Why 2 million?
I could try to give a long insightful breakdown of why I think $2 million is the amount I need to be financially free, but I won't. I'll give you a quick breakdown instead.
If I assume a conservative rate of return of 5%, $2 million in cash & assets (excluding my home) should provide about $100,000 in passive income per year.
What about inflation you ask? Well I think this goal assumes inflation will be pretty tame for the next 20 yrs - and that $100,000 will still provide for an upper middle class lifestyle (albeit maybe not as great as it would today). If inflation becomes significant and I don't take advantage of it accordingly, I admit I may need to restate this goal.
I think this is a very simple goal. I certainly hope I will be able to get a better rate of return than 5% and I hope my net worth will continue to grow past $2 million, but I feel this is the perfect high level goal that will enable me to lead an upper middle class life without meaningful financial worries and free to pursue my life's passions and opportunities.
If I assume a conservative rate of return of 5%, $2 million in cash & assets (excluding my home) should provide about $100,000 in passive income per year.
What about inflation you ask? Well I think this goal assumes inflation will be pretty tame for the next 20 yrs - and that $100,000 will still provide for an upper middle class lifestyle (albeit maybe not as great as it would today). If inflation becomes significant and I don't take advantage of it accordingly, I admit I may need to restate this goal.
I think this is a very simple goal. I certainly hope I will be able to get a better rate of return than 5% and I hope my net worth will continue to grow past $2 million, but I feel this is the perfect high level goal that will enable me to lead an upper middle class life without meaningful financial worries and free to pursue my life's passions and opportunities.
posted by 2million at
9/06/2005 10:52:00 AM
2 Comments:
Just a suggestion: wife and kids are really asset drain liabilities. Stay single to rerach your goal! Just my 2 cents.
By
Anonymous, at 11:57 AM
Nice site but I'd say $2M is not going to go far these days. Especially when you have to put $1M into a house (at least where I live).
Also factor in that most investment planners will only let you take out (at most) say 5% if you make 10% per year, so figure 2.5% if you assume 5%. This is in order to have your portfolio continue to grow.
I think about $10M ought to do it.
And I (kind) of speak from what I know, having netted approx $1M from IPO stock and it's nowhere near enough not to work (but then I spend a lot more $ than you)
By
Anonymous, at 8:21 PM
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