separate company with all the debt) whilst the brand would be taken public as a sexy stand alone. I would repeat this until I die or become terminally ill.
Well, I'm 25 for another two weeks, so if I got 8-12 mil I would certainly not retire. I would invest and try to buy my way into a top MBA program through donations.
8-12 million is a lot of money, but it's not enough to retire at 25 and live like a baller. I want my money to make money
How much do you need? I am 26 and retired, its not a number but the ability for your assets to fund your life style through their returns. I have considerably more than he does, and I can sustain my lifestyle on that. However it depends on what form it is in and what kind of cash flow he has left after debt servicing and taxes.
Its a complicated thing but it can be done if he has a large enough risk appetite to generate the necessary returns on capital to fund the life style he wants to lead.
I'm out once I hit $600k - I should be able to make $70k/year off that easily. Do I need to live in Lower Manhattan to trade? Nope, not even in the US. You guys are going about this all wrong. NY isn't the place to retire in - you can have fun pretty much anywhere.
Oh, you're one of those pay in cash people? Suppose you really want an $8 apartment (quite the stupid investment - $8 mil can yield $400k/year off of low-risk investments - $40,000 lost in opportunity cost every month.). Well, that's just plain dumb. Rent a place for $10,000 and you have $22k/month to live over of without touching the principle.
Payments are about $600/month for a $100k house, so an $8M house would be the equivalent of $48k/month mortgage payment.. Just plain dumb.
2.5 mil into short term CD's/Treasuries 500k in cash 9 mil in a low risk fund - 5% returns = $450,000 income a year. Subtract taxes and you're still looking at 300k+ a year without working.
Unless you want to live like a rock star, this should be plenty.
wat. how does one even do this within 4 years of undergrad?
Obviously inheritance, luck, speculation or a combination thereof. Probably some hard work as well.
Look up my Q and A and my blog about alternative investments.
It's really not hard to do 15% return on a moderate amount of money. 15% yield is 1.3% a month. When you day trade, all you need to do is hit that target adjusted for future losses. Have you ever traded small-caps? I feel like I'm getting trolled by a geriatric right now.
I wouldn't want to retire at 25 personally. I would just lose my mind and get bored eventually. I would get a nice relaxing job and work till at least 35. If you have that kind of money and don't blow it on stupid things then you will probably be OK. Also depends a lot on if the person would be married, have kids, etc, in my opinion.
Wow, I would be board out of my mind. Your friend could at least stay in college for 10 years. Instead of retiring, I'm saving money to go on adventures.
And if that passion is to bang half of the pacific rim?
definitely would not retire, but I love what I do so I'd keep doing it. if your friend truly does not want to do anything, then he should retire. it's a waste of those assets in my opinion, and he should work, do charitable stuff, or go to school. he probably doesn't have the acumen to be a real value add for a VC firm, but think about this: if you retire at 25 and live until 85, that's 60 years you have to fill. and 8-12mm is a lot, don't get me wrong, but it's not the lottery. I'd tread carefully.
I think it's more about cash flow than it is savings.
I guess my question is, "Can you think of any recurring expenses I am leaving out?" I am certain it's going to be at least $15 k more.
Yes, to the point about gasoline, I forgot to multiply x 12.
I guess my question is, "Can you think of any recurring expenses I am leaving out?" I am certain it's going to be at least $15 k more.
Yes, to the point about gasoline, I forgot to multiply x 12.
I'm in the first half of my twenties and have been pondering with much interest on this question. The simple fact is that I do ABSOLUTELY not plan to work until the legal age of retirement at around 65 or 68 years.
Given that men (and I am male) tend to have much shorter lives than their female counterparts I would not have much time left to enjoy a job-free life if I retired so late.
I haven't done any calculations so my opinion lacks any sensible quantitative insight but I believe £5M (so around $7-$10M) is a very good sum to have as one's retirement funds. But then again it all depends on the kind of lifestyle you wish to pursue once retired. I am conscious this money will not be enough to sustain a lavish existence though...
