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First Mini Exit and Retirement on $500k. Possible?

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VentureVoyager

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I've been struggling with business burnout and been thinking to sell it.

If I do, then I might get to $500k in savings.
I'm 31.

I have realized that I don't give a damn about Lambos, big mansions, boats, planes and living large.
I'm most likely the type of person to get more fun out of a good mountainbike and a kitty than a luxury car and a boat.
I'm now living in a big house and I don't even care. It's too big for me. Could as well live in small one.

All I care about is the sense of financial independence, safety and freedom.

When I write "retire" I don't mean not doing anything else ever again until I die. I would most likely start another business or freelance after a sabbatical. But I imagine that it would give me a relative peace of mind.

So I would love to hit the "SAVE GAME" button and make sure that I will never have to work menial soul-sucking jobs ever again. That's my biggest nightmare.

Obviously, it could be very hard to make a living out of that in Vancouver or NY, but I live in Latin America, where 2k USD a month makes you good above-average living.

I've been reading about dividend paying-stock and talking to some people. The consensus is that around 4-5% yearly withdrawal should be possible.
@MTF told me he's getting around 4.85%, but that's on American market.

That would give me around 2000 USD monthly, but that doesn't take possible taxes and broker fees into account. Also, I'm afraid of inflation and the ever rising prices in many countries.

On the other hand, other people have told me that it's not the best idea to invest in big American companies as of now, according to them, and could be better to invest in REITs, as they can be relatively low risks and with way bigger returns, or even dividend paying companies but from the developing markets such as Eastern Europe, because of the capital circulations (that are supposed to flow from developed countries to developing countries in 8 year cycles or so, I don't remember the exact numbers..).

So maybe I'm overlooking something and it could be possible to get more than 5% yearly return?

For now, I do realize that I need to study the topic waaaaay more. I'm following certain YT channels and buying books on that topic to educate myself more. I'm also thinking about real estate flips on the rising marketc, etc, in order to multiply my savings. But still:

Do you think that is even possible, considering that I'm single and live quite frugally?

TL/DR: If you were forced to retire on $500k by the age of 31, how would you do it? How would you invest it?
 

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A $500K "escape number" is not a lot of money, at all -- even for Thailand or some off the beaten path Indonesian village.

TL/DR: If you were forced to retire on $500k by the age of 31, how would you do it? How would you invest it?

I can't answer because I wouldn't try to "retire" on $500K. I'd use that $500K to get larger, more asymmetric returns thru business ownership.
 

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That amount is too little. What is your net after paying taxes? Even though you are burned out, realize that you going to get three for one leverage on every dollar you can make this company make.

So while it is hard work to squeeze an extra $100,000 out of your company per year it will be worth $300,000 to you.

It would be way harder to sell and get $500,000 right now before taxes. And then come back and start a new company to go from zero to $100,000.

Maybe take a few months off with the business cruise, but don’t let it decline. Then come back and try to grow it after your break.
 

Antifragile

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I’m the current environment I don’t know a risk free 5% coupon on your investment. And I also think inflation will eat away at your principal faster than you would want.
Since you plan to live frugally and build a new business anyway, why not just focus on that with your $500k. What I mean is don’t think of perpetual retirement, just a 1-3 year pause. Then you can dip into your principal and still be OK. And with less burnout and pressure, maybe next exit could be in the $5m range... and the one after that in the $50m.
 

VentureVoyager

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A $500K "escape number" is not a lot of money, at all -- even for Thailand or some off the beaten path Indonesian village.
Well, that depends. My logic is:
500,000 * 5% yearly yield = 25000 USD yearly. / 12 = 2083 USD monthly. IF I could (not sure if that's so easy) get to that amount, then yes, I could live on 2k a month. Which would be a frugal life, but good enough for my first retirement at the age of 31.
My mom has LESS than that and she's 68, retired one year ago. So... welcome to Eastern Europe supreme, capitalist pigs :D In Thailand or Indonesia, and many countries in LATAM that would be good enough too.
BUT
I do realize that there's taxes etc. And so, the 500k figure includes taxes resulting in a business sale etc.

