Can I live off of interest on $100 Million for life?

[ryanbleau]

What color is your lambo??

 

[Fox]

Dear diary: the forums didn’t provide any concrete feedback on what to do regarding interest once I get to 100,000,000. I will try again tomorrow until the answer is clear and once solved start right away on my logo design and business name.

 

[MTEE1985]

(Stolen from @jon.a )

Somebody should write a book and include a section on money systems...

 

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[G-Man]

If I earn $100Million after taxes via businesses in the USA and Europe, what taxes will I need to pay on yearly interest/dividends of 5% from investments of the $100Million principal after accounting for 3% inflation for example? I am 27 now BTW. And let's assume that I will live till 85. Can I live a luxurious lifestyle while simultaneously beating inflation and not touching the principal forever? In fact I want the principal to grow every year in proportion to inflation.

Appreciate your valuable replies, FastLaners.

Joking aside, this question is a little like the kid at batting practice worrying about if his agents going to screw him if he somehow gets signed by the Yankees in 10 years.

Don't worry about it, and just focus on the business you're working on.

 

[CareCPA]

You're missing the point. There's no point in going for the hundred million in 10 years if it's only worth 90 million in today's dollars.

Good point. Guess I won't get off my couch today then. Not even worth it for only $90 million.

 

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[MidwestLandlord]

Please kindly answer my question above guys as I have not yet found an answer online for many days.

That's because there isn't an answer.

What will inflation be?
What assets will you own?
What form of income will you have? (passive? active?)
What tax deductible expenses will you have?
What business structure will you employ?
Which countries taxes will be applicable?
Which state's taxes (assuming USA) will be applicable?
How will tax laws change between now and then?

But overall, yeah. If you're not paying to fly super models out in your private jet for bottle service at the club on a nightly basis, you'd probably be just fine.

I could live on $100 million without touching the principal. (although I might have to adjust my current lifestyle down a bit lol)

 

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[AgainstAllOdds]

Thanks for the replies so far guys. I have not earned the 100 Mil yet. I wanted to ask the question for motivation as I am on track to starting some high growth ventures. Many guys in my markets have made hundreds of millions and even billions.

So, coming back to my question. Can someone clear my doubt with some numbers? Let's say:

5% dividends and interest from investments => $5 Million
Inflation => 3% ($3 Million)
Taxes => 15% to 40% approx? (Not sure how much would the capital gains tax is be).

Will I be paying taxes on the whole of 5% interest/dividend income or on 2% (after deducting the 3% inflation rate from the 5% interest)?

Please kindly answer my question above guys as I have not yet found an answer online for many days.

Concentrate on growing your business and end this thread.

If you lack the capability to even two-minute google some of these hypotheticals, then you lack the capability to grow a $100M venture.

Stop being an idiot. Start working.

When you make your first $1M, come back and post this stupid thread again.

 

[biophase]

My question must be silly if that is coming from a reputed old member like you unlike an amateur calling me an idiot above just for asking an innocent question. I have never done taxes on my own as all my business affairs are managed by my family's accountants. Also, I have been pampered by my parents since birth, so I have very little real world tax experience. And yes, I never worked a day in my life. All in all I am not ashamed that I had to ask this stupid question as it's been answered nicely by the lovely TMF community.

Here is the reason your question is silly.

First, anyone who makes $100M would have professionals doing this kind of stuff for them.

Second, anyone who makes $100M would have gone through questions like these at $1M, $5M, $10M etc.

Third, anyone who makes $100M does not worry about inflation anymore.

Fourth anyone that makes $100M does not do it by trying to preserve all their capital in low risk interest building investments. If they did this, they would be stuck at $10M.

Finally, to answer your question "how do you suggest I grow the principal to negate inflation?", you do it by doing the same thing that got you to $100M.

Think of it this way. If you were able to go from $0 to $100M running a business. Why do you stop and suddenly hit the brakes so hard. Why wouldn't you put $50M away and continue to use the other $50M doing what you were doing.

So your questions is silly because it's not relevant and the answers that you get will mean nothing to you. A real answer would be some guy telling you to open up trusts, move offshore, establish more LLCs, get annuities, etc... All this stuff that you will have no idea what they are talking about. Also, if you did learn everything there is to know about trusts, offshore accounts, and annuities, laws would have changed by the time you got $100M so it's kind of pointless.

Biophase, in the $5 Million interest example above, how do you suggest I grow the principal to negate inflation? And will I still be paying 40% taxes if that interest comes from dividends or capital gains and not necessarily bank interest?

Nobody can answer how much you will pay in taxes. Just assume it will be somewhere between 20-40%. Does it really matter at that point?