Yes the major recurring expenses have been covered and even if you calculate it out to be 80k, will you ever just stop making money once u hit say 5M+? Once you've made more and more you can live in a better and better lifestyle, it really doesn't ever end because you'll probably always want more. And are you really going to be single? Having a wife or gf, you'll need like 10x the funds you calculated.
so what? if you fuck up and never amount to anything great (or lose a big chunk of your net worth) then you'll go reverse and start being content with less. Retirement planning this early (pre-30s) is dumb. Live in the present and do your best in the here and now. When the time comes, people adjust.
I like edmundo's ideas though.
I wouldn't worry about it too much. The average life expectancy for a US male at your age is 28.5 more years, but adjusting for your wealth (+ a couple years), then subtracting the amount of stress you have likely endured (say, -5 years), I'd say you'll probably live less than that.
Of course, there is a high variance and I can understand you don't want to run out of money. But as you grow older, you will probably find yourself spending less money (except on health care and unavoidable expenses). I don't think you are gonna be spending 6k*1.03^20 on clothes when you are 70, for example. Also, you'll probably get a decent sum in social security upon retirement.
Anyway, assuming you live 30 years (somewhat optimistic), and spend 80k in real 2010 $ per year, without factoring in social security, and earning 5% on investments after tax, you need 2.3 MM.
Thanks for someone continuing this thread.
I have considered an immediate single-premium life annuity. One example is from BerkshireDirect. A large portion of the annuity return is considred return of capital. BRK limits the amount to $3 million. So I would have some other funds to invest plus I would own my home outright. Here is the BRK Quote: "Your investment of $3,000,000 will yield 4.68% based upon our mortality assumptions and the U.S. Treasury yield curve as of March 26, 2010. This investment will provide you with $14,921 every month for as long as you live, beginning on May 1, 2010.
Under current IRS rules, if your annuity is purchased with non-qualified after-tax dollars, your annual after-tax cash payment, assuming a marginal tax rate of 40.0%, will be $144,602 every year for the first 31.2 years because the IRS will consider 51.9% of each payment to you a return of your principal. Any payments you may receive after 31.2 years will be fully taxable, reducing your annual after-tax cash return to $107,431 thereafter. "
Continuing, since I could always sell my home and recover about $900,000 (the approx value), I have a method of reducing my monthly expenses dramatically: ie move to a smaller place . The home is not only consuming the alternative investment opportunity on $1.1 million, but also is costing $3200-$4000 per month in operating costs.
I guess the bottom line concern is inflation, and the idea I can't seem to accept is a declining net worth at any point. That makes me feel antsy.
Now, throw in the fact I am also considering purchasing a Cessna Corvallis for about $700,000. I will likely end up with it's predecessor aircraft , buying one about 3-5 years old for $400k or so. In the last 5-10 years light single engine airplanes have undergone a revolution and this aircraft is a fast 230-260 mph and has instrumentation rivalling the flight deck of any commercial airliner. Newer planes are just SO cool. Things like Synthetic Vision, fully integrated autopilots, etc allow you to basically plug in an altitude, the ID code for the destination airportt, etc, and the plane will fly the entire route and instrument approach . (I have been an instrument-rated pilot since age 17, and a commercial pilot and flight instructor since age 18, so ownership is a logical step).
This gets more complicated the more I consider it.
You're a pilot, so I know you've heard this advice before. But I think it bears repeating here:
If it flies, floats, or fucks, you're better off renting it!!!
I would avoid the life annuity because:
a) They are probably overestimating your life expectancy.
b) Life annuities are on average overpriced (obviously)
c) You can probably get an above market return on your cash. This annuity is good if you can only get a shitty return / can't beat the market. Diversify your portfolio, and the life annuity is unnecessary.
Why not just work all your life?
Because some people want to work their asses off the first 10-20 years of their professional lives so that afterwards they may retire and lead a peaceful existence where they may indulge in whatever they please.
They could also spend more time with their family/friends and maybe help run a charity. Principle of self-actualization from Maslow's pyramid my friend...
I'm continuing this thread after thinking about this for several months.
I definitely want to avoid spending much time trading, but do want to keep access to a good trading system and good info sources. I have decided not to do the immediate annuity. I want control over most of my money. Presently I am about 65% in cash equivalents and 35% in bonds. I have negotiated a special rate of 3.5% on short term FDIC insured funds by placing a large deposit at one bank and by adding beneficiaries it is fully insured. The rest is munis and corporates of various ratings. I never would have suspected that 5% would be a great return for safe investments, but it appears to be now.