But the 2k monthly assumes guaranteed 5% yield, and also doesn't include withholding tax (I'm now checking if it would apply to me, as I'm a tax resident in tax haven when there's hardly taxes, and the country also has good agreements with US and other countries, that could change a lot), the costs of the tax structure that I'm using etc.

But LET'S ASSUME that I could pay almost 0 taxes on the profit. Then 2k would be good enough - for at least a few years. Where I live people survive pretty well on 4x time less, so...

The big question is: can I assume the returns nearing 5%? I'm thinking about investing in dividend paying stocks.

Or maybe I'm missing something and it could be possible to withdraw more each year?
I'm still fresh to the topic, that's why I started this thread, to check if maybe there's a zone of unconscious incompetence, areas of investing that I'm not even aware of.

I was also thinking to invest in real estate and start renting houses on AIRBNB (again, I don't live in the ridiculously overpriced US, so $500k buys you quite a lot here, where in New York that would most likely buy me half a bathroom on the outskirts, but with no roof and no paint on the walls, take that into consideration).

The perk is that you can buy at local prices here, but then rent out to Americans, Canadians and Europeans who skip winters here, giving them way more Western prices. But that's a full time work to begin with, and then at least part time or regular maintenance work included.
I'm not afraid of the work involved however, if that could guarantee me a nice yearly return. I mean I'm 31, not 81.

I'd use that $500K to get larger, more asymmetric returns thru business ownership.
Yeah, that sounds good. But so far I don't honestly have any ideas for a new business. No idea what to do next, really.

So I would rather put that money into something in order to generate even a low income instead of eating into the lifetime savings.

The general plan would be to invest that amount and then take my time to calmly think about new business ideas (now I can't seem to do it calmly, I'm stressed out...) knowing that there's no deadlines. When a new opportunity arises, I could sell my stocks or even real estate and invest the savings in a new business.

That amount is too little. What is your net after paying taxes?
For the sake of this topic, I assume that I would be left with 500k in overall savings, AFTER the sale. So it's not (price tag on the biz-tax), it's 500K after all and then it's just me without any more cashflow, thinking of plans on how to invest that amount for maximum returns with no big risks (yeah I know sounds like an antonym or a maybe a bit naive, but let's see...).

Even though you are burned out, realize that you going to get three for one leverage on every dollar you can make this company make.
I'm not sure if I understand. Might be because I only slept 4 hours today, but would you care to elaborate?

Are you reffering to a potential sale multiplier as in growing this business way more and then selling it for x3 yearly profit? or else?

I’m the current environment I don’t know a risk free 5% coupon on your investment.

I was thinking about:
-REITS (I have yet to study that topic, I don't know too much about it)

-Dividend paying stocks (investing in 10-15 companies with an average of 3-6% yearly dividends) - or maybe more % is possible, but I'm studying the topic and it's pretty confusing so far.

-Real estate. For example airbnb. That could potentially give bigger yields than 5%, but then it's a part time job, not passive income, and also it's not too liquid.

-? maybe buying a bulletproof and idiotproof local brick and mortar business that generates a stable income. But that's a bit desperate and very creative idea.

-??
 
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humananalytics

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If you retire with barely enough in the bank, you might end up being more stressed, worrying about your investment principal and expenses. If there's a market reversal and your principal drops to 300k within a year, retirement won't be so fun.

REITs are an interesting option, but if your whole portfolio is REITs, it can be pretty volatile and have you sweating during your retirement. In recent years REITs have underperformed the broader market, but not a bad long term option if you diversify (just be aware your principal might swing widely). The basic idea of a REIT is that 90% of profits are paid out to shareholders. Volatility usually strikes when a REIT is unable to make a payout or decreases a payout, then the price of a REIT can plummet very rapidly - since the whole point of the REIT is paying out most of its profit.

