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Should I retire?

I've made my millions in the last 15 years and now I'm thinking about retiring.  If you had 11.5 million "in the bank" would you retire?  I think inflation will kill me.

Anon
Friday, May 28, 2004


I'd find a part-time lax job that I'd enjoy more... Like working in an airline, and using flight benefits to fly around the world.

A Dingo Ate My Baby
Friday, May 28, 2004

Are we talking Rupee, Yen, Bath, Won or Bolivar here?

Just me (Sir to you)
Friday, May 28, 2004

U.S. Dollar to be precise.

Anon
Friday, May 28, 2004

Does your mother know you're on the computer?


Friday, May 28, 2004

How old are you?  Inflation doesn't matter much to eighty year-olds.

A good financial advisor can do some modeling so you can understand the risks to your portfolio.

Steve
Friday, May 28, 2004

Assuming you are talking USD, then yeah, 11.5 mil should be enough to live on forever, unless you're incredibly extravagent.

Even if you only invested it at a rate equal to inflation, you take a long time to burn that much capital, unless you're a VC ;-)

The fact is, you could retire now and if you didn't like it, then take some part-time assignments now and again, to keep busy.

I dread retirement myself, I think I'd just get too bored. Playing golf, etc just isn't enough for anyone.

Steve Jones (UK)
Friday, May 28, 2004

My mom and dad passed away a while ago.  That's when I started my own company and I seemed to do ok with it.  I guess i can live on 1% interest.  Can't wait till they raise it.

Anon
Friday, May 28, 2004

11.5 million divided by 100k a year = 115 years.... with no interest whatsoever...  If you had that much money you could live comfortably for the rest of your life.

chris
Friday, May 28, 2004

I'd convert it to something with a bit more stable prospects. 100% US Dollar seems too risky to me.

Just me (Sir to you)
Friday, May 28, 2004

Get off the forum, troll!

anon-y-mous cow-ard
Friday, May 28, 2004

Why do you believe the U.S. dollar is not stable?  It seems stable enough to me.  What would you recommend?

Anon
Friday, May 28, 2004

> What would you recommend?

Rupees.  Bound to go up with this outsourcing marlarky.  Sorry..

i like i
Friday, May 28, 2004

if you made $11.5 million and you do not know how to manage money, well in that case you have a big chance to loose it soon.


Friday, May 28, 2004

You can invest in me, so I can start a company

Berlin Brown
Friday, May 28, 2004

The USD is "stable" in that it won't become worthless overnight, but compared to other currencies it is going up and down like a yo-yo.

For example, compared to GBP it has ranged (downwards) from 1.45 to 1.90 in the past two years. In other words, your 11,500,000 USD would have lost 30% in two years, compared to holding the same amount of cash in GBP.

It's even worse against EUR, almost a 40% loss, over the same period, just because you happened to hold it in USD. There has even been a "loss" of 10% against the INR - Indian Rupee (it was much worse until recently, but the USD recently gained back some ground).

Even to someone of your substantial means, losing three or four million dollars in a couple years is material and should not be considered to be stable.

Disclaimers: Sorry if this is stating the obvious, its just that I have an interest in these matters too. I assume you are aware of the above. As always, past performance is no indicator of future financial growth.

Steve Jones (UK)
Friday, May 28, 2004

Naw.  I live on the interest.  I live very basic.  Nothing fancy here.  I just don't trust the stock market.  It's like gambling.  I'm actually very good with managing my money.

Anon
Friday, May 28, 2004

From personal experience if you are serious you should contact these people. You should be able to retire today with 11.5M and so should your children if properly managed.

http://www.bbh.com/ I personally feel these people are beyond reproach when it comes to matters of personal finance.

Jeff
Friday, May 28, 2004

Well that is an interesting concept... holding money in a different currency.  I think I have to find a trustworthy financial advisor.