So, adding a little info there is abt $5 mill in the entire portfolio exclusing the house. I realize it's a good problem for most people to have but i still don't feel like i might not outlive the money.
Whatever you do, please don't tell me to call Suze Orman.
Dude you are not going to outlive the money. Very worst case scenario, you have to scale back a bit late in life. Remember you are going to get a decent amount of social security at 65 also. It scales with income.
Like I mentioned in a comment I made on another post yesterday or the day before (don't remember the topic, sorry), with the Internet it is not only possible but relatively simple to make $50,000 a year from home. The example I gave was a guy I know who sets up WordPress websites for people (he's into other stuff now that pays well, but that's what got him started and is still his biggest moneymaker).
He takes a product available to everyone for free (WordPress) and puts it together with a web hosting package through GoDaddy (around $100/year). The whole process of setting someone up takes about 10 minutes and he makes $110 to do it (he charges $59 for the service and gets a 50% commission from GoDaddy). All of his marketing is blog and Twitter based (free) and most of it is word of mouth. He makes about $8,000 a month now.
There is a whole Internet full of guys like him who aren't going baller or creating the next Google, but who are combining free tools into packages they charge money for and making $50-100,000 a year doing it.
We don't have to look any further than WSO, though. Patrick is finished now, thanks to this site. He's off to travel the world and enjoy life rather than being chained to a cubicle. He's probably had higher infrastructure costs over the past couple years than most websites of this nature, but he's built it into a successful money maker and now he gets to live the life he chooses.
WSO is obviously a great example, but probably atypically successful. But the wordpress example is basically a job. You are working a certain amount, and get paid a certain amount. Sure the work might be more rewarding/enjoyable, but I don't think it can be distinguished from a job. Not obviously superior to - say - working for Microsoft.
WSO, in contrast, once developed probably requires minimal time investment and delivers a steady cash flow. That's more of what I meant - something you can develop to the point where you can sit back and enjoy the proceeds for life (or at least a long time). Basically, looking for passive income.
In response to the posts: I had nothing until I started trading, so i definitely would do it over again. When I say nothing I borrowed my first capital from a line of credit I had...I actually had a negative net worth. I started late in life, at 38. I wish I had started right out of college on an exchange as there were many more opportunities back then. Every edge gets arb'ed away much faster today and I think I have run out of new edges, so retirement seems apprpriate.
Regarding the comment about cash, I am earning 3.25-3.5 on free cash in an insured institution. The deposit has enough beneficiaries such that it's entirely insured. It is a 5 yr deposit that is entirely liquid because I have a free put--no withdrawal penalty.
Regarding the comment about social security, I am going to receive very little because traders in securities do not pay self-employment tax unless they are receiving W-2 income. If you are a proprietary trader receiving a K-1 you are not subject to SE tax.
Regarding leaving money to kids, I feel that except in extraordinary circumstances they generally need to make their own way after they receive an education.
Agreed. It sounds like you need to read The 4-Hour Workweek if you haven't already. It's basically the bible of automatic cash flow, which is what you're referring to.
There are many examples, but http://exilelifestyle.com/ is a pretty interesting one. Also, if you go to YouTube and enter 4 hour work week case studies, you'll find a shitload. Here is one I found particularly amusing:
I realize that lifestyle isn't for everyone, and I don't want to hijack the thread. Bottom line, if you're looking for recurring cash flow that doesn't require a constant 40-hours a week in effort, create some in-demand information product and sell it online.
thanks for the video edmundo, ive actually watched a lot of these after i finished the book maybe two summers ago - which again everybody should read - and this is def. one of the best ones ive seen. Also Edmundo, thanks for all of the effort you put into posting/replying and helping us all out.
Ask and you shall receive. From today's Under-30 CEO blog, 25 Businesses You Can Start Today:
http://under30ceo.com/aspiring-entrepreneurs-25-businesses-you-can-star…
With the talk of "The 4-Hour Workweek," I think it's relevant to bring up the counterpoint, as expressed in this post from AoM: http://artofmanliness.com/2008/04/06/the-virtuous-life-industry/
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