Dividend stocks have also largely underperformed against the broader market. A good example is a stock like AT&T - sure you might get a 4-6% dividend, but you'd also have close to zero or even negative capital appreciation over the past 20 years. While not always true, dividend stock companies tend to be old, slow growing companies that are out of ideas and have no clue how to grow, so they just pay out extra cash to shareholders. It's not a bad thing, just if you invested this way over the past 20 years, you would really lose out of lots of gains. In an ideal world you find a dividend company that is both growing and can payout a significant portion of its profit, but it tends to be one or the other. Dividend payout percentage and company growth tend to be inversely correlated.
 

Matt Sun

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Couldn't you delegate and automate your current business ? Maybe grow it some more without so much input on your part, and then exit for more money.
 

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It seems to me there are two questions in this thread:

1. Should I sell my business?
2. Can I semi-retire on $500k if I'm smart about it?

As for the first question, I'd encourage you to read this book:
https://www.amazon.com/dp/B07BN2KD1J/?tag=tff-amazonparser-20

This is a very difficult decision and the questions offered in this book are helpful to figure it out.

As others have pointed out, if you could somehow increase your business income, you could sell it for way more. I would strongly consider ANY option (even if it sounds silly) that could add to your bottom line, even if a little. If, for example, your business makes $100k a year and the sales multiple is 3x, you can sell it for $300k. But merely increasing your yearly income to $110k a year results in 30k more when selling it as @biophase pointed out.

And maybe if you find out you can increase income, then perhaps you wouldn't want to sell it. Because the truth may be that YOU think the business is finished while in reality it can still grow a lot (essentially, if someone will buy it from you, it means they think it can still grow). And yes, we've talked about this a lot, we share the same business challenges, and I'm not hiding the fact that I have similar doubts about this. But trying to look at it from another perspective, we may be too attached to the idea that self-publishing is in its demise.

And we may be too invested in the idea that the next business will be it.

As a guy starting a new business who thought that this would be easier than trying to grow my old one that has plateaued, let me tell you that this is WAY harder. I thought I would be done with my old business once I would focus on a new opportunity, but in reality I'm tempted to refocus on my old business.

The reason is simple: for that old business, I already have many assets (like a newsletter list or my deep understanding of the industry) I can use to make money TODAY (even if just a few hundred bucks). With this new business, I have nothing. And building an audience that trusts me may take years, if I even succeed. I thought that with one successful business I could easily build another one but if it isn't very similar to the previous one, it's a lot like being a newbie to entrepreneurship.

This brings me to another issue: what if you sell your current business, lose the monthly cashflow you now have, and won't be able to create a new business for years to come? Wouldn't you be more stressed out with reduced cashflow coming from investments that you couldn't control as much as your business?

The above is all just a different perspective to consider. I'm not saying that this would actually happen and that you absolutely shouldn't sell your business.

As for the second question, you wouldn't invest all of your 500k into 5%+ vehicles. A smart investor would keep at least some money parked in cash for future opportunities. You would probably also want to set aside some cash for growing new businesses. This reduces your income so $2000/month becomes less realistic assuming a relatively safe investment.

Could this amount of money help you chill out for a few years? For sure. Would it help you get rid of stress? I doubt it because while it's a lot of money, it's still not a life-changing amount unless you're really okay living on a very tight budget.

Perhaps you could go the risky route and use this money to buy a different business and flip it a year or two later (and then repeat it over and over again) but for that you need the right skills.
 

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All I care about is the sense of financial independence, safety and freedom.

When I write "retire" I don't mean not doing anything else ever again until I die. I would most likely start another business or freelance after a sabbatical. But I imagine that it would give me a relative peace of mind.
Congrats for the milestone!

500k is a first pot of gold.

Definitely not enough to retire comfortably in a big city unless you plan to live frugally and never start a family. But surely the cash and let you chase a bigger dream in business without worrying about having to put the idea on hold after trying 3 months because you need to pay for your bills.

But I highly doubt that it is "not enough" to do it on Indonesia or Thailand, given that I am in South East Asia right now. If you can't do it with 500k US dollar I guess the locals have to be permanently working. And it probably will work well in Latin America.
 

biophase

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Honestly, you are 31 and have a business that can sell for $500k, which means that it is making you at least $150k a year. I think you are taking your foot off the gas too soon. Unless you absolutely think cannot grow your business any more, I think you should keep it and grow it until you can sell it for an amount that will impact you.