Anon
Friday, May 28, 2004

http://www.refconews.com/cur_usd_f_f.html

"In recent months, the decline in the US dollar has been hitting the headlines of all major financial publications. Since the beginning of this year, the trade weighted dollar index has fallen over 14%, while declining 20% against the euro. Based upon both technical and fundamental analysis, the collapse in the dollar is expected to continue. However, the dollar's weakness against currencies such as the EURUSD, are at very extreme levels, suggesting that a need for a meaningful correction cannot be overstated. This implies that volatility will be the theme in the first quarter of 2004. What we have seen in 2004 is that a rebounding economy does not necessarily translate into a strengthening dollar. A widening current account deficit that is funded primarily by foreign central banks will continue to exert downward pressure on the US dollar. As indicated in the table below, investment banks are forecasting continued dollar depreciation against the majors. "

http://www.ntrs.com/library/econ_research/weekly/us/pc012304.pdf

"My bet is that in 2005, foreign central bankers will have had their fill of countering the dollar’s natural inclination. When that happens, the dollar will likely go into an uncontrolled tailspin and the Fed will have jack up interest rates."

http://www.studien-von-zeitfragen.de/Weltfinanz/US_Outlook_2004/us_outlook_2004.html

"Even against that frightening background, we can hope that an orderly decline in the value of the dollar to a trend line in keeping with that before the 1990s boom, might be manageable.

What seems to be happening now however is that a more widespread awareness of the size and significance of the trade deficit and the unlikelihood that it will be remedied soon or through the processes of normal trade and finance, is causing people to get out of dollars more rapidly and comprehensively. One angle on this, put forward by David Chiang is that „my best recommendation to protect your personal wealth and capital is to reduce exposure to US dollar based investments. The de-industrialized American economy has already passed the rubicon or the point of no return. There simply is very little in the way of ‚real‘ wealth-producing industrial capacity left. Our federal reserve Chairman continues to propound dubious analyses. As an economy, we are massively inflating financial claims without the backing of tangible assets or the capacity to produce true economic wealth. When the mortgage-finance driven credit bubble implodes, we need to have our personal finances protected for the inevitable.“ On the back of that real-estate bubble, the US Government has now backed $8 trillion of mortgage securities at Fannie Mae and Freddy Mac. The financial fallout when the bubble bursts must give cause for grave concern, with the repercussions potentially worldwide"

Just me (Sir to you)
Friday, May 28, 2004

Thanks for the link Jeff.

Anon
Friday, May 28, 2004

Wow that's an eye-opener Just Me.

Anon
Friday, May 28, 2004

BTW, even though Anon is trolling, the Dollar deficit is a serious topic that probably will hit a lott of us more than any "outsourcing" issues.

Just me (Sir to you)
Friday, May 28, 2004

>For example, compared to GBP it has ranged (downwards) from 1.45 >to 1.90 in the past two years. In other words, your 11,500,000 USD >would have lost 30% in two years, compared to holding the same >amount of cash in GBP.

What are you comparing the Pound against for your claim of stability? The Pound ?

a2800276
Friday, May 28, 2004

I'm comparing USD with GBP, etc.

Not making any claim to the stability of GBP.

Steve Jones (UK)
Friday, May 28, 2004

When you retire you will likely die first intellectually
and then in your body. Some people can handle
retirement.  Many can't. Which are you?

son of parnas
Friday, May 28, 2004

Invest it, man!  Do you realize how many lottery tickets you can buy for 11.5 million dollars!?

Kyralessa
Friday, May 28, 2004

Problems of the common man.

m
Friday, May 28, 2004

Just don't buy a $11.5 million house in Beverly Hills :)

grunt
Friday, May 28, 2004

Go to Vegas and put it all on black! 

...no, wait, red!  Oh well, make up your own damn mind!


Then wash, rinse, repeat until either you or the casino is broke.  ;-)

Michael Kale
Friday, May 28, 2004

11.5 million US dollars? At that point I would say that you are already retired and doing exactly what you want to do. If not, then for heaven's sake quit what you're doing and go do what it is you want to do. You don't have to stop everything, roll over, and die; in fact you should have something to do that keeps you engaged. Personally, we hope to have our boat-building shop finished and a couple of boats out the door by the time we get a lowly CA$350K, and then we 'retire' to the lake. We'll build boats, and maybe work part time for the park board.

Retirement isn't--or shouldn't be--about keeping the seat of a rocking chair warm, but about the financial freedom to do whatever the heck you want without worrying about where the next meal is coming from.

