He is still working, but what if that job were lost & the only guaranteed money he had for the rest of his life is that 1 million? Would you still advise the same? How would you use a "normal level of risk to get a few extra tens of K / year, perpetual and growing with inflation" from 1 million dollars without locking all of it away for years, or gambling on the stock market, and still having access to enough for living expenses?
What would you do if you had a million dollars?
- Thread starter johnA27
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Stock market isn't really a gamble if properly diversified! But once again, having zero debt, living sensibly within your means andbknowing the difference between " WANTS & NEEDS " , you can live nicely.
Here are some simple lists.....and with favorable rate of returns. Monthly and yr to yearly rates of returns.
http://globefunddb.theglobeandmail....ian+Dividend+and+Income+Equity&top=Best+Funds
What do you mean? 10 & 15 year returns are quite decent? That is a long period of time lol.
Luv2lick, the period since the 2008 meltdown has been historically high. If you retired and had say 1.2 million the advice you would get is to take out between 4 and 5% annually so that you would not run out of money. That would yield you around $54 thousand annually. Remember when in retirement you need to balance your portfolio to avoid major downturns in the equity markets.
http://money.usnews.com/money/retir...w-to-avoid-running-out-of-money-in-retirement
Withdraw 4 percent or less each year. You should take only small distributions from your portfolio every year if you want the money to last the rest of your life. If you withdraw 4 percent annually from a portfolio invested in 35 percent U.S. stocks and 65 percent corporate bonds, there’s an 89 percent chance that the money will last 35 or more years, according to Congressional Research Service calculations. And if you withdraw less money in years when your portfolio performs poorly, it can help your investments recover faster. “When you get into retirement, if you really want to make sure that you don’t outlive your assets, you need to control your withdrawal rate,” Hanson says. “Somewhere around a 4 to 5 percent withdrawal rate of your assets is probably the most you can do. If you can make sure your lifestyle stays at or below that number, you are setting yourself up for success.”
http://money.usnews.com/money/retir...w-to-avoid-running-out-of-money-in-retirement
Withdraw 4 percent or less each year. You should take only small distributions from your portfolio every year if you want the money to last the rest of your life. If you withdraw 4 percent annually from a portfolio invested in 35 percent U.S. stocks and 65 percent corporate bonds, there’s an 89 percent chance that the money will last 35 or more years, according to Congressional Research Service calculations. And if you withdraw less money in years when your portfolio performs poorly, it can help your investments recover faster. “When you get into retirement, if you really want to make sure that you don’t outlive your assets, you need to control your withdrawal rate,” Hanson says. “Somewhere around a 4 to 5 percent withdrawal rate of your assets is probably the most you can do. If you can make sure your lifestyle stays at or below that number, you are setting yourself up for success.”
You don't need $800 to sleep with two ladies. $400-$480 should be plenty to play for an hour with two pretty ladies, based on advertised rates I see around.
I already knew that because I'm on track to meeting my goals. You just went into more of a detailed script which is fine. I guess I could have done that too. But as I said repeatedly...and ill say it again.
For a single person living within one means.....it's achievable. One can also buy a condo where it is affordable and rent it out for extra cash flow income. That is another source of helping income. Plus, CPP also is added
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I was commenting on the specific situation. When expenses are already covered, being too cautious with investments is likely a mistake. "Safe" options ensure you lose some money. Keeping 1 mil in cash loses 20K / year to inflation (if 2%). Saving accounts / GICs / bonds are better, but give you at most 2% / year gross or so, which after tax (say 40% marginal) and 2% inflation means you are still losing 0.8% or 8K / year.
Compare to a simple strategy of putting 1 mil into a low-commission Canadian stock market index fund. It will pay currently, per TD Waterhouse research, 3.2% in dividends - that's 32K / year gross or 25K / year after tax.
Surely there is a risk. Is it better to lose 8K reliably or gain 25K with some risk?
It is by no means a universal solution. In real life, need to consider other income / expenses / assets / pension / age / gender / health at least. It may be right to buy a mix of some annuity, safer investments, and equities.
I realized I said 'conservatively' without giving any numbers. GICs are almost laughable as an investment. Off the top of my head, I wouldn't be able to tell you what I consider a 'normal' level of risk, but as I had said (for my scenario), I comfortably have everything I need don't feel the need to splurge. The extra 10k or whatever in utility isn't likely to be worth the risk. You can see 'oh but you can grow the money', but really more money isn't adding a whole lot of value in my life.
Carry on with your actual investing discussion.
If I had a million dollars I'd sleep with Vancouver's top notch SPs at least once every week, if not more frequently, for at least one year. And I'd do it for extended hours (and overnights when I can).
Your "TD Waterhouse research" link refers to a "S&P/TSX 60 Index" investment. How does that compare to a "BMO Canadian Market GIC" that offers "100% principal protection" and an unlimited "Maximum Rate of Return for the Term"?
https://www.bmo.com/main/personal/i...rogressive-gics/bmo-canadian-market-gic#rates
Couldn't this GIC earn as much as the item you linked, well over the 2% you mentioned for GICs, but with no risk?
As any other stock-market GIC, it's a sophisticated instrument, designed to rip you off in a less obvious manner.
If I understand the terms, you'd lock your money for 3 years. You get your original investment back if the index is down or flat. If the index is up, you also get 0.35 of the increase. No dividends on top of that, since you don't actually own any stocks.
I'll compare this GIC with the ETF I mentioned (exchange-traded fund based on the same index). The ETF price may go down or up, in any case you also get dividends, estimated 3.2% * 3 years = 9.6%.
Ignoring inflation and taxes, in reality they both would support my point as shown before.
Case 1, the index is down 10% in 3 years.
GIC return is 0% (safe!)
ETF return is -10% price + 9.6% dividends = -0.4%
Case 2, the index is flat.
GIC return is 0% (safe!)
ETF return is 0% price + 9.6% dividends = +9.6%
Case 3, the index is up 10% in 3 years.
GIC return is 0.35 * 10% = +3.5%
ETF return is +10% price + 9.6% dividends = 19.6%
The index can go down way more than 10% in 3 years, in which case you may regret the risky investment. But it might go up more than 10% too. On balance, I don't see stock-market GIC as a good option for anyone.
I've had just about enough schooling at this point so I would likely open a high end comfort food restaurant.
Or a fancy sports bar.
Or a fancy sports bar.
Oh I thought you of all people would wanna do 2 chicks at the same time lol
Interesting. Thank you for the detailed explanation.
If you keep 100% of your stock investment profits plus dividends, how does the bank make any money? Fees they charge to stock investors?
I guess banks make more money from those investing in mutual funds since they're always suggesting this to me when i am requesting GICs.
