Ask HN: I have $1M cash in my bank. How can I stretch it so I can retire? | Hacker News Reader

Ask HN: I have $1M cash in my bank. How can I stretch it so I can retire?

71 pointsarcheantus153 comments

I’ve worked hard in the tech industry for the last eight years and have saved up a nest egg. In addition to that I recently sold my house which means I literally have $1M in my bank account right now.

For so many on here that is not too much money, but for me and my bg, I feel more fortunate than I ever could have dreamed of being.

I like my job, but it’s stressful. My dream is to use this nest egg to make investments that will grow the capital and allow me to live off of it.

Am I jumping the gun? Is $1M not enough? I’m sure I could get way more money if I endure more years of my job, but I so want a break. What are the chances of taking $1M and investing so that I don’t have to work anymore?

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The amount of terrible advice on here is amazing.

First crucial advice: don’t take financial advice off the internet from a group mostly made up of people who have never had a million dollars or more to invest. Ask people who can show you they’ve got millions more than you and have had them for years through ups and downs..

Second: there are a gazillion factors that goes into making solid investing advice; what’s your current living situation, what’s your 5 year outlook, 10 year outlook, ambitions in life (wanna retire soon or you’re planning to work and just have this as a long term nest egg), what’s your appetite for risk, do you need the money in the next 10 years (at all!), if you invested in something and markets suddenly crashes and your invest was suddenly worth 500k, what would you do, hang on and ride it out or sell? .. and on and on.

What matters is simple long term low cost investments, and then not touching shit no matter what happens. Hell, just buy cheapest sp500 index etf (vanguard or ishares or similar) and hang on for 20 years and you’ll be in extremely good shape.

What’s the timeframe OP should deploy the money in your opinion? The global stock market cap is close 1.17x global GDP. It’s very rare but if you invested at the wrong time in the SP500 20 years is not enough to recover.

With $1m you could very easily hedge your bets, I don't think OC is saying put it _all_ in an ETF that's pretty foolish.

To OP: Get a financial advisor ASAP, $1m is enough to justify it. You also have a lot of tax implications that you probably haven't thought of, a lot of work goes into avoiding taxes at those stakes.

Specifically, if you get an advisor, a "fee-only" advisor (charging a flat fee or hourly rate). Many (most?) financial advisors will be more than happy to charge you 1%/year or more for the rest of your life, which is going to be a major expense and drag on returns for someone with $1M+.

Why is it "foolish"? Serious question. There are 2300 ETFs in the US. They do many different things... Are they all foolish?

There are plenty of great ETFs. If you had a 20 year time frame, putting it all in a SP500 ETF is certainly not a bad option (though I would personally diversify to maybe 2-4 ETFs to get international and fixed-income exposure).

edit: See https://www.bogleheads.org/wiki/Three-fund_portfolio for an example of a simple, well diversified three ETF portfolio.

Not a comment about ETFs, but in general, the word "foolish" applies to someone entering the scheme, not someone running the scheme. And as is the way of humans, there are always enough people willing to be misled into bad decisions. In that sense, these schemes are very smart.

To repeat, this is NOT a comment about ETFs; it's only about where the word "foolish" goes.

Never put all your money in any one instrument even if it is a collection of many different things. The foolish part was 'put it in a single ETF'.

Honestly this whole thread is a dumpster fire I'm leaving this one alone.

This is terrible advice.

https://www.marketwatch.com/story/why-way-fewer-actively-man...

A vast majority of advisors (90%) aren't going to beat an index fund. You are just giving money away money by hiring an advisors.

Unless you want to pull offshore tax shelters or Real estate depreciation schemes its not super complicated to do taxes. Invest long-term and you are getting capital gains tax.

> if you invested at the wrong time in the SP500 20 years is not enough to recover.

That's simply not correct.

And important note here is that I'm obviously not advocating for investing 1 million dollars in a single SP500 ETF. For some people that may very well be the right thing, but if all you've got is 1 million dollars, you're taking a ridiculous risk putting it all into one thing, because what happens if some years down the line, stuff happens in your life, and you need to take out a good chunk of cash and it coincides with a terrible market, not a stellar combo.

So obviously basic diversification is critical, based on your personal situation. Can be accomplished easily with 3-5 cheap ETF's. Buy and hold for many years, until your life changes.

But as for SP500.. You could have invested in virtually any SP500 high, and as long as you can hang on for more than 10 years, you can almost not lose. Quite the opposite, sitting in cash is sure death, because you're gonna miss all the highs, sure the market may drop 30%, but that dip could have been in a period of 40% gain.. And you're losing out on the most essential part of making money long term: compounding interest. So.. Just invest, there's (almost) no bad time.

As for OP and timing.. I wouldn't know.. Way too many unknowns to give any kind of specific advice.

Someone else linked to the "three fund portfolio" and that's close to what most people should do. Get VTI, VXUS and BND in some ratio based on your age, personal situation, investment horizon etc, and then just let it sit.

You are right. I am used to look at the inflation-adjusted chart like (https://www.macrotrends.net/2324/sp-500-historical-chart-dat...). This is another context and I failed to mentioned this.

Here is an hypothetical example of someone who only invested just before a crash in SP 500: https://awealthofcommonsense.com/2014/02/worlds-worst-market...

Spoiler: time in market beats timing the market, historycally.

Don't do an ETF. Use your career knowledge to invest in companies and sectors you understand. Tech companies are doing great, and are already a massive part of the S&P. Why give away that advantage? Diversification (via ETF) is for people who are too ignorant or apathetic to choose better.

You'll want to do some research on FIRE - "Financial Independence Retire Early." There are plenty of resources (someone linked to the main FIRE subreddit but there are others like r/leanfire. Personally I'd also recommend getting started maybe reading _Your Money or Your Life_ (the og FIRE book) and maybe the bogleheads.org wiki to get some more color. Also, the r/financialindependence sub has a basic wiki/faq.

