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Probably so.... they'd need to be atypical (wise beyond their years) for this to work.
The OP's hypothetical was that the 18-year-old would be given $200,000, presumably by
well-off and generous parents. My point was that "even" $90,000 would accomplish a lot
(via the power of time and compound interest), i.e. taking the place of the retirement benefit
missing from many of today's jobs.
I think we are pretty close.
Here’s a possible break down of $90k being spent:
- 20 year old needs a newer car that could last 10+ years and they have $5k set aside. Tell them you’ll match it and get them a far safer, more reliable car for $10k. Of course this assumes the kid has otherwise proven to be responsible with their actions and money.
- 18 or 19 and want to work full time and go to school? Pay ~$10-15k for their 2 year degree while they work full time and show vast improvements (percentage wise) in their net worth
- At 23 the kid finds a $150k home and plans on paying $20k down and paying it off quickly. Match that and make it $40k down. Now their house payment is ~$500/month. If the young person does well, tell them you’ll pay off their last $10k owed. Possibly a paid off home/rental property by 27?
Well that’s only about $50k, but as you can see, a little money strategically placed can keep a child motivated and incentivized to build their net worth.
By their early 30s, that small investment could have produced a millionaire.
This crazy method requires virtually no unique skills...just a basic understanding of finances.
And yes...a $200k investment from parents. Perhaps in a trust so the child can’t touch it for a certain amount of time.
I would submit that by age 25-30 an intelligent young person with a little guidance could have a net worth of $500,000+ and no debt. This could essentially make them self sustaining for life...and rich by 40-50 if they hold on to a few basic principles. The person would also be young enough to still attend college if they so choose.
And let’s face it, who’s the same person at 25 as they are at 18? By 25 most people will have a much better understanding of who they are and where their interest lie.
For a young person that lives at home (or on the cheap with roommates), $200k + contributing $15k+/year of their own money + no debt could pay huge dividends long term. Not to mention the life skills accumulated through being in the working world and understanding exactly how to manage finances.
Look at all the people out here who are 30 with a negative net worth (a worst case scenario for any child of mine). Most will probably be 55+ before they can even imagine what $500k looks like.
For this to work you need a very level headed and practical child that is capable of doing more than working for minimum wage. Something like HVAC, plumbing or good car salesman would be perfect.
You are basically front loading a good understanding of finances/modesty which long term could be way more valuable than college.
If your child succeeds by coming out on the other end with $500k + no debt....well, they will have earned their PHD and most likely have a long comfy life ahead of themselves. They won’t be working a job they hate...they’ll have plenty of time for family/kids...plenty of time to take care of their mind/body, etc.
I guess the most valuable lesson would be how they’ll have to quickly learn the value of a dollar to reach $500k. Once THIS lesson is instilled in a person - money becomes ‘one less thing’ as Forest Gump would say.
Not sure if mentioned before, but if many kids have $200K sitting in an account somewhere, $200K will no longer be worth much as it used to be. These kids will still be back to square one or back to the way things were when the GFC happened. It wont make any difference.
Its the same with all the other kinds of welfare. The more you hand out, the more times you hand it out, the less worth each beneficiary has received. You then have to keep increasing the amount.
Not sure if mentioned before, but if many kids have $200K sitting in an account somewhere, $200K will no longer be worth much as it used to be. These kids will still be back to square one or back to the way things were when the GFC happened. It wont make any difference.
Its the same with all the other kinds of welfare. The more you hand out, the more times you hand it out, the less worth each beneficiary has received. You then have to keep increasing the amount.
I don’t disagree, but if a young adult (say 22-28 years old) can’t see help for what it is and truly appreciate it - have we failed as parents? Ya know, I can see your average 22 year old/semi-spoiled/parent supported/idealistic/college grad not being appreciative - but the below-your-means raised child that isn’t a slave to today’s consumer demand driven materialistic culture perversion? Perhaps not.
One thing that is concerning to me looking at the number of younger people planning to live off their withdrawal rates is that they seem mesmerized by the returns of the current bull market. Things have gone extremely well in the market since the last bottom. A 4% draw on $800,000 generates $32,000. If the portfolio takes a significant hit like 2008/2009 then they would be drawing nearly double to generate $32,000. Should their portfolio stay at the reduced level for a couple of years their principal would be eroded quite a bit.
Personally, the explosion of FIRE people retired or planning to retire at such a young age is sending a topping signal to me. This is added to the list of signals suggesting caution in the market and exercising a more conservative investment strategy is appropriate.
Location: Formerly Pleasanton Ca, now in Marietta Ga
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Quote:
Originally Posted by Lincolnian
One thing that is concerning to me looking at the number of younger people planning to live off their withdrawal rates is that they seem mesmerized by the returns of the current bull market. Things have gone extremely well in the market since the last bottom. A 4% draw on $800,000 generates $32,000. If the portfolio takes a significant hit like 2008/2009 then they would be drawing nearly double to generate $32,000. Should their portfolio stay at the reduced level for a couple of years their principal would be eroded quite a bit.
Personally, the explosion of FIRE people retired or planning to retire at such a young age is sending a topping signal to me. This is added to the list of signals suggesting caution in the market and exercising a more conservative investment strategy is appropriate.
You realize that has been brought up numerous times but Eddie doesn't factor that in for the rest of his own life. He thinks the market will always grow every year without a downturn. When it is brought up he chooses to not respond and change onto another subject.
You realize that has been brought up numerous times but Eddie doesn't factor that in for the rest of his own life. He thinks the market will always grow every year without a downturn. When it is brought up he chooses to not respond and change onto another subject.
One thing that is concerning to me looking at the number of younger people planning to live off their withdrawal rates is that they seem mesmerized by the returns of the current bull market. Things have gone extremely well in the market since the last bottom. A 4% draw on $800,000 generates $32,000. If the portfolio takes a significant hit like 2008/2009 then they would be drawing nearly double to generate $32,000. Should their portfolio stay at the reduced level for a couple of years their principal would be eroded quite a bit.
Personally, the explosion of FIRE people retired or planning to retire at such a young age is sending a topping signal to me. This is added to the list of signals suggesting caution in the market and exercising a more conservative investment strategy is appropriate.
The only signal it sounds is that some of us are fed up with that way things are “supposed to be”.
You realize that has been brought up numerous times but Eddie doesn't factor that in for the rest of his own life. He thinks the market will always grow every year without a downturn. When it is brought up he chooses to not respond and change onto another subject.
He doesn't strike me as the type of person to be invested in the market, anti consumer, hates working, bum lifestyle. Has all the makings of someone who would be very afraid of the market. I would bet his inheritance is mostly in fixed income type investments, that is why he is talking down inflation so much.
One thing that is concerning to me looking at the number of younger people planning to live off their withdrawal rates is that they seem mesmerized by the returns of the current bull market. Things have gone extremely well in the market since the last bottom. A 4% draw on $800,000 generates $32,000. If the portfolio takes a significant hit like 2008/2009 then they would be drawing nearly double to generate $32,000. Should their portfolio stay at the reduced level for a couple of years their principal would be eroded quite a bit.
Personally, the explosion of FIRE people retired or planning to retire at such a young age is sending a topping signal to me. This is added to the list of signals suggesting caution in the market and exercising a more conservative investment strategy is appropriate.
History has shown a 401K can become a 201K real quickly.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,569,440 times
Reputation: 16698
Quote:
Originally Posted by eddiehaskell
Who said I’m totally dependent on the market?
You don’t even know my annualized return. LOL.
That makes two of us because apparently you don't have the faintest idea either. LMAO
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