The question is why? Why do you have to grow it? You have $100M in the bank! But if I had to give you an answer, I'd say buy some real estate with it. Spend $2M a year on REI, and spend the $1M on yourself.

 

[Harbourmaster]

I only have one question - how did you make your $100,000,000??

Sounds like a story that is worth telling!

Or is this a hypothetical situation?

The answer is, of course you can. At a 2-6% return (depending on risk tolerance) you’d be generating between $2M-$6M dollars a year. If inflation is 2-3% you are ahead of the curve.

To be honest though, if this is hypothetical you are better off putting your mental energy and focus towards getting to that point as opposed to thinking about what you will do with the money once you’re there. It’s like deciding what colour Lambo you will get right now, even though you can’t afford one.

 

[G-Man]

What color is your lambo??

Took the words right out of my mouth

 

[Vigilante]

Wasting time? There is no such thing as a dumb question. I wanted to research the same after finding some conflicting numbers in some examples on Quora.

Guys, please clear this up. One Quora answer first deducts inflation rate from the yearly interest rate and then applies 15% tax on the difference. Is that how it works?

There are absolutely dumb questions.

The first and immediate thing you can do to change your life and head toward your goals is to immediately and permanently stop listening to whom ever told you that there is no such thing as a dumb question.

 

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[G-Man]

Why do you think you would get a deduction for inflation? Do you now? If not, why would you *when* you're rich?

You're missing the point. There's no point in going for the hundred million in 10 years if it's only worth 90 million in today's dollars.

 

[ryanbleau]

there are no stupid questions, just idiots that ask them thinking they are good questions.

 

[MJ DeMarco]

Also, I have been pampered by my parents since birth, so I have very little real world tax experience. And yes, I never worked a day in my life.

But you're soon to come into $100M simply by virtue of your awesome work ethic, your expansive industry experience, and your rough childhood.

I'm sorry, but are you expecting to win the lottery? Because you don't fall a$$-backwards into a $1B startup.

 

[G-Man]

Wasting time? There is no such thing as a dumb question. I wanted to research the same after finding some conflicting numbers in some examples on Quora.

Guys, please clear this up. One Quora answer first deducts inflation rate from the yearly interest rate and then applies 15% tax on the difference. Is that how it works?

There are in fact dumb questions, but you've gotten a couple of answers that would have helped steer you in a more productive direction.

If you're looking for a clear numerical answer, then the answer is always 7.

 

[MidwestLandlord]

So the guy is applying taxes on the difference between the interest rate and inflation rate. Is he right or wrong?

That's not what he's doing.

He's saying that you'd have $50,000 from the interest, and after adjusting for a 3% inflation rate you have $17,200 equivalent spending power after taxes.

You would physically have the $50,000 to subtract tax from.

But you'd have the spending power of $20,000 to subtract tax from.

Let's say I have $100 and Snickers bars cost exactly $1

$100 = 100 Snickers Bars

Next year I have $100, but Snickers Bars have inflated to $2

$100 = 50 Snickers Bars

Same $100...less Snickers Bars for me.

Inflation = less Snickers Bars

The same money can buy less stuff

 

[Almantas]

I'll let you know as soon as my long-lost Nigerian cousin wires €100m into my bank account.

 

[biophase]

Here you go. If you had $100M in a bank account at 5%, you'd likely pay 40% taxes on it. So, $5M income @60% is what you have left. $3M a year. Now you have to decide if you can live on that.

Of course principal is not growing this way. And you don't realize this yet, but yes your question is stupid. You will come back in 5 years and agree.

How close are you to $100M, I'm assuming you must be at least over 1M?

 

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[Harbourmaster]

Thanks for the replies so far guys. I have not earned the 100 Mil yet. I wanted to ask the question for motivation as I am on track to starting some high growth ventures. Many guys in my markets have made hundreds of millions and even billions.

So, coming back to my question. Can someone clear my doubt with some numbers? Let's say:

5% dividends and interest from investments => $5 Million
Inflation => 3% ($3 Million)
Taxes => 15% to 40% approx? (Not sure how much would the capital gains tax is be).

Will I be paying taxes on the whole of 5% interest/dividend income or on 2% (after deducting the 3% inflation rate from the 5% interest)?

Please kindly answer my question above guys as I have not yet found an answer online for many days.

You missed the entire point and now you are wasting everyone’s time.

By your own words, you have spent days researching this without an answer. What a waste of energy.

 

[MJ DeMarco]

There are people who live off $500,000 in savings. Granted they live in tents and call themselves minimalists, but it being totally FREE (subjective) can be done relatively inexpensively if you have your housing situation taken care of.

 

[lowtek]

Wasting time? There is no such thing as a dumb question. I wanted to research the same after finding some conflicting numbers in some examples on Quora.