I'd also recommend looking up the "Trinity Study" which gives the guidance of a 3-4% "safe withdrawal rate" - eg, if you should be able to retire if you can keep your cost of living under $40K - there's a lot of bikeshedding about the exact number and various strategies you can use to minimize risk during downturns. Personally, I'd make sure your fixed living expenses are <3% of your net investible so you have some flexibility.

A while back I wrote a short guide for a friend that lays out my personal financial perspective in a bit more detail: https://www.notion.so/lhl/Basic-Financial-Literacy-Guide-386...

Before making any rash decisions, I'd make sure you get your finances sorted (cash buffer, asset allocation sorted, comfort with market volatility, etc), but also think about what you want to do after quitting your current job. One thing that seems to happen a lot is that people quit their job but really haven't thought about what they want to do afterwards. Taking some time off/a sabbatical isn't a bad way to try to figure that out.

If you're in tech and you don't like your current job btw, just find a new one (or better yet, learn to de-stress at your current job - stress is as much a state of mind as extrinsic factors). Good luck!

My favourite thing today: learning the term “bikeshedding”. My god this is so applicable to everyday life and yet I’ve never heard it. Thank you!

Recognize that "retirement" doesn't necessarily mean "never work again" - but rather that you can be more selective in the work you take.

Also - this is just an observation of mine: Retirement, especially if you're not honing your skills or keeping busy with learning, can be absolutely a killer on your acumen.

I've seen very skilled people enter early retirement, only to quit their profession all-together, instead just focusing on doing...nothing. Or rather, nothing very productive. After a couple of years they just seem more dull, intellectually speaking. Unless you have an iron will and very self-driven, it can be hard to motivate yourself to do something at the same level as when you're employed, or there's lots of risk involved.

It's really no problem if you're in your sixties, and will likely never work again - but retiring at a very young age, there's lots of risk and uncertainty involved. Doesn't mater how well you plan, you could get forced back into employment.

So with that said - I wouldn't retire entirely. Rather, become more selective on the work you take, work part-time on projects. Try to become highly competent in some specialized skill, just to keep yourself up to date and motivated.

As for money:

- Move somewhere cheap - Invest enough that you'll go in plus after all expenses - Live frugally. Lifestyle creep is real, and can obliterate retirement savings.

Of course, investments are inherently risky - but speak to some professional about this.

> I’ve worked hard in the tech industry for the last eight years...

> I like my job, but it’s stressful.

> Am I jumping the gun?

I think so. I'd work on reducing stress on the job. If there are specific causes, a decent manager should be able to help. If that doesn't work, try something else! If you've worked in tech for 8 years, you're pretty hireable, so there are lots of other opportunities. Part-time work is also an option.

It's also not the best time to retire like that. Interest rates are historically low, stock prices are nominally high, the way covid plays out is up in the air, and the impact of monetary and fiscal policy on the value of the dollar isn't clear.

This is probably the best advice.

$1M really isn't a lot to retire on especially if you're south of 35. You're best bet is to hire someone to give you professional advice on how to invest the money and keep working.

The last thing you want is to try and retire now, run out of cash and then have to try and get back into an incredibly fast moving industry where ageism is real. You run out of money in your 40's and its going to be hell on wheels trying and get back into the industry.

Compare that with reducing your stress, staying the course and continuing to add to what you have saved while growing the money you already have. Walking away when you're 100% sure you can run the clock out would be a wiser move than trying to do it now when you're young and borderline don't have enough in the bank to do it.

Patience is the better move at this point.

£1M is plenty if you're frugal. Not saying it's not an idea to try reducing stress and saving a little more but you'd have to be an idiot to accidentally burn through £1m before 50.

Having kids is the primary thing. With no kids, sure you can live however you want. I'd probably work through covid, given there's not a whole lot else to do right now. But certainly don't feel bad about taking a year or two off to do whatever (but do it on a budget--you want to err on the side of caution when starting out, and set that as your precedent), then see how you feel.

I spent three years variously traveling, working low-wage jobs, taking classes, spending about 10K/yr (which was less than what I was making on my investments). I'm back in software now and maybe a bit behind my peers who stayed in, but happy I did what I did.

I anticipate most people who "retire" in their 30's end up coming back to work at some point. Not for money necessarily, but because we find ourselves missing the feeling of being productive.

I took a break and over 18 months I cycled 30,000 km (20,000 miles) in 12 countries. My burn rate was very consistently $1,000/month, even during 5 months in the expensive US. This included airline tickets and replacement bicycles

https://www.cycleblaze.com/profile/nicroets/

The best way to make your money grow over the long term is a diversified equity portfolio of which a low cost index tracking fund should be your first choice.

If you want real value for your retirement savings, you should live abroad: South Asians countries don't have a lot of exports, making their currencies weak.

Nice blogs, thanks for sharing the link.

Check out the subreddits r/leanfire, r/fire and r/fatfire. FIRE = Financial Independence, Retire Early. Moving to a low cost of living (LCoL acronym on those forums) will be important given the amount you have saved and what I presume is a fairly lengthy retirement (I assume you aren’t in your 70s!).

I think the conclusion you will come to is that it would be good to move to a LCoL location, keep your job or somehow stay in the industry but in a more flexible manner where you work far less and make a bit of living money so you don’t eat into your nest egg very much.

Also, word to the wise: inflation is unpredictable and current government estimates are likely massively underestimated for things that actually matter to you - healthcare, housing, etc. So be careful with the standard 4% withdrawal, equity market returns, and inflation expectations. Garbage in, garbage out!