Ron Porter
Friday, May 28, 2004


A fool and his money are soon separated.

And a fool is anyone who claims to have over 11 million in the bank and comes to a web site for techies and ask financial advice.

Stalin
Friday, May 28, 2004

Could you spare about $5000 or so that I may use it to fix up my flooded basement?

Waterlogged in Michigan
Friday, May 28, 2004

"I just don't trust the stock market.  It's like gambling. "

You need to learn about the concept of financial risk.  Putting $10 million in a bank because it's "safe" is not avoiding risk.  Read a book like B. Malkiel's "A Random Walk Down Wall Street".  If I recall, that book is good both on subject of risk and on why stockmarket is not "gambling".  Yes, performance of any given stock over a period of days or months may be random, and if that's your investment focus it may be no better than gambling.  But if you focus on performance of a broad range of businesses over a period of many years then the stock market is perhaps the least risky form of investment there is. 

Because of inflation, money invested in bank savings accounts is almost guaranteed to dimish in real value over a long period of time.  On the other hand, money invested in a broad range of stocks is almost guaranteed to increase in value (i.e., outpace inflation) over a long period of time. 

You're throwing money away by keeping it in a bank account. 

Herbert Sitz
Friday, May 28, 2004

"But if you focus on performance of a broad range of businesses over a period of many years then the stock market is perhaps the least risky form of investment there is"

there are booms, busts and vey long periods of little or no movement. Which "many years" are you referring to?

Just me (Sir to you)
Friday, May 28, 2004

Take about 2-3 million of it and buy an immediate fixed-rate annuity that will start at about $100K/year and increase by 2% each year.  That will give you a safety net that you can live on no matter what else happens.

Then take the other $8-$9 million and spend some months researching a variety of investment types for it (including "safe" investements).

T. Norman
Friday, May 28, 2004

Keeping large sums of money in the bank is not safe, in the short run or the long run. Keeping it in gold is only a bit more stable. Personally managing 11M in the US is not a sound idea since you are at the point where upon your death, not just state but federal laws will severly impact the dispersement of your fortune. Even in day to day life how you manage that type of money can be a very complicated scenario.

The people that will line up at your door once you start solictiting for a company to manage even a slice of your portfolio are usually barely credible. The vast majority of firms that manage people's complete portfolios have only been in business for one generation, that is not who you want to invest in once you have over 3M in the bank. Splitting that sum of money between different firms is probably less secure then placing the money in the bank since it will be almost impossible for all the companies to work in a unified way like going to one company will.

When you need 11M managed you need to be talking to someone that is charging you $700 an hour and is not living off of a percentage of your growth. If you die with 11M in the bank your trust should have to pay $250,000 to have your finances properly handled, your trust will allready be paying a 55% tax anyway unless you can better manage things. I feel in the US the risk is not in investment as much as it is in your IRS filings. With 11M your a worthy audit every year you file and with the IRS being able to go back so far your risk more then doubles every year you move forward. Having a team of tax law gurus that deal with personal wealth at these levels will be your biggest asset in life.

Jeff
Friday, May 28, 2004

Actually, the interesting thing pointed out to me (on the webpage of John T Reed, who is most notable for writing an excellent review of how *bad* "Rich Dad, Poor Dad" and the entire Robert Kiyosaki enterprise is) was that you don't *actually* need a million to be fiscially secure.  You do need the money if you want to be especially extravagant and/or waste it on drugs and hookers.

You really just need enough to buy outright all of the things that most middle-class folks traditionally have to mortgage for.  Most houses, outside of certain urban areas like NYC and SF, are not worth more than a million.  You can get 250,000 miles out of a well purchased car.  Things like that.

The other half of the equation is how much money we spend to save what little time we've got left.  Cleaning service instead of doing it ourselves, day care instead of spending time raising kids, $30 at the service station instead of $10 for oil and filter.

The biggest way to lose money is to do stupid stuff with it, of course.  Drugs and hookers are only the beginning of stupid things to do with your money.  If you aren't pulling our leg, you *really* need to see a financial advisor....

