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Okay so people here mention inflation. So basically years from now, everything will increase in price right? Example rent will go up.
So basically how much money a month a year can you make off passive income where it will overcome it?
I mean if someone has 2 million dollars in the bank that they could put anywhere, would that a lot already? A CD could give you 2.5 percent so that would be 50,000 USD... which is pretty good.
I suggest doing a pro-forma statement of budgeted post-retirement income and expenses.
I will never rely on money in the bank for passive income. Anyone one who does will be eating a rapidly shrinking pie. Money in the bank is for saving and having enough so major purchases can be made without financing.
I have been mostly invested in something for nearly 50 years. Right now, our IRAs are roughly 50/50 stocks/fixed income (bonds and preferreds). Our post-tax investments are roughly 60/30/10 stocks/fixed/bank.
Let say you own your house and do not owe any mortgate.
If you had 2 million dollars cash all to your name, would you say buying a 1 million dollar house and paying it off fully and then renting it out say a 2 bedroom would be very good idea?
The thing is online savings seem to give 2 percent interest. So you could put 1 million dollars in the bank and get 21k a year. But you would make more with this buying a house right and then rent it out? But if you have 2 houses at 1 million each and rent them, while you have your own house that you already paid fully, that surely would be enough right?
I mean if someone has 2 million dollars in the bank that they could put anywhere, would that a lot already? A CD could give you 2.5 percent so that would be 50,000 USD... which is pretty good.
No, when inflation is running around 3%, getting 2.5% interest is not good at all.
The others are right: you need to learn about safe withdrawal rates for different types of investments. It's not just about the total sum of money you have, it's how it's invested that makes the difference.
Compare a $250,000 portfolio for a retiree in San Diego vs. the same portfolio for a retiree in Malaysia.
Same portfolio...very different levels of lifestyle comfort.
you are missing the point ...what current expenses are while working are what they are ... once you stop and the pay checks end all that matters is what you have to work with , a portfolio has no memory what your income was or your expenses were when you had a pay check or two pay checks coming in .. all you have is what you end with .. you then have to back in to a life that fits .
Let say you own your house and do not owe any mortgate.
If you had 2 million dollars cash all to your name, would you say buying a 1 million dollar house and paying it off fully and then renting it out say a 2 bedroom would be very good idea?
The thing is online savings seem to give 2 percent interest. So you could put 1 million dollars in the bank and get 21k a year. But you would make more with this buying a house right and then rent it out? But if you have 2 houses at 1 million each and rent them, while you have your own house that you already paid fully, that surely would be enough right?
What on earth?!!
Not very many people could afford to rent a house that you bought for $1,000,000 (OK, I guess in places like the Bay Area, but not in most areas of the US) so your rental pool would be very small (not to mention that most people who could afford the rent on such an expensive place would likely buy their own place instead).
OP, why do you keep coming up with these bizarre scenarios?
OP, why do you keep coming up with these bizarre scenarios?
Sounds like he is frightened of the stock market, but thinks there is no risk in real estate.
Buying an expensive house to live in and renting out rooms certainly does not sound attractive. This is quite different than just finding a tenant for a rental house. I did it when I was younger and single, but only with people I already knew.
IMO, someone who is truly scared of the stock market can use some single-premium life annuities, with the rest in bonds. The effective percentage draw will depend on one's age, of course. While I think it's better do use the conventional approach of equities plus other assets, equities will not help someone who is just going to panic and sell the next time the market drops.
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