How much is enough??

[Reality Check]

Originally Posted by starfish62

Creatio ex nihilo.

What does creating an ex nympho have to do with it... BTW you need a spell checker

[dcstrng]

<Architect Ludwig Mies van der Rohe, who coined the phrase.>

Didn't know that, but then I'm finding there's more and more I don't know...

[starfish62]

Personally, I had to marry her to accomplish that feat.

[David M]

So much of it depends on age and how well you want to live. At my age of 47 I don't dare quit my job unless I plan on retiring. I would hate to weigh anchor for a few years and then come back to having to work for the rest of my life. If I were younger, I would not mind doing so.

The other factor is level of comfort. Personally, I cant see myself and my wife living on a 30 something foot boat. I'm sure I would become claustrophobic eventually and just dread being underway. If I was younger?...no problem.

For myself, and not necessarily for others, I can't see doing it for under 1 million invested...and this means after I own the boat. 1 million means a rough annual budget of $50k after taxes. I could live on that on a boat that is already paid for.

To answer the question, 1 million minimum with a boat that is already paid for.

[6string]

I was working this out today as I was driving from Milwaukee to Green Bay for some sales calls this morning. I didn't want to think about business so early in the morning.

I plan on selling the lake home of 25 years, (lots of equity) and saving everything I can between now and then. 42 months. I plan on having $200,000 to buy and equip the boat and $720,000 invested. At 5% return for living, I've got $3000/month. The rate of return should average 10% long term so I should see this income go up over the years despite taking 1/2 for living. For Grins and Giggles we will find some things to do to make a few $$$ as we go along. I just hope that my business continues going as it is now. If it does, the plan works.

Jeff

[Steve Rust]

Just remember to factor in 2-3 percent for inflation every year. Taking your 10 percent annual average growth , which is a commonly accepted figure and taking out 5 percent for spending money leaves 2-3 percent after inflation. From that you will also pay 1-2 percent commissions, brokers fees, management fees, etc.

[GordMay]

Originally Posted by 6string

...At 5% return for living, I've got $3000/month. The rate of return should average 10% long term so I should see this income go up over the years despite taking 1/2 for living...
... I just hope that my business continues going as it is now. If it does, the plan works. Jeff

Originally Posted by Steve Rust

... aking your 10 percent annual average growth , which is a commonly accepted figure and ...

My crystal ball obviously isn’t as clear as Jeff’s and Steve’s. In the past, I’ve used a 10% RoR assumption and been disappointed. More recently, I’ve assumed 5%, and remain disappointed.

It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.

Some prudent cautions, excerpted from:

Asset Allocation, Rebalancing and Long-Term Investment Returns
Evanson Asset Management - Asset Allocation Rebalancing and Long-Term Investment Return Information

... Very approximately, after inflation,
stocks can be expected to give a real return of 4-5% in a globally divesified portfolio,
bonds, 0.5-1.0%,
and T-bills, 0.5% (Dimson et al, 2002, Triumph of the Optimists).
Returns in the 1980’s and 1990’s were much higher than this, as interest rates came down from record double digit highs, boosting bond prices, and stocks averaged 18% per year, before inflation. Also, there is persuasive data suggesting that over very long time-frames, small stocks outperform large stocks, value stocks outperform growth stocks, and international stocks in various categories smooth out long-term returns, if not adding to them.

But, as Keynes pointed out, over the long run we are all dead, and I know only one investor who has been in the market fifty years or longer. So, real investors must deal with the unpredictability of markets and returns over shorter time frames. And, the predictability of returns and volatility over shorter time frames, even twenty-five year time frames, involves uncertainty. Let’s take a look at some numbers...

... What long-term returns should an investor realistically expect from a well diversified passive and index portfolio 100% invested in stocks? An honest answer would be somewhere between 4% per year and 6% per year after inflation, with the latter figure including a probable bonus from overweighting value and small equity asset classes. And, it could be better or worse, depending upon time frame and time of market entry and exit ...

[ess105]

My budget is assuming 3% over inflation. If, after a few years, I exceed this, we can treat ourselves. Of course, one can't do this each year as there will certainly be some years where we won't even make this.