I find fatFire an amazing sub to read - its like a parallel universe of people in their 30-40's with 8-figures in the bank or investments

A rule of thumb (from trinity study) is you need a lump sum of 25x yearly expenses to retire and live off investment income. So with 1M you'd have a $40k/y budget. It can be enough (a lot of people in the world live on much less than that), it can be a stretch - depends on your personal situation, lifestyle, location, etc.

Take that $1M and invest it. If you make 6%/yr, that’s $60k/yr! I average 20%/yr so that’s definitely doable.

The easy way: Consider $ARKK, $VTI, the ray dalio all weather portfolio, or the Harry Browne permanent portfolio. Use portfoliobacktester.com to analyze your investment choices.

Here is a reading resource for you to consider https://training.kalzumeus.com/newsletters/archive/investing...

He talks heavily about target date funds. Personally I don’t invest in TDFs because ETFs like ARKK and VTI give much higher long-term returns but for the highly risk adverse, they can be perfect.

If you have any questions, even if they’re newbie, feel free to ask!

How long have you averaged 20% per year? How many business cycles? It has been easy to be an equity investor for the last decade, but sustaining these returns over more than a decade would put you in the top few money managers worldwide.

5-7 years. Making 20%+ per year is not mythical and many people already do it. Kevin Pathrath, Katherine Wood, Emmet Savage, and Danny Devan are 4 that publicly share their portfolios and outperform. Warren Buffet averaged a little higher, and most of us know about other inspiring public investment gurus William O’Neil, Bill Miller, Richard Drihaus, and Jeff Neff.

I started investing 5 years ago with real money and won virtual investing competitions for the 2 years before that where the goal was to produce the highest portfolio values within a given set of time. I don’t remember how high I placed but I got a pretty ornamental gift certificate which inspired me to continue further. Other investors would read charts like they would tea leaves but my strategy was to find stocks trading below their company valuation with above average growth prospects. These prospects have a lower risk and have a higher potential reward.

At one point in my career, I downloaded the data for all 3000+ stocks into a MySQL DB to learn which metrics mattered the most and which mattered the least... and the results were surprising.

That 20% I quoted is from a stock and ETF retirement account. In a non-retirement account that had also grown quite a lot over the years, I allocated a conservative 20% of my portfolio to call options and that account is up 177% overall this year. But options aren’t something you try until you have years of experience, comfort, and knowledge with stocks.

Finally, I know the theme on HN is to disagree, counter, and dispute whatever the previous comment said but I’d like to receive some support if I’m going to continue posting.

Thanks for sharing. What stocks are you most bullish on at the moment?

Depends on whether your goal is to have as much as possible over a 2-3yr period or pure capital preservation over a shorter duration.

I’ve been much lazier about stock selection after selling a bunch to buy a house this year but I’ve been invested in ARKK for 4 years and expect to continue being invested with them for the next 4 years. Looking forward to capture their juicy Christmas dividend. I also like Apple and Target stock as a solid portfolio bedrock.

This. Investing in the last decade has been easy. I'm not so confident for the next, specially for tech. I feel a lot of people currently think they're great investors but they've all started after 2008.

For the OP, having 1M is a great position to be in but also a two edged sword: you have the money but investing it all at once is psychologically hard. I saw an article on Seeking Alpha with an example portfolio for retirement that I generally agree with, you can take a look at it here: https://seekingalpha.com/article/4391859-retirement-portfoli...

OP here: it looks like I can’t edit the post to add more details that many have called out as missing. I’m 34 years old, and have been doing software since college.

I have a large family that is quite young. Six kids under the age of 15.

My annual expenses of $100k is definitely for a lifestyle that is nicer than we need. Most of that is on a big mortgage.

I’m surprised at how many people have joined in on this discussion. Thank you!

>Six kids

Keep in mind that college education has gotten enormously expensive. The forgettable state school I went to now estimates a total cost of $20-30k/year (inclusive of food, housing, transportation, etc - depending if the kids live with you or independently). 4 years, 6 kids on the low end would then be around $500k. Now, parents obviously arent obligated to pay for their children's higher education, but if you were thinking about it, that's half your money right there - at today's prices.

Yeah, OP may need to look into picking one or two favorites and selling the rest. Either that or keep his job a few more years.

I have not seen anywhere mentioned so far, but where do you live? The biggest thing missing is all the FIRE and early retirement info is health insurance. If you’re in the US, you just need one health emergency and all that money could be gone. With six kids (SIX?!), you will have a LOT of health insurance things like accidents to be worried about.

Leave the US. Go to Thailand or Malaysia for example and never work again while living comfortably. Thailand has retirement visa, and you have more than enough cash for it. Anywhere the dollar is strong you can 3-6x your net worth in purchasing power, simply by getting on a plane (once things open up soon).

You can live comfortably in SE Asia on $1000/mo, with access to good healthcare, gigabit Internet, a nice apartment, etc. I think it’s crazy to spend your money in the US.

I seem to recall the Thai retirement visa has a minimum age limit on it.

Also, living in Thailand is only cheap if you live like the locals. Luxury cars are more expensive than the west due to high import taxes; “Average” locally built cars (eg a Toyota or Nissan) are pretty much the same price as in western countries. western luxury foods are more expensive due to scarcity and the need to be imported.

Houses are only cheap if you accept local cheap standards. If you want a house built similar to western standards, it’s going to be expensive, and will likely still involve compromises.

And there are some things money can’t solve. Living in Thailand is very different to living in a western country, and thinking that money can solve any hardships is naïveté at its finest.

Without listing your expenses, location and cost-of-living, there's not much advice to give.

I do recommend immediately investing that money though. Sitting in a bank account does nothing for you.

Based on the given info, here is the advice I have:

0. Debt is a killer. Pay yours off.

1. Live below your means

2. Look up the 4% rule - can you live happily on 4% ($40k) per year? If not, you may need to save some more.

3. Implement a strategy to leverage the 4% rule. I usually try to avoid investment fees and invest directly in exchange traded funds. To learn more about ETF investing, read The Simple Path to Wealth.