Selling now and trying to make $2k a month is like the slowest fastlane mindset. Do you really want to go from $12k a month active to $2k a month passive? Yes, you will have $500k in the bank, but you won't be able to use it. Get it to at least a $1M exit.
 

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Honestly, you are 31 and have a business that can sell for $500k, which means that it is making you at least $150k a year. I think you are taking your foot off the gas too soon. Unless you absolutely think cannot grow your business any more, I think you should keep it and grow it until you can sell it for an amount that will impact you.

He's in the same business as I am (self-publishing). We've been talking and trying to come up with ideas for months whether we can grow these businesses more. And I think we're both burned out and find it hard to identify new growth opportunities. So this is probably also partly motivated by feeling stuck and the fear that if you don't sell it now, it'll continue decreasing.
 

thechosen1

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I know a guy who is "mini retired" on about $600k. It's possible if you're single and you don't mind just chilling.

He bought some ETH way back when it first started, saw some big gains, sold and paid cash for a $250k house.

Pretty much has expenses around $2000 per month. He goes places with his dog, drives his truck to the beach, sometimes goes out.

Honestly for my area, he's living the same lifestyle as everyone else just without work! Pretty nice!

much better than UBI or unemployment because he has real options!
 
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biophase

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He's in the same business as I am (self-publishing). We've been talking and trying to come up with ideas for months whether we can grow these businesses more. And I think we're both burned out and find it hard to identify new growth opportunities. So this is probably also partly motivated by feeling stuck and the fear that if you don't sell it now, it'll continue decreasing.

I see. Ok, then I can see why selling would be a good thing.

I don't think that investing $500k for 5% passive is a good plan. We are talking about $2k a month that he is trying to attain. I think a better plan would be to take $100k, which is 4 years of his $2k/mo salary and set it aside. Then take the remaining $400k and use that to invest or build another business.

It's crazy to think about how little 5% is.

If he takes $500k and gets 5%, in 4 years he will have $500k and lived on $25k a year for 4 years.
If he uses $100k to live for the next 4 years and doesn't invest anything, he will have $400k.
You can be 35 years old with $500k in the bank or 35 years old with $400k in the bank.

But the biggest difference is that if you take a low risk path, there's no chance that you can be 35 years old with $1M in the bank because all of that $500k capital cannot be used to fund anything else.


I should add that when I was 33, I moved to Arizona and was mini retired. Meaning I had a $70k condo paid for and the HOA included all utilities. I had $100k in the bank which at the time I calculated could last me 4-5 years. Life was great because I didn't have to work. But the part of life that sucked was that I had alot of time and could not afford to do anything. When you try to live on a low fixed income, you can't just go to movies or restaurants whenever you want. Not to mention the cost of dating! You basically need to cook food, budget, look for sales and do all these things that you don't want to be doing. I spent my days at the gym, playing pickup basketball, going to a 1pm movie and then sneaking into the other ones. Not exactly the retirement life that I wanted...
 
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Love this breakdown, @biophase. You always deconstruct these types of difficult decisions in a very thought-out way.

Then take the remaining $400k and use that to invest or build another business.

@VentureVoyager will surely address this but I'd add that that's where the challenge is. If you don't believe you can successfully deploy the $400k to build a business, then I can understand why it seems like it's a better option to simply save it all and play it safe.

I wouldn't know how to sensibly invest $400k. And to be more precise, I'm pretty sure I'd lose it all (unless it was a real estate business or another hard asset based business, then maybe I wouldn't).

I should add that when I was 33, I moved to Arizona and was mini retired. Meaning I had a $70k condo paid for and the HOA included all utilities. I had $100k in the bank which at the time I calculated could last me 4-5 years. Life was great because I didn't have to work. But the part of life that sucked was that I had alot of time and could not afford to do anything. When you try to live on a low fixed income, you can't just go to movies or restaurants whenever you want. Not to mention the cost of dating! You basically need to cook food, budget, look for sales and do all these things that you don't want to be doing. I spent my days at the gym, playing pickup basketball, going to a 1pm movie and then sneaking into the other ones. Not exactly the retirement life that I wanted...