Guys, please clear this up. One Quora answer first deducts inflation rate from the yearly interest rate and then applies 15% tax on the difference. Is that how it works?

Yes, there are lots of dumb questions. Asking if you can live off the interest of 100m when you are probably living off something like 25k a year qualifies as a dumb question.

 

[Ecom man]

Honest answer... no one worth 100 million has it sitting in a bank making 5%. They have a few million in real estate, a few million in annuities, a few million in index funds, a few million in dividend paying stock, a few million in internet startups, a few million in bonds, a few million in land deals and 75 million in their business.

Your hypothetical question will never happen to anyone unless they won the lottery because as you build a 100 million dollar business you are going to be pulling some off and investing it here and there over time.

I know a business owner that is currently worth north of a million. They don’t have a million in the bank. They have inventory, real estate, stocks, internet investments, and more worth the 1 million+. The amount in their bank account? 10-20k

 

[Healthfulness]

I only have one question - how did you make your $100,000,000??

Sounds like a story that is worth telling!

Or is this a hypothetical situation?

The answer is, of course you can. At a 2-6% return (depending on risk tolerance) you’d be generating between $2M-$6M dollars a year. If inflation is 2-3% you are ahead of the curve.

To be honest though, if this is hypothetical you are better off putting your mental energy and focus towards getting to that point as opposed to thinking about what you will do with the money once you’re there. It’s like deciding what colour Lambo you will get right now, even though you can’t afford one.

I believe that person who has 100,000,000 wouldn't need to ask such question, as he/she would definitely know what to do with It. I am assuming this as It takes insane knowledge and experience to aquire that money and that knowledgeable and experienced person would have multiple different income streams that would mutliply his 100 millions many times until age 85.

 

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[Boo]

This is #Landfill but if you can spend less than $6million per year, you can almost guarantee that you can live off the interest and still see some principle growth.

 

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[CareCPA]

Thanks for the replies so far guys. I have not earned the 100 Mil yet. I wanted to ask the question for motivation as I am on track to starting some high growth ventures. Many guys in my markets have made hundreds of millions and even billions.

So, coming back to my question. Can someone clear my doubt with some numbers? Let's say:

5% dividends and interest from investments => $5 Million
Inflation => 3% ($3 Million)
Taxes => 15% to 40% approx? (Not sure how much would the capital gains tax is be).

Will I be paying taxes on the whole of 5% interest/dividend income or on 2% (after deducting the 3% inflation rate from the 5% interest)?

Please kindly answer my question above guys as I have not yet found an answer online for many days.

Why do you think you would get a deduction for inflation? Do you now? If not, why would you *when* you're rich?

 

[CareCPA]

He's saying that you'd have $50,000 from the interest, and after adjusting for a 3% inflation rate you have $17,200 equivalent spending power after taxes.

This is what he's saying, but that's not how you factor in inflation.
Just poor methodology all around.

 

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[Timmy C]

Please #landfill put us all out of our misery.

 

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[AllenCrawley]

It seems you're implying that you have $100M already?

 

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[Fastlane Liam]

Is this a troll? Like seriously?
Is one hundred million dollars enough to live off? What do you think? Are you high?

 

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[Arrived2015]

If I earn $100Million...

Curious...

Why is that sum so concerning for you?
________

biophase's response is the reason for my curiousity especially as I agree with:

...anyone who makes $100M would have gone through questions like these at $1M, $5M, $10M etc.

I'm thinking unless you project to go from $0 to $100m within days, during your journey to your $100m target, it's impossible to avoid paying taxes (and more). Consequently, because those sums ($1mto$99m) are in the middle you'll have the answers to your questions by the time you reach $100m.

Am I thinking wrongly?

Isnt it, by the time you arrive at $100m, you'll be experienced enough to be able to tell us the answers here or correct those on Quora?

I have not earned the 100 Mil yet. Many guys in my markets have made hundreds of millions and even billions. I wanted to ask the question for motivation

Perhaps the guys who have arrived at your target figure of $100m (and beyond) are the best ones to motivate you in what to expect and answer you best.

Similar to visiting a country you've never been before and wanting to take part in an activity of climbing their known treacherous mountain. Will you take advice and follow a local who has never climbed the mountain therefore being hypothetical with the best way for you both to climb to the top (peeps on forums or Quora)

OR

seek a trained recognised guide who because they have completed the climb so many times, they can do it in their sleep? (guys/experts you refer to)

what taxes will I need to pay on yearly interest/dividends of 5% from investments of the $100Million principal after accounting for 3% inflation for example?

Worry is the interest you pay on a debt you don't owe.
Source: Unknown