4. Try to get a part-time, less stressful job. That way there is more room for error in your calculations. If you employ DRIP investing, your savings compound even effortlessly this way as you don’t withdraw as much.

Unless you move to a cheaper country, it isn't enough. Especially if you have no where to live! Housing cost is one of the largest costs you'll have. If you owned your home and gas one mill million, that would be one thing. If your job is stressful, consider taking a year off, travel, write a novel, write a game, be a beach bum, whatever. Then work for another 8 years and save another million.

There's a book called "How to survive without a salary" by Charles Long. It may be out of print, but I would recommend you read that.

There's also a series of books called "The Tightwad Gazette" with a similar theme of learning to spend less.

Successfully retiring from a tech job is highly likely to be equal parts investing well and learning to live on less. One or the other won't solve it.

Best of luck.

I’ll add “Your Money or Your Life” as an excellent read.

https://reddit.com/r/financialindependence

$1m invested correctly will net you $40k/yr, before taxes, in perpetual income. So you’ll need more than $2.5m to live off at your expected annual expenses of $100k.

This guy fires

Not currently FIRE, but close to it.

This is a handy rule of thumb. On average, you can pull 4% from a balanced portfolio and it should last in perpetuity. Again, on average, across a range of scenarios.

So $1M nets you $40k, before tax or around $33k after tax (assuming no-state tax state of residence).

That's $3k per month free and clear, which would be doable a single person in a LCOL area, even having to pony up for a high-deductible health insurance plan. You'd have almost nothing left at the end of the month, but that's the plan?

Edit: Good point below - most/all of the returns will be capital gains and the rate is 0% under $40k (which should be easy to keep below, since you'd be selling a percentage of initial investment + returns)

Since accruals and dividends will mostly be capital gains, and the 0% tax bracket for federal cap. gains goes up to 40k, the 40k will still be just under 40k after taxes (assuming no state).

This is the best advice here, by far.

If you don't want to live on $40K/year, another option to consider is getting a lower stress job at a lower salary, while withdrawing $40K/year.

> Is $1M not enough?

I don't think it's enough in your case. A good chunk of that money is from your house which you no longer have. Once you buy another (or rent) those will be big drains on your cash. So you really don't have $1 million free and clear to retire on.

It sounds like you are still young, only working 8 years. Early 30's? Unless you move to a low cost area and live very frugally, $1 million might not last into old age.

Being a "millionaire" isn't what it used to be. It's a lot of money to be sure, but you are not rich. It may grant a lifetime of frugal retired living, not rich retired living.

At what principle do you feel one can more confidently retire without worry?

According to redditors, $5 million is considered to be a "fatFIRE threshold" which would yield $200k/year at 4% annual withdrawal.

https://old.reddit.com/r/fatFIRE/comments/5g1jhd/what_is_you...

I think the key here is to use it as a pivot in your life. Retiring on 1M$ is pretty hard (in the US), but do you really want to retire? Or work on something that matters to you and might be more enjoyable and less stressful.

For example, you could take a couple years to try to build a one-man startup. Working on building an MVP that would resolve a niche problem? You will be less stressed because you would know that in the worst case you can always go back to a comfy engineering job. With 1M$ you already did better than 99% of the people your age.

> What are the chances of taking $1M and investing so that I don’t have to work anymore?

Not high.

I'm going to guess, based on the fact that you have 8 years in the tech industry, that you are probably in your late 20s or early 30s. Given modern life expectancy, that means you could be alive for at least 60 more years.

In order to make 1 million dollars last that long you are going to need to take on significant investment risk. "Normal" investment risk, e.g. from index funds, is not going to grow the money enough -- if you withdraw enough every year to live on, the money will run out. When it runs out, you will probably have been out of the job market for decades, and therefore unemployable.

If you are living on a fixed income, predictability of expenses is key. Home ownership is one way to control your expenses -- get a fixed-rate mortgage and your monthly cost of living will be fairly predictable. Property tax and utility costs might fluctuate, but in most places the mortgage will be the largest cost, and you can lock that in at a known monthly amount. However, you just sold your house. If you are planning to rent, you won't have the predictability that you need in order to plan for future expenses. If you are planning to buy again, that $1 million is going to shrink by the amount that you pay for your next home.

You probably can't retire on $1 million. But you can take some time off, like a sabbatical. If you aren't happy in your work, you can look for another job, and having that money will let you coast for a while until you find it.

Just FYI that investment is quite dated. Modern advice is to invest heavily in stocks--even as much as 90% stocks, 10% bonds--then withdraw no more than 4% of the original balance, corrected for inflation, per year. Historical back-testing as well as stochastic modeling shows that in this way you can expect funds to remain indefinitely.

(The details are a bit more complicated, and you might want to choose a smaller percentage like 3.5% or 3% if you are retiring at a younger age.)

The definition of indefinitely in the trinity study which you seem to refer to is 30 years.

No the trinity study (and its follow-ups) only run simulations for 30 years, but they did not say that the funds would run out in 30 years. To be precise: the success criteria was that the portfolio survived for 30 years, but the actual outcome was that most portfolios had more than the original principal at the 30-year mark. Which would imply indefinite survival.

Warning: fellow engineer here. I am not a financial advisor.

You can follow one of two stock-based strategies:

1. Invest 100% in an S&P500 index fund, returning 8%/year [1] and growing to $11M in 30 years [2], minus withdrawals.

2. Invest 100% in bonds, or a high yield savings account, yielding 0.6%/year [3] and growing to $1.2M in 30 years [2], minus withdrawals.