That's a very good point. As I was considering selling my own business I thought about this as well. I have predictable cashflow now that lets me buy pretty much whatever I want (sensibly) without worrying about the price. It would suck to have to budget everything again.
 

thechosen1

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I see. Ok, then I can see why selling would be a good thing.

I don't think that investing $500k for 5% passive is a good plan. We are talking about $2k a month that he is trying to attain. I think a better plan would be to take $100k, which is 4 years of his $2k/mo salary and set it aside. Then take the remaining $400k and use that to invest or build another business.

It's crazy to think about how little 5% is.

If he takes $500k and gets 5%, in 4 years he will have $500k and lived on $25k a year for 4 years.
If he uses $100k to live for the next 4 years and doesn't invest anything, he will have $400k.
You can be 35 years old with $500k in the bank or 35 years old with $400k in the bank.

But the biggest difference is that if you take a low risk path, there's no chance that you can be 35 years old with $1M in the bank because all of that $500k capital cannot be used to fund anything else.


I should add that when I was 33, I moved to Arizona and was mini retired. Meaning I had a $70k condo paid for and the HOA included all utilities. I had $100k in the bank which at the time I calculated could last me 4-5 years. Life was great because I didn't have to work. But the part of life that sucked was that I had alot of time and could not afford to do anything. When you try to live on a low fixed income, you can't just go to movies or restaurants whenever you want. Not to mention the cost of dating! You basically need to cook food, budget, look for sales and do all these things that you don't want to be doing. I spent my days at the gym, playing pickup basketball, going to a 1pm movie and then sneaking into the other ones. Not exactly the retirement life that I wanted...
Wow this is awesome! I didn't know you went through this low-FIRE kind of experience.

It makes sense that it would be pretty rough, actually. It's nice to have that financial freedom (hell I should really look at getting a paid-off $70k condo for now while I try to build my wealth in business - currently I own a 2300 sq. ft. brick house that I'm remodeling to live-in flip) but I totally get what you're saying.

Thanks for sharing. Very eye-opening.
 

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500k in that age had brought me the security not to have to enslave me in a job.

I could have developed my hustles.
Or I got a job without having to fear a dismissal. Which makes me do my job better and holding my brain free of bad stress.

Sure you can’t have a rich life on 500k, but you are able to not have a poor one, too.
And it hasn’t have to be for ever.
 

thechosen1

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500k in that age had brought me the security not to have to enslave me in a job.

I could have developed my hustles.
Or I got a job without having to fear a dismissal. Which makes me do my job better and holding my brain free of bad stress.

Sure you can’t have a rich life on 500k, but you are able to not have a poor one, too.
And it hasn’t have to be for ever.
That's why it's so important to save an emergency fund ASAP.

It's an important first step that can't be overestimated. Just a small amount will do.
 

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I think you'll get bored with not much to do.

Is it possible to automate your business so that it runs itself, or runs with minimal input from you? If you can, I'd bet that you can make significantly more than $25k/year with it.

From there, you can build something else that interests you.
 

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Ok, so an interesting thing came up.
I was hanging out with my American friend here in Mexico and talking about his real estate projects.
He told me something very interesting that I had no idea about: the current state of Mexican economy allows banks to still have positive annural returns rates, and high.

He's a very succesful semi-retired entrepreneur who has lived in TONS of different countries and seems to be very numbers oriented and generally aware, so I don't think he would be BSing me.

So according to him it's not very difficult to find a US or Canada-backed bank in Mexico that will offer you 5% anually, if you deposit a large sum. And the sum in question is considered large here in Mexico. And I live here anyway.

*the yellow filter and sicario's gunshots intensifying, cabron*

So looks like I wouldn't even have to put the money in dividend paying stocks, I could just transfer them from my UE bank to Mexico and become semi-retired. This way I wouldn't have to worry about the stocks losing the value, withholding tax, broker fees, etc. Simple.