[sundog]

No way I'll be waiting for a million bucks to pile up! The wife and I are killing our debt right now... should be gone in a year (includes having the house paid for). Once the debt is gone we'll start boat searching based on the value of our home, once our home is worth enough/we find a cheap enough boat (probably around 150k) we'll sell the house and move aboard while continuing to work. Once we feel comfy with our savings (probably 30-40k) we're outta here! The trick is we're cultivating a money tree of sorts... basically a small buisness with high earning ability and no overhead that can be "put away" when we don't need $, and can be opened up for a couple months at a time with no prep work when we need to recharge. So wherever in the world we are when we start to run low we'll just fly home to earn some cash as needed. This will get us by just fine and allow us to take off for an open ended cruise at under 35 years old.

[s/v Breakaway]

Sundog - what are you doing? Selling drugs?

[Apogee]

Originally Posted by sundog

No way I'll be waiting for a million bucks to pile up! The wife and I are killing our debt right now... should be gone in a year (includes having the house paid for). Once the debt is gone we'll start boat searching based on the value of our home, once our home is worth enough/we find a cheap enough boat (probably around 150k) we'll sell the house and move aboard while continuing to work. Once we feel comfy with our savings (probably 30-40k) we're outta here! The trick is we're cultivating a money tree of sorts... basically a small buisness with high earning ability and no overhead that can be "put away" when we don't need $, and can be opened up for a couple months at a time with no prep work when we need to recharge. So wherever in the world we are when we start to run low we'll just fly home to earn some cash as needed. This will get us by just fine and allow us to take off for an open ended cruise at under 35 years old.

Ok, Ok, I was totally with you until the you mentioned the price of the boat. 150K! Honestly? Seriously? And then you'd sail with only 30-40k saved up? Ummmm, can you do it the other way around? 30-40k boat and 150k fir cruising? Am I the only one around here that thinks 150k for a boat is carzy? (as for the special work arrangement...)

Comments welcome.

[liberty16]

This was a great thread to read through. Tons of wisdom and practical advice about money management....

[ess105]

I find it incredibly interesting how even the poll results are. This just may be luck due to the way the bands were picked. Or, perhaps more likely, it simply confirms the notion that cruising costs what you've got and/or prepared to pay.

[seafox]

Originally Posted by Alan Wheeler

We need an extra price range of $1000-25K up in our poll. $25K/yr would be about what we would spend total and that is assuming we still retained the Marina Birth at $5K/yr. And that is NZ$'s. I just can't see how you would have to spend more as a minimum. Anything above that is luxury excesses. Like Flying home or staying in a hotel or whatenver. And why would you do those things. You set out to live on a boat for goodness sakes.

The poll is retiring and going cruising. If you only had 25k in the kitty and went cruising you would have to cut your throat or jump in the ocean when the money ran out

To retire on 25K pa you will need around $312,000 @ 8%. Then you would have to allow some inflation and tax. More like $500,000 at 8%.

Unless of course you were Rebelheart. Then you could do it on $25k invested at 100%

[waterworldly]

I have also studied the retirement aspect and find that playing the "you need more because of inflation card" to be a red herring, often used by those that sell securities to convince you to invest with them to make a larger (promised, not realized) return, that consequently gets cut back by their "fees" for "helping" you out. I have done quite nicely on a 5.25-5.6% return buying plain vanilla CD's, not fees, no muss, no fuss. You get a clear statement at the end of the year and do a simple 1040 return. With your significant other, you can put $400,000 FDIC insured in each institution, and when you show up with that cash, it's amazing how you can barther the rate up from the "advertised" rate on their CD's, and that will become more previllent in the coming year as sources for loan money dry up and banks (more so regional) start actually using real deposits to loan money as opposed to selling the loans before the ink is dry. Here's a hint: if you have someone that wants to be your "finacial advisor", a tag given to just about anyone that takes a two week course in house at any of the money houses like Smith Barney etc, ask to see their personal Equifax report. AFter all, they saw yours. Chances are, when you see their credit report, you wouldn't trust them with your grocery money, let alone your life savings!