You want to do as much of (1) as possible, while doing (2) as little as possible in order to pay for things (mortgage, rent, food, kids, etc.). You can't rely on (1) for day to day expenses, since stock returns are super variable (recessions, depressions are inevitable over time).

To balance the two, you can think of it as: consider retirement when MIN(1, 2) > expenses. The exact mix of 1 and 2 depends on your personal risk tolerance.

EDIT: Numbers for (2) were off, as suggested by multiple people in the comments. Updated.

---

[1] https://www.investopedia.com/ask/answers/042415/what-average...

[2] Calculate this with an online interest calculator (being sure to re-invest earnings), or remember the rule of 7 (your stocks will double in value every seven years).

[3] https://www.bankrate.com/banking/savings/best-high-yield-int...

0.6% compounded for 30 years would be barely $1.02M

Yeah, that math was miles off, apparently based on 6% (way too high), not 0.6% p.a.

Updated, good catch.

Looks like you dropped a zero in your calcs for example 2. Should be 1,000,000 * (1.006 ^ 30). Perhaps you used 1.06 instead. Works out to about $1.2m after 30 years, unadjusted for inflation.

Updated, thanks.

> minus withdrawals

Withdrawals change these numbers tremendously

Right, they’re the crux of it. It comes down to what OP’s expenses are.

Why not retire in a developing country? The living expense is much lower, the weather is fair and more than often you can have access to a beach. Health care is not necessary bad, either. If you don’t get scammed, with $1M you can live comfortably in the Philippines, Vietnam, Cambodia and many Caribbean islands. The return on stocks and bonds investment in the emerging markets are often much higher in comparison to the US, too.

IF I were in that situation I wouldn't quit outright. I would just find an easier job. I'd invest a significant portion in etfs and whatnot (100% up to you) just cause inflation is gonna make $1mil in 40-60 years be like the new 100k. I'm not saying it can't buy a lot now, but it most certainly can't buy as much as it could in the 70s. Also factor in COL areas. $1mil will get you buy farther in a small town in the midwest than it will in a major metro area. Find a nice quiet place that rich people aren't exactly excited to flock to. Get a mortgage for a decent home or condo as well. Lastly, run a tight budget.

Tbh, $1mil isn't enough to retire with at an early age. It's certainly a lot of money, but depending on your lifestyle, it won't exactly cut it til the end. $5 mil at 20 would be a "set for life" number for me factoring in I'd live another 60 years/720 mos. That's factoring in for inflation. This is why you need to tie up money in investments. You can be pretty risk averse too. But just as long as it's not sitting in a bank account.

You might want to wait a bit before you retire. 1 million is a lot but unfortunately there is no save investment that will net you a comfortable long term income. If you are lucky you might get 2% a year but that's very little to live on anywhere in the U.S. Even if you could live on that inflation will eat up the buying power over time.

Think about investing money in real estate. With a million dollars you could buy an apartment building live in one of the units and manage the others. Over time you will have enough money to retire. The one plus in this type of investing is that you have a lot of control over how successful your investment will be.

You'll need to educate yourself on the intricacies of apartment building rentals but the success is very likely. Also, Real Estate is a long term investment so once you get involved expect to have your money tied up for many years.

You did the hard part of saving the money now it's time to move on to the next step. Good luck!

> You'll need to educate yourself on the intricacies of apartment building rentals ...

I'm not the OP, but this doesn't look like retirement and this is no my favorite type of work.

> ... but the success is very likely.

It is probably not so easy.

Figure out what number you can live on and compare that to the expected growth of your investment. If you have $1 million and you assume a 6% growth rate, you can live on 60k and not work. If you want less risk, assume a lower growth rate. If you want a higher standard of living, work until your nest egg provides a greater income through investment.

Don’t forget inflation and taxes.

Your 6% might only give you 48k after tax.

Subtract 2% for inflation and it’s only 28k per year you get to live off in perpetuity.

You're not going to be paying much (federal) taxes on that capgains income.

This is correct. In the US, currently if you are making no other income (AGI), your LTCG will be 0% for the first $40K. Bonds or other tax-inefficient (STCG generating) vehicles should be rebalanced into tax-deferred accounts (if the OP has been working in tech, unless they've been completely reckless, they should have a healthy 401k to work with) - it's very possible that an individual retiring on $1M and aiming for a SWR would pay $0 in federal income tax.

It depends on whether or not we are going into a depression or if the markets are going to keep climbing.

Mutual funds on average the last couple years have returns of 13-14%, if that keeps up You could probably grow you million and draw enough to live off.

If the world goes into a depression, cash will be king, deflation will kick in and prices will drop. So your million will go a lot further.

If things cool off a bit and go back to a historical marketplace of 6% to 8% ROI, I think You have a way to go yet if You really want to not work at all. Of course if You are planning on checking out in the next 20 years You probably have enough.

It is a neat feeling when You see all that money in the bank though isn't it?

Don't take financial advice from anyone here. The problem is not the advice given... But that you have not provided enough information or inputs into the calculation.

How old are you? Where do you live? What are expenses and costs where you live? Do you have other sources of income?

You should hire a financial advisor or planner versed in these matters. More than anything they are behavioral coaches who will tell you what you can and can't do.

You should build an annuity calculator in a spreadsheet and add conservative growth assumptions and agressive spending assumptions where you may have unexpected medical expenses for example.

> You should hire a financial advisor or planner versed in these matters

Around here, 99% of them are terrible and will cost 2% of NAV, which is massive when we’re talking about 4% annual draws.

And they won’t recommend moving away when you should, because they’ll lose you as a customer. And the #1 thing here is that OP probably needs to move to make this goal work.

Agree with parent. Financial advisors are basically never worth it, for a bunch of reasons, including: -cost is very expensive -none can beat the market, because if they could they would be hedge fund managers or something that makes 100x -their incentives are misaligned with yours.