The problem is, as @MTF pinpointed when we briefly talked yesterday, that a bank could, in theory, go bankrupt. I'm not actually sure how often such a thing happens. It's not like you hear often about large banks going to zero. And anyway, I still have most of my savings in a single bank in Europe (and some on Wise and in crypto), so...it could all go bankrupt too, but I'm not sure if this way of thinking isn't too anxious and paranoid.

Also, Mexican economy is also growing at a rapid rate, especially where I live.

But I could as well find 2 banks and deposit the money 50:50 on a 4.5% or smg like that. It's still yet to be researched.
But still it was an awesome information, considering the zero-ish or negative return rates in European and US&CA banks.
So that's an interesting find.

Of course, that's not guaranteed to last me a lifetime. But I could feel pretty safe and semi-retire until I come up with a new business idea. And it's not like all businesses need big investments.
I started the current one with 70 USD. Yes, 70. However, it was back in 2014, so maybe I would need 5x that amount these days. Idk.

Now, back to your replies and feedback. I appreciate them all <3 , but I feel like we are missing the point at times.

I'm not asking if I should do it, and if I can survive on 2k USD monthly. Again, I don't give a crap about "living large", also, I don't live in the US, I'm in Mexico.
You don't need 400 USD per night to have a good time out. You will be OK with 500 MXN, so around 25 USD lol. Unless you are a drug addict and alcoholic haha. You don't pay 30 USD for a pork sandwich & beer.
And so on.

Also:
I think you'll get bored with not much to do.
well, as I write in the original post:
When I write "retire" I don't mean not doing anything else ever again until I die. I would most likely start another business or freelance after a sabbatical. But I imagine that it would give me a relative peace of mind.

Also, @biophase No, I did not receive a 500k buying offer.
That would also mean that I currently have $0 in savings, lol.

The 500k is the sum that I theoretically could have if I sell, my life savings included. Unfortunately, my business is not making 12-15k a month, it's closer to 8k on average after all the expenses. And I've been doing it for more than 7 years now and I'm totally burned out.
So yeah, I'm gonna think whether or not I'm gonna sell, and if there are any more ways of growing, but that's not the point.

So my main question is: Is there any other way of investing 500k pretty safely, in order to get 5% returns or higher, that I'm maybe missing here (like I missed Mexican banks offering 5% annual returns)...
 

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Ok, so an interesting thing came up.
I was hanging out with my American friend here in Mexico and talking about his real estate projects.
He told me something very interesting that I had no idea about: the current state of Mexican economy allows banks to still have positive annural returns rates, and high.

He's a very succesful semi-retired entrepreneur who has lived in TONS of different countries and seems to be very numbers oriented and generally aware, so I don't think he would be BSing me.

So according to him it's not very difficult to find a US or Canada-backed bank in Mexico that will offer you 5% anually, if you deposit a large sum. And the sum in question is considered large here in Mexico. And I live here anyway.

*the yellow filter and sicario's gunshots intensifying, cabron*

So looks like I wouldn't even have to put the money in dividend paying stocks, I could just transfer them from my UE bank to Mexico and become semi-retired. This way I wouldn't have to worry about the stocks losing the value, withholding tax, broker fees, etc. Simple.

The problem is, as @MTF pinpointed when we briefly talked yesterday, that a bank could, in theory, go bankrupt. I'm not actually sure how often such a thing happens. It's not like you hear often about large banks going to zero. And anyway, I still have most of my savings in a single bank in Europe (and some on Wise and in crypto), so...it could all go bankrupt too, but I'm not sure if this way of thinking isn't too anxious and paranoid.

Also, Mexican economy is also growing at a rapid rate, especially where I live.

But I could as well find 2 banks and deposit the money 50:50 on a 4.5% or smg like that. It's still yet to be researched.
But still it was an awesome information, considering the zero-ish or negative return rates in European and US&CA banks.
So that's an interesting find.

Of course, that's not guaranteed to last me a lifetime. But I could feel pretty safe and semi-retire until I come up with a new business idea. And it's not like all businesses need big investments.
I started the current one with 70 USD. Yes, 70. However, it was back in 2014, so maybe I would need 5x that amount these days. Idk.

