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$5,000,000 IS THE NEW MILLION

1/8/2013

1 Comment

 
Travie McCoy had it right when he said that all he wanted to be was a billionaire, not millionaire.  Even this one hit wonder understood inflation! 

It may not seem like it, but these days being a millionaire won't get you much.  Long gone are the days of your grandfather's generation where if you had a million bucks you were set for life.  When recently surveyed only 60% of those with $5,000,000 or more felt that they were financial secure.  Along with feeling like they had the resources to do most of what they wanted.  Seem crazy?

If you're worth five million, then you most likely have at least a half a million dollar home.  So unless you're running a hostel out of that sucker it only leaves you $4.5 million for income generation.  At a respectable return of 5%, you're talking about $225,000 before tax.  At that income level, when you start throwing in federal and state income tax, property tax, the new medicare tax and sales tax, you're looking at take home of $135,000 for a family or couple.  

Now I know nobody is going to cry a river for a couple who is bringing home $135,000 each year from investments, but that's 2.7% on a $5,000,000 asset base.  That's a little higher than the traditional inflation rate of 2.5%.  Which means if they want to maintain that asset base, they need to keep most of it! 

My professors in college use to tell me how moderate inflation was a good thing.  Once again they were wrong.  Inflation is a tax on all of us, and what makes it worse is it's on our net worth, not just income.  
1 Comment
Saint Petersburg BDSM link
15/10/2013 01:51:14 pm

This blog is pretty interesting, will add a bookmark, thanks.

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    This website was created due to the atrociously misguided financial advice that I've heard over the decades.  Financial freedom is not intellectually strenuous, but it takes discipline. 

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