(Not to be too negative, financial advisors can make sense in some circumstances if the person really needs an expensive person to make sure "they don't blow it on something dumb")

Get a van! Living on the cheap and exploring is the shit buddy. Come meet me down here in Mexico. Also, make some apps or something. Passive income. Make your own van (way cheaper). Invest when the time is right

Tell us your story please - It sounds amazing.

The critical piece of information thats missing is: how long are you stretching for? If you joined tech industry right out of college you are probably in your 30s, which means you need to make it stretch for 40+ years at least. Thats pretty hard.

On the other side if you moved to tech from somewhere else and you are actually older, the numbers start to become more reasonable.

You also said you recently sold a house, but what is your living situation now? What do you want it to be? Having $1M in the bank doesn't mean much if next year you need to turn around and buy another house for $1M

If it is not inflation hedged, you've no way of knowing if it will be enough. Holding fiat currency is exceptionally dangerous.

Diversity is good. You don't want to put all your eggs in one basket, and risk it all.

I found myself in a similar situation (after 20 years of work, though, so my expected remaining lifespan is probably shorter).

While I did invest most of it, raising means is only half the job. The other half is lowering needs. This is already how I managed to save most of my pay each month, but the older I get, the more extreme I take it. Not only does it ensure my stash will last as long as it needs, but I acquire lot of new skills on the way (by learning how to build rather than buying). Oh, and I don't have a family, it probably helps a lot.

I think you could use only a fraction of that money to setup a homestead and live off the grid. You would have to plan it properly: (e.g. rain fall, solar hours, land area, soil quality, rivers, and so on) and put in more work outside. But where there's a will there's a way. Even without homesteading 1 mil would go a long way if you purchased cheap property and didn't fall into the rent trap.

In my current situation I could do it with less than half of what you have. But I'd personally get bored. Good luck with the retirement.

I retired last year (albeit with a slightly larger nest egg and a more advanced age than OP - from what I gather).

I bought a property with two apartment units in North Carolina, and got a $200k mortgage (paid $500k at purchase time).

My girlfriend and I live in one unit, while the rent from the other unit (3 bedrooms, kitchen and 1.5 baths) covers mortgage, utilities, taxes, insurance and some of our living expenses (about 10 days of groceries, gym membership and one dine-in/takeout meal).

Rest comes from a variety of investments in bonds, ETFs, and REITs - I withdraw about 1.9% a year (general wisdom is that up to 4% is safe) - actually it was closer to 1.2% last year including two fortnight-long vacations, but up to 3% this year due to the early-year market dip.

I have a question - say, if one wants to invest $1M in some sort of rental properties (anywhere in the world).

What's the most efficient rental properties that generate highest percentage of return after recurring expenses?

The reason I like real estate is that because it's something tangible, real and physical (compare to stocks, cryptos, papers and government promises) and can provides excellent inflation hedge as well as real place to live.

And $1M can afford to invest into high quality, waterfront properties that can be carrying many benefits for years to come.

Where in the world are you able to turn $1 million into multiple high quality waterfront properties?

Panama, and probably few more.

First of all, would you buy for investment or residence? Your residence is not an investment, it’s a place to live.

If you do not want the hassle of being a landlord and spread risk broader than with owning individual properties, look into real estate funds.

I don't want to buy "papers" or "shares" or "ETF" etc... I want real real estate that comes with hassles of being a landlord.

Decisions like these are intensely personal. Not only does the answer rely on a multitude of things like where you live, your family situation and housing, but also on what makes you content: is it travels, restaurants, wines and fast cars, or is it long walks in the woods?

Also, if your current work situation is carving at your self-esteem or general life satisfaction then you might not have any other choice than to get out before crash landing, and then that money in the bank will give at least give you some time to evaluate your options.

$1 million is more than enough if you are willing to live in a rural area or small town, or can move to somewhere like Greece, Croatia, Portugal, Sicily, etc.

But, I would only suggest this if you have a clear plan for what you’re going to do when you retire. Write novels? Work on open source? Become a world-famous painter? The world is at your fingertips, but if you don’t have a plan, you’ll be bored of retirement within 2 years. If you don’t have that yet, I suggest keeping your job for another year while you plan you escape.

6 kids, that’s mire than enough to do :-) and if you run out of things, play with them more!

Same question but with $5M asked here a couple months ago:

https://news.ycombinator.com/item?id=24683297

Lots of commentors will claim that everyone else giving terrible advices - and not to listen to anyone on internet - and this of course followed by the specific advice by that commentor.

Land. Buy farmland. People have to eat. Make it work for you for a steady stream of passive income. Create a self sufficient compound so your passive income is only for your spending money.

If all else fail, you still have the land to sell. You can’t print land. It will always be in demand.

Buy productive land you can steward. One acre of fertile land with water is much better than 500 acres of scenic acreage.

Where can you find that in America? I have a rough rule. Follow the Amish. Can’t go wrong.

(This is not investment advice. Just my thoughts.)

Farming is massively mechanized and run by professionals with million dollar equipment. This is not good advice unless OP really wants to get his hands dirty and spend his nest egg

You can buy the land and lease the field use to farmers to plant. This is pretty common in some areas.

Check out the lease rates relative to purchase price. It’s around 1% of purchase price on a gross revenue basis. After subtracting low property taxes on the farm land, you net zero or very close on a nominal basis. Oh, and the mechanized farming referred to upthread? It’s sucking the nutrients out of the soil and rendering it less productive year by year.

This is not for growing grains and commodities , but if bought in hundreds of acres, it can be mechanized.

It is possible to have homesteads to grow everything you need for a self sustaining lifestyle. ‘Off grid’ living including outside of an unstable money economy.