Now, back to your replies and feedback. I appreciate them all <3 , but I feel like we are missing the point at times.

I'm not asking if I should do it, and if I can survive on 2k USD monthly. Again, I don't give a crap about "living large", also, I don't live in the US, I'm in Mexico.
You don't need 400 USD per night to have a good time out. You will be OK with 500 MXN, so around 25 USD lol. Unless you are a drug addict and alcoholic haha. You don't pay 30 USD for a pork sandwich & beer.
And so on.

Also:

well, as I write in the original post:


Also, @biophase No, I did not receive a 500k buying offer.
That would also mean that I currently have $0 in savings, lol.

The 500k is the sum that I theoretically could have if I sell, my life savings included. Unfortunately, my business is not making 12-15k a month, it's closer to 8k on average after all the expenses. And I've been doing it for more than 7 years now and I'm totally burned out.
So yeah, I'm gonna think whether or not I'm gonna sell, and if there are any more ways of growing, but that's not the point.

So my main question is: Is there any other way of investing 500k pretty safely, in order to get 5% returns or higher, that I'm maybe missing here (like I missed Mexican banks offering 5% annual returns)...
Tailored made unit trust that have the name “income fund” are a good choice. Dividend stock a good choice.

Safe is a relative term. They are safer than the broad market index that contains non-dividend paying stocks and growth stocks with nice stories but no profit.

They still have market exposure and price fluctuation and will never be any where close to be safe as your bank fix deposit. It is the diversification that protects. One or two companies in your portfolio going bankrupt is not going to affect you much.
 

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Kevin88660

Gold Contributor
I've Read UNSCRIPTED
Speedway Pass
Feb 8, 2019
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474
Singapore
Ok, so an interesting thing came up.
I was hanging out with my American friend here in Mexico and talking about his real estate projects.
He told me something very interesting that I had no idea about: the current state of Mexican economy allows banks to still have positive annural returns rates, and high.

He's a very succesful semi-retired entrepreneur who has lived in TONS of different countries and seems to be very numbers oriented and generally aware, so I don't think he would be BSing me.

So according to him it's not very difficult to find a US or Canada-backed bank in Mexico that will offer you 5% anually, if you deposit a large sum. And the sum in question is considered large here in Mexico. And I live here anyway.

*the yellow filter and sicario's gunshots intensifying, cabron*

So looks like I wouldn't even have to put the money in dividend paying stocks, I could just transfer them from my UE bank to Mexico and become semi-retired. This way I wouldn't have to worry about the stocks losing the value, withholding tax, broker fees, etc. Simple.

The problem is, as @MTF pinpointed when we briefly talked yesterday, that a bank could, in theory, go bankrupt. I'm not actually sure how often such a thing happens. It's not like you hear often about large banks going to zero. And anyway, I still have most of my savings in a single bank in Europe (and some on Wise and in crypto), so...it could all go bankrupt too, but I'm not sure if this way of thinking isn't too anxious and paranoid.

Also, Mexican economy is also growing at a rapid rate, especially where I live.

But I could as well find 2 banks and deposit the money 50:50 on a 4.5% or smg like that. It's still yet to be researched.
But still it was an awesome information, considering the zero-ish or negative return rates in European and US&CA banks.
So that's an interesting find.

Of course, that's not guaranteed to last me a lifetime. But I could feel pretty safe and semi-retire until I come up with a new business idea. And it's not like all businesses need big investments.
I started the current one with 70 USD. Yes, 70. However, it was back in 2014, so maybe I would need 5x that amount these days. Idk.

Now, back to your replies and feedback. I appreciate them all <3 , but I feel like we are missing the point at times.

I'm not asking if I should do it, and if I can survive on 2k USD monthly. Again, I don't give a crap about "living large", also, I don't live in the US, I'm in Mexico.
You don't need 400 USD per night to have a good time out. You will be OK with 500 MXN, so around 25 USD lol. Unless you are a drug addict and alcoholic haha. You don't pay 30 USD for a pork sandwich & beer.
And so on.