Flamebait Sr.
Friday, May 28, 2004

You should immediately check into mental hospital. I think, spending too much time job hunting has had such a bad effect on your mental state. Get on it fast otherwise your hallaucination will be as dramatic as the guy in "Beautiful Mind"

Wish you best of luck in road to mental recovery. Keep us posted.

Cosmo Kramer should be the president of the United States
Friday, May 28, 2004

What's the link, Flamebait?

Also, have you bought any of his books? Any good?


Friday, May 28, 2004

I know the link to his web page of course, I'm talking about the link to where he said that about the million.


Friday, May 28, 2004

"there are booms, busts and vey long periods of little or no movement. Which "many years" are you referring to? "

From "Random Walk Down Wall Street":

"The longer the time period which you can hold on to your investments, the greater should be the share of common stocks in your portfolio.  IN general, you are reasonably sure of earning the generous rates of return from common stocks only if you can hold them for relatively long periods of time, such as twenty years or more." (pp. 404-05 of 6th ed.)

Twenty years is a long time, but we're talking about _Retirement_ investments here.  If you're not investing for the long term then think bonds or other investments that are less volatile over the shorter terms even if their longer term returns are smaller.

Regarding boom and bust periods, the average rate of return on common stocks for investments held for the entire 44 year period between 1950 and 1994 was 10%.  That's through several booms and busts.  Of course, if you invested for a period of much less than that, say any 1 year within that range, your return could have varied anywhere between +52.6% (best year) and -26.5% (worst year).  But over a longer period, say any 20 year period between 1950 and 1994, even the _worst_ 20 year period yielded an average annual return of +6.5%.  The best 20 year period had an average annual return of +14.6%. 

Herbert Sitz
Friday, May 28, 2004

I've never bought any of his books because I'm not in the position to take advantage of the advice contained within (he does real estate investing)  I know about the free articles on his website because he does an excellent job of pointing out the real estate "gurus" to avoid.

http://www.johntreed.com/rateseminars.html

Flamebait Sr.
Friday, May 28, 2004

Those numbers in previous post are of course referring to a "diversified" investment in common stocks, like S&P 500 index.  If you invest only in a single stock you risk losing a lot no matter how you do it.

Herbert Sitz
Friday, May 28, 2004

Play a game.

See if you can get rid of the entire amount within one year, without giving anything away, and without having having any assets to show for your year of spending. As well, restrict yourself to paying regular prices for all services received.

My regular price for this advice is 1.2 million USD, cash or cheque.

Edward
Friday, May 28, 2004

In response to the OP question : "If you had 11.5 million "in the bank" would you retire?", my answer is an definite 'yes'.  I think retirement could be achieved on much less than this, with the minimum being about 1 million for a very conservative person with no children.

However, be careful about the definition of the word retirement.  For me, this means living below my means using the fixed income(CD, bond, other low-risk investments) I've established from the 11.5 million. In other words, I'd live off the interest and never touch the principal.  If you buy 5% CDs, this is about $575k per year before taxes(say $350k after tax).  Unless you require a very extravagant lifestyle, you should be able to live on much less than this per year.  Once your basic living costs are completely paid(house, car, food, various insurance policies, credit card debt, all other debt), it's difficult for me to see how one could be required to spend additional gross amounts of money in an average year.  For large purchases, save money and spread the cost over a few years.  Use the extra money(I assume that it won't be needed for many years) from your fixed income to invest in higher-risk investments, and use the gains from this to increase your 11.5 million which will in turn increase your fixed income.  If you lose money in these higher-risk investments, no problem, you still have that permanent fixed income.

Will inflation kill you?  It depends on the lifestyle that you want to live with your $350k per year.  If you initially live close to this limit, then yes, I'd guess that inflation would eventually catch up.  But if you started out living at, say $100k, then I'd say that inflation would not kill you for many years, if ever.

What's the flaw in this logic?


Friday, May 28, 2004

I have $37 and a coupon for a free Chic-fil-A breakfast sandwich in my wallet . . . should *I* retire?

Anon
Friday, May 28, 2004

Anon - Depends, do you have a coupon for a drink with that sandwich?

KillMeNow
Friday, May 28, 2004

It seems I'm not the first with this offer, but I'll give you a discount. For 9 percent of the nest egg, I will advise you on how to manage your money.