Energy, water, food, fiber and some amount of cash can be derived from land. It can be bartered or sold. You can form co-ops with other like minded people with a million savings. With food, hydroponics, orchards, field crops, honey, eggs, meat and fish. You can get a (cobot)robot in that budget to eliminate need for labour.

A million dollars is not much. Any value of a dollar/market currency is pegged against what it can buy. You can’t outrun inflation if you want to live within the matrix. My (literal)2c.

Take a sabbatical for 6-12 months. Travel, do something fun for yourself.

Then re-evaluate.

A lot of people think they want to retire when in reality they want a break.

You can easily live on 50k/year if you don't have a family. That's 20 years if you don't make another penny so you really don't need to do anything. If you don't spontaneously find a way to make money in the next 20 years that you enjoy, something has gone terribly wrong :)

1M$ is not enough to up and quit. But it is enough to quit your job to do a job you actually enjoy and supplement that income with dividends.

Dividend + buyback yield is around 4% on s&p 500. So you could reasonably safely take out 4% / year (assuming you dividend reinvest).

Spending is the real issue. If you can get your spending down you could actually pull it off.

I'd recommend buying rental properties in areas with low housing costs relative to rent.

There are parts of Florida where 3 bedroom existing homes (i.e. not new) are $100,000, but monthly rent for that same house is $1,000+ per month.

Based on discounted cash flow, you can determine the value of any revenue stream. In some parts of the country, you'll find homes are undervalued compared to rents.

Stocks are good, but they're not good for steady withdrawals. For example, during a bear market your withdrawals are very costly.

To retire, you need predictable income streams, and rental property is one of the best.

Plus, it's easy for a regular person to leverage money for real estate. For example, with $1 million, you can buy $3 million worth of property with 33% down -- not counting transaction fees, though).

33% down should give you immediate profits from most of your properties.

$3 million could get you as many as 30 condos/homes in the right areas.

If monthly profit on each of those 30 condos/homes can average $200 per month, that's $6,000 per month right there.

You might still want to continue working for a few years to give you capital to deal with hiccups and allow some time for those mortgages to pay down further.

In a nutshell, rental property is one of the faster ways to generate income without working.

The other, simpler way is to move to a country like the Philippines.

One of the biggest lessons of 2020 is that rental income is not as reliable as people thought it was.

During the pandemic, many renters were allowed to stop paying rent and landlords had no legal recourse. Several states have created new rent control laws in the past few years, too.

Managing 30 properties - hell, keeping 30 properties occupied - is a nightmare. Unless they’re extremely homogenous, even a property management firm will hesitate to touch that.

> $3 million could get you as many as 30 condos/homes in the right areas. > If monthly profit on each of those 30 condos/homes can average $200 per month, that's $6,000 per month right there.

With $3m invested in a FIRE-recommended portfolio you can withdraw $10k/mo indefinitely without any work at all. I don't think this is as good an opportunity as you are presenting.

> If monthly profit on each of those 30 condos/homes can average $200 per month, that's $6,000 per month right there.

I assume your calculations include a full-on property manager? I have a single unit (wife's pre-marriage condo we held onto) and even that is a minor job sometimes at the most inconvenient times possible. A kitchen sink doesn't care that it's 10pm on a Sunday night before a huge early Monday presentation. It's gotta be fixed now.

30 units would be full-on full time 40hr/week job while also hiring a part time assistant for larger jobs. If you have 30 units, I guarantee that 3 major things will break simultaneously during a holiday weekend - it's just the way the business goes.

33% down here won't get you into profitable territory with a property manager taking their cut. Certainly there are areas of the country where this is very possible, and if you put a little effort up-front you can make it a quite sustainable business - especially if you can get to the point you can hire a full time (cheap) property manager/handyman and you simply run the books.

Just want to reiterate to those reading this that what is described is essentially a second career. Certainly not passive income in any sense of the term. You would be trading your tech career in for that of a landlord which indeed is actual non-trivial amounts of labor.

That doesn't even get into risk. I'm renting in a city with evictions paused but no mortgage relief to be seen for my profile. I'm fine, but if had been just starting out in my landlording adventure I might be close to bankruptcy. Can you survive a year or two with 50% or less income? This can and will happen in the form of either vacancies/non-pay, or major unexpected structural repairs.

I'm actually considering picking up a few more units in the neighborhood simply to have a diverse income stream for when I do decide to step back some and "retire" to an easier/part time job in my chosen field. But, I do this knowing I'm also lining up "things to keep me busy" at the same time.

Go find yourself a fee-only financial planner (CFP) that is a fiduciary. Directly ask them this and leave if the answer is anything else than "yes".

Also most advice here is going to be wrong or not applicable to your specific situation.

Where do you want to live? How long are you going to live?

$1m won't go far in some places.

Don't retire! There is too much uncertainty. Invest some of the money in US stock, and some in stocks in other parts of the world: China, Vietnam etc. Put 1% of that in Bitcoin/other cryptos.

Wait until it's 2 or 3m, then live frugally. There is no clear indication on the future value of the dollar or other currencies for that matter.

Save and spend as little as possible. If you don't have a kids and wife, don't spend on useless things. You don't have any responsibilities so just be happy.

Would you ask for cooking advice on a woodworking forum?

Then why ask this question here? Proceed at once to Bogleheads.org, and prosper.

Who wouldn't want to take investment advice from the internet's top minds?

"the internet's top minds"

Do you think they'll actually read this? I feel like the very prominent people mostly post links to their blog/site and don't respond as much to other posts on here.

If you were alone on a small jet after the pilot died of heart attack, would you rather have advice from the internet's top minds, or an experienced pilot?

If you had accidently ingested a poison and had minutes to live, would you rather have advice from the internet's top minds or from top toxicologists?

I see it the same way. I'd take the topic experts.