Also:

well, as I write in the original post:


Also, @biophase No, I did not receive a 500k buying offer.
That would also mean that I currently have $0 in savings, lol.

The 500k is the sum that I theoretically could have if I sell, my life savings included. Unfortunately, my business is not making 12-15k a month, it's closer to 8k on average after all the expenses. And I've been doing it for more than 7 years now and I'm totally burned out.
So yeah, I'm gonna think whether or not I'm gonna sell, and if there are any more ways of growing, but that's not the point.

So my main question is: Is there any other way of investing 500k pretty safely, in order to get 5% returns or higher, that I'm maybe missing here (like I missed Mexican banks offering 5% annual returns)...
The higher interest risk is just a reflection of the depreciation risk of the underlying currency.

I remember gov bond of Venezuela being sold at 33 percent interest when massive inflation hits the news.
 

woken

Bronze Contributor
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By no means I have the same experience as others that posted here, but I do have an opinion.

To me it sounds like you’re asking :

“How do I take a break?”

Once you start thinking about it, or you feel like you’re burning out, I’d say do it.


You said it yourself, you’re not looking to *not do anything* for the rest of your life.

What you’re looking for is a break. Earning 2k/ month passively would give you the financial freedom you need for your break.

Most likely, after two years you’d be ready for another project which you could fund with your principal.


it’s a phase, and you have to go through it.
 

NMdad

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He's in the same business as I am (self-publishing). We've been talking and trying to come up with ideas for months whether we can grow these businesses more. And I think we're both burned out and find it hard to identify new growth opportunities. So this is probably also partly motivated by feeling stuck and the fear that if you don't sell it now, it'll continue decreasing.
If you're both similarly stuck, you might consider:
  • Asking what someone else would do to grow a business like yours.
  • For example, some Jay Abraham-style strategies--he's got a knack for identifying opportunities.
 

socaldude

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Great job.

Real estate is a pretty good gig in Mexico. And it gives you some passivity while you keep grinding.

Although I would tread carefully with putting large sums of money in a Mexican bank. It’s not unheard of to get your money cleaned out. Then you’ll have to sue them at CONDUSEF.
 

gryfny

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I was contemplating the same. I figured out I would need 1-2M to retire. Check out some FIRE communities, preferably one for your country/region. For my country I found some great resources, with calculation tools to figure out how much you'd need to retire.
 

VentureVoyager

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For my country I found some great resources, with calculation tools to figure out how much you'd need to retire.
Ok, and then how would you invest the money?

@Ing - same question
 
Last edited:

evergreen_scene

New Contributor
Dec 5, 2016
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Alright so I've contemplated doing the exact same thing, semi-"retiring" on ~$700k thanks mostly to timely crypto investments and working a 6-figure/yr income job.

I think there is 1 fairly obvious solution you're missing. You've never strayed from 5% passive return on your investment. There are plenty of ways to get a relatively safe return of 8-10% at the moment, it just involves some slight know-how and appetite for risk, but no more risk than you'd be taking loaning $500k to a bank or 50:50 to multiple banks. In fact, you could even get this 10% return on $250,000 of your cash and then go ahead with your 5% return on the other $250,000 netting you the $25,000/yr you're targeting and then an additional $12,500/yr.

Feel free to DM me, I'm happy to outline where this 10% I'm speaking of would come from.
 

advantagecp

Bronze Contributor
Feb 7, 2015
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A $500K "escape number" is not a lot of money, at all -- even for Thailand or some off the beaten path Indonesian village.
$2000 per month. That will get you a nice apartment with a water view in Hanoi or Danang, along with a very comfortable lifestyle. Not a big swinging dick Westerner lifestyle, but a comfortable far above average lifestyle. I would get a part time gig teaching English or BJJ, immerse myself into a heavy BJJ training schedule, take tango classes, the possibilities are endless.

Then at some point another entrepreneurial opportunity pops up. I think the OP is probably burned out and looking to consolidate some gains and take a break. Nothing wrong with that.
 

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