By the way, you have to be a troll. Anyone with 1 million spare, let alone 11 million, has bank advisor and investment spruikers all over them.

Do what a former boss of mine did. Buy a tropical island and run a resort.


Friday, May 28, 2004

> Well that is an interesting concept... holding money in a different currency.

This is done by buying foreign bonds.  I do it in my albeit smaller portfolio.  I like T Rowe Price international bond fund.  Be careful A LOT of foreign bond funds try to take currency fluctuations out of the returns by hedging US Bonds.  You then loose your currency diversification.  T. Rowe Price is unhedged.  Plus they are good customers ; )

christopher baus (www.baus.net)
Friday, May 28, 2004

Herbert Sitz

I presume your numbers are based on the US stock market.  This is survivorship bias.  If you would have been a citizen of a less prosperus county you wouldn't have been as well off.  There's no guarantee that US market will be as successful in the future as it has in the past.

josReader
Friday, May 28, 2004

Guys, guys:

I was just kidding why do you have to take everything so seriously?

Anon
Friday, May 28, 2004

You know, Anon, at $10,000 apiece, you could make 1150 people very happy.

I, for instance, could stand to be happier than I am at present.

Just think what a warm fuzzy feeling you'll have inside.

Kyralessa
Friday, May 28, 2004

"There's no guarantee that US market will be as successful in the future as it has in the past."

Of course not.  In fact, in his book I believe Malkiel advises investors to invest in both U.S. and foreign market index funds. 

But overall annual returns from stock market investments in U.S. markets over last 100 years have averaged around 10%.  If you think things are going to change dramatically anytime in the near future (20 to 30 years) then I'd be curious to ask why because I sure don't see it.  For one thing, because most of the largest U.S. companies already are multi-national.

Herbert Sitz
Friday, May 28, 2004

Even if this a hoax.  It is an interesting question.  How much does it take to cash out.  I usually think 5million is what it would take to live a good life if you already owned a home.

christopher baus (www.baus.net)
Friday, May 28, 2004

You think $11.5M is something... well it's nothing. Me and my partner sold our crappy .com in '99 and I pocketed $50M.  I spend my days completely drunk on fine scotch and scarfing down "Chessmen" butter cookies (I now weigh over 280 lbs).

Maybe you are envious that one of my many guest bedrooms has a waterbed, except it's stuffed with crumpled-up bills, over $50,000 worth.

And sometimes I like to go to a drive-up bank to withdraw $25,000 in cash, and I make them stuff it all in that tube, just because I can.

Melvin Snebb
Friday, May 28, 2004

If you do retire, will you be spending more time posting to Joel on Software?  Because that would affect my answer.

Cognitive Dissonance
Friday, May 28, 2004

"As an economy, we are massively inflating financial claims without the backing of tangible assets or the capacity to produce true economic wealth."

Good articles. We are already seeng this - gas prices are not really going up, it's just that we are importing gas and dollars are depreciating. Regular goods imported from China don't depreciate because they have a policy of havig a fixed exchange rate. This stuff is straining as the seams and when it breaks all hell is going to break lose - 50% inflation will be the good years.

Putting your money in gold is foolish and dangerous because the first thing the government does when the economy collapses is declare that possesion of gold is illegal. It also assumes that other people will switch to the gold standard and accept gold for purchases, which will never happen.

Dennis Atkins
Friday, May 28, 2004

Spend 11 million on wild women and drink. Waste the other half million.

Not George Best
Saturday, May 29, 2004

i like strippers

poop
Saturday, May 29, 2004

This guy who bought the island used to have a little party trick.

He would park his Ferrari then approach people on the street and asking for change for the parking meter.

He thought he was hilarious.

He was a jerk.


Saturday, May 29, 2004

"If you had 11.5 million "in the bank" would you retire?"

I have no idea.  I've never had 11.5M.  Wire it to me and I'll think about it.

poorboy
Saturday, May 29, 2004

Invest in shipping, invest just usd 2m and calculate net income per day at least usd 2000.
Not containers, tramp shipping ie Bulk carriers.
Shipping market is secured for at least 4 years more.

G.Thetis
Thursday, July 08, 2004

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