If you look at my comment history and hilarious knee-jerk downvoting of anything remotely critical of the HN hive mind, it should be clear to you that I meant that sarcastically.

You need to set some parameters for us!

- How much per year do you want in your pocket? - Where do you want to live? (think climate, cost of living) - What will you do with your time? (take a year or two off, you may get bored) - How much will your retirement activities cost?

You get the idea.

Also consider part time remote work. If you're skilled I'm sure you can find a company that you can put in 10 hours per week at and it doesn't even have to be programming.

Could you share pointers for part time remote work? (Especially for software)

Freelance contracting is probably the easiest way to work part time. There is some stuff that is only x number of hours a week. This seems to mostly be sysadmin work or basic web design. The other option is to do something like 3-6 months on, then however long you want off, etc. Probably easiest for web and mobile developers.

This is not exactly about a part time job, but I'd recommend to read whatever patio11 wrote about consulting like https://www.kalzumeus.com/2012/09/17/ramit-sethi-and-patrick... (HN https://news.ycombinator.com/item?id=4533498 ) or https://www.kalzumeus.com/2012/09/21/ramit-sethi-and-patrick... (HN https://news.ycombinator.com/item?id=4554669 ). Also, there is a monthly freelance thread here https://news.ycombinator.com/item?id=23379195

> If you're skilled I'm sure you can find a company that you can put in 10 hours per week at

Do you have real world experience with that? I found on the contrary that the more skilled I get, the less companies are willing to make me work only part time. Which is too bad, because part time high paid job is really the best of both world.

Part time jobs in restaurants is what allowed me to learn programming when I was in early adult life, and I crave for as much time to learn new things, nowadays. Sadly, while people I work for are willing to negotiate insane amount of money (in my opinion), they are not to concede the slightest amount of time.

Give it all away and do it again

The market is way overvalued. Hold cash until it corrects.

This.

This. And have in mind that with 0% effective interest, the Fed can't cut it anymore to prop the market up.

Europe has negative rates. It could happen here. They simply recommended that no more monetary policy changes be made and that we instead rely on fiscal stimulus.

Caution.

As the great John Bogle once said, "Nobody knows nothing."*

* For more, see Bogleheads.org

I'd be careful with this one. Nobody really knows.

It may seem overvalued now, but will it still be considered overvalued if another variable changes, say inflation catches up with the monetary policy actions.

1M in the bank can buy you a decent house in NYC. Just do that as that keeps things in perspective. You are a homeowner, and that’s about it.

go to a low cost country. that money is plenty in parts of asia, middle east etc.

Not really... Many of these countries have burgeoning middle classes with massive growth. The effects of globalization make it that you can buy million dollar apartments in any emerging market city. Also, I'd argue this in favor of asia, but I don't know anywhere in Middle east that's "cheap"

Turkey. An experienced senior engineer earns about 2000$. About what you would make if you invest your money using 4% withdrawal rate.

You can live in a coastal/touristy area and live well.

I could live off of the interest alone

Really? At current interest rates that's like $5k a year.

You have 1M and is not enough?

$1m is not enough to retire on by itself. I have a large family and our expenses are around $100k/yr.

I want to stretch the $1m as long and as far as I possibly can. Looking for tips/suggestions on how I might do that.

https://www.bogleheads.org/ - this is a pretty good resource. While this is more of the journey to get to the point where you can retire, it would probably make sense to follow some of the advice above from a longer-term perspective, as you are aware you cannot retire off of the amount you currently have. The key to stretching it is reducing your living expenses obviously, and after taking a break finding some form of income to supplement what you already have. Moving somewhere cheaper tends to be top of the list, and could go well hand-in-hand with the taking a break bit.

I would be curious to see a breakdown of 100k of expenses.

The 100k/yr would be the first thing to look at.

Without a paid off home, it'd be a stretch depending on age. If you're willing to move to a lower cost of living area, you can get a pretty nice home and land for about $200k, let's say $250k. That leaves $750k to live off of after that (or you're paying a mortgage and keeping the full amount). If you can keep your expenses under $50k, that's 15 years ignoring earnings on the money.

You can get nice homes in the mid-West for $100k. In smaller cities, with low crime and good schools.

As a guy in mid 20s I can drain that in couple mos.

People who spend this much money on their own leisure are repulsive.

People who judge how others spend their hard earned money are repulsive.

People who $verb how others $verb their $noun are $adjective.

I love you.

A million dollars would save hundreds of lives if directed to the right people or causes. If you are spending that amount of money all on yourself and your comfort in a few months, you're a bad person. It's that simple.

easy does it ghandi

Yes and I'm comfortable with that. What's leisure for you might be passion for me.

An average SpaceX rocket launch costs over $50m and I'm telling you, if I got $49m more I would launch one for fun, then die broke with a smile on my face and a rocket emoji I pre-etched on my grave.

Pay down all debt. Cut down on expenses. Sell most of your possessions. Invest in stocks/crypto. Take a few months rest without any digital obligations and reset your health. Good luck.

Go join wsb. Yolo on options and make it 5x.

When it comes to someone asking for life advice on HN, let's not play games.

WSB is a terrible idea for someone looking for financial security and next steps.

If OP is looking to retire as quickly as possible, this is a method that might work. It's just high risk.

This strategy is my only hope to retire early. At least OP is making so much money that he could retire in early even without investing. I'm also 8 years in and have less than a quarter of that (and I live frugally).

Split $750k between Bitcoin, Bitcoin Cash and Ethereum.

Rent and pay 6-12 months in advance, try to get a discount.

Give yourself a 1 year budget and make it on the low end.

Everytime Bitcoin doubles take out 10% (Rake Method).

Wait one year and re-evaluate.

jfc no, I'm a big crypto fan but no.

No! Just for the counter party risk, let alone the value risk. And yes that includes managing your own keys. Especially that!

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