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.<p>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.<p>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.<p>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 <i>have</i> to work anymore?
The amount of terrible advice on here is amazing.<p>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..<p>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.<p>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.
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.<p>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.<p>A while back I wrote a short guide for a friend that lays out my personal financial perspective in a bit more detail: <a href="https://www.notion.so/lhl/Basic-Financial-Literacy-Guide-38686f17308e48ecb2a5dc2521acfcf2" rel="nofollow">https://www.notion.so/lhl/Basic-Financial-Literacy-Guide-386...</a><p>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.<p>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!
Recognize that "retirement" doesn't necessarily mean "never work again" - but rather that you can be more selective in the work you take.<p>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.<p>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.<p>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.<p>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.<p>As for money:<p>- 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.<p>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...<p>> I like my job, but it’s stressful.<p>> Am I jumping the gun?<p>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.<p>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.
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.<p>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.<p>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<p><a href="https://www.cycleblaze.com/profile/nicroets/" rel="nofollow">https://www.cycleblaze.com/profile/nicroets/</a><p>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.<p>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.
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!).<p>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.<p>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!
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 <i>your</i> 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.<p>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.<p>Here is a reading resource for you to consider <a href="https://training.kalzumeus.com/newsletters/archive/investing-for-geeks?__s=esaiz3kazigwidftsigk" rel="nofollow">https://training.kalzumeus.com/newsletters/archive/investing...</a><p>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.<p>If you have any questions, even if they’re newbie, feel free to ask!
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.<p>I have a large family that is quite young. Six kids under the age of 15.<p>My annual expenses of $100k is definitely for a lifestyle that is nicer than we need. Most of that is on a big mortgage.<p>I’m surprised at how many people have joined in on this discussion. Thank you!
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).<p>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.
Without listing your expenses, location and cost-of-living, there's not much advice to give.<p>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:<p>0. Debt is a killer. Pay yours off.<p>1. Live below your means<p>2. Look up the 4% rule - can you live happily on 4% ($40k) per year? If not, you may need to save some more.<p>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.<p>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.<p>There's also a series of books called "The Tightwad Gazette" with a similar theme of learning to spend less.<p>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.<p>Best of luck.
<a href="https://reddit.com/r/financialindependence" rel="nofollow">https://reddit.com/r/financialindependence</a><p>$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.
> Is $1M not enough?<p>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.<p>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, $1 million might not last into old age.<p>Being a "millionaire" isn't what it used to be. It's a lot of money to be sure, but you are not rich. It may grant a lifetime of frugal retired living, not rich retired living.
I think the key here is to use it as a pivot in your life.
Retiring on 1M$ 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.<p>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?<p>Not high.<p>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.<p>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.<p>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.<p>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.
Warning: fellow engineer here. I am not a financial advisor.<p>You can follow one of two stock-based strategies:<p>1. Invest 100% in an S&P500 index fund, returning 8%/year [1] and growing to $11M in 30 years [2], minus withdrawals.<p>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.<p>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).<p>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.<p>EDIT: Numbers for (2) were off, as suggested by multiple people in the comments. Updated.<p>---<p>[1] <a href="https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp" rel="nofollow">https://www.investopedia.com/ask/answers/042415/what-average...</a><p>[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).<p>[3] <a href="https://www.bankrate.com/banking/savings/best-high-yield-interests-savings-accounts/" rel="nofollow">https://www.bankrate.com/banking/savings/best-high-yield-int...</a>
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.<p>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.<p>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.<p>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.<p>You did the hard part of saving the money now it's time to move on to the next step. Good luck!
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.
It depends on whether or not we are going into a depression or if the markets are going to keep climbing.<p>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.<p>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.<p>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.<p>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.<p>How old are you?
Where do you live?
What are expenses and costs where you live?
Do you have other sources of income?<p>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.<p>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.
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
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.<p>On the other side if you moved to tech from somewhere else and you are actually older, the numbers start to become more reasonable.<p>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.<p>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).<p>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.<p>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 have a question - say, if one wants to invest $1M in some sort of rental properties (anywhere in the world).<p>What's the most efficient rental properties that generate highest percentage of return after recurring expenses?<p>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.<p>And $1M can afford to invest into high quality, waterfront properties that can be carrying many benefits for years to come.
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?<p>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.<p>But, I would only suggest this if you have a clear plan for <i>what you’re going to do</i> 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.
Same question but with $5M asked here a couple months ago:<p><a href="https://news.ycombinator.com/item?id=24683297" rel="nofollow">https://news.ycombinator.com/item?id=24683297</a>
Lots of commentors will claim that everyone else giving terrible advices - and not to listen to anyone on internet - and this of course followed by the specific advice by that commentor.
Land. Buy farmland. People have to eat. Make it work for you for a steady stream of passive income. Create a self sufficient compound so your passive income is only for your spending money.<p>If all else fail, you still have the land to sell. You can’t print land. It will always be in demand.<p>Buy productive land you can steward. One acre of fertile land with water is much better than 500 acres of scenic acreage.<p>Where can you find that in America? I have a rough rule. Follow the Amish. Can’t go wrong.<p>(This is not investment advice. Just my thoughts.)
Take a sabbatical for 6-12 months. Travel, do something fun for yourself.<p>Then re-evaluate.<p>A lot of people think they want to retire when in reality they want a break.<p>You can easily live on 50k/year if you don't have a family. That's 20 years if you don't make another penny so you really don't need to do anything. If you don't spontaneously find a way to make money in the next 20 years that you enjoy, something has gone terribly wrong :)
1M$ 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.<p>Dividend + buyback yield is around 4% on s&p 500. So you could reasonably safely take out 4% / year (assuming you dividend reinvest).<p>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.<p>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.<p>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.<p>Stocks are good, but they're not good for steady withdrawals. For example, during a bear market your withdrawals are very costly.<p>To retire, you need predictable income streams, and rental property is one of the best.<p>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).<p>33% down should give you immediate profits from most of your properties.<p>$3 million could get you as many as 30 condos/homes in the right areas.<p>If monthly profit on each of those 30 condos/homes can average $200 per month, that's $6,000 per month right there.<p>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.<p>In a nutshell, rental property is one of the faster ways to generate income without working.<p>The other, simpler way is to move to a country like the Philippines.
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".<p>Also most advice here is going to be wrong or not applicable to your specific situation.
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.<p>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.<p>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.
You need to set some parameters for us!<p>- 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?<p>You get the idea.<p>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.
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.
Split $750k between Bitcoin, Bitcoin Cash and Ethereum.<p>Rent and pay 6-12 months in advance, try to get a discount.<p>Give yourself a 1 year budget and make it on the low end.<p>Everytime Bitcoin doubles take out 10% (Rake Method).<p>Wait one year and re-evaluate.