Wealth v. Residuals

by Dorina Lanza

in Wealth

How much wealth do you need? Well, it depends what you want to do – and when. Let’s talk about retirement – yours. How old are you? When would you like to retire? How many years away is that? How much revenue per month would you need to have available to spend in order to live the lifestyle to which you have become accustomed? No, I’m not talking mega yachts, exotic cars, luxury real estate, couture and haute joaillerie [unless that is what you are used to]. I am talking about maintaining a lifestyle comparable to what you have now. How much would that be? Per month? $5,000, $10,000, more?

Hmmm . . . Do you have any idea what it takes to generate that level of revenue from assets? [remember, you are retired . . .]. Well, let’s see. First we need to think of what kind of return you could get – relatively low risk – remember, this is your retirement asset, not one you will use to try to get a high speculative return. I just checked. As of May 21, 2010 rates for a jumbo 1-year CD range from .65% to 1.55%, 5-year rates are not much more comforting – 1.03% to 3.09%. And these rates are per year – OUCH! And money market returns are just about as bad.

So, let’s say that you need $10,000 per month and let’s say that you can get 3%/year return on your money. How much would you need? You would need a cool $4,000,000 to do that. How long did you say you had until you wanted to retire? 10 years? [a common goal no matter what your age - go figure!]. How much do you have now – after the market crash? $250,000, $500,000? You are not real close, are you? You would still need to accumulate an additional $3,500,000, or $350,000/year to achieve your goal. How are you going to do that?

Well, we can help you solve that problem – if you are willing to make a focused effort . . .

You say you can get a return better than 3%? OK, here is a table of Liquid Asset – Residual Revenue Equivalents – The Translation Formula. In the left hand column find your desired monthly income and across the top find the rate of return you believe you can achieve. At the intersection of your selected row and column you will find the amount of revenue generating assets required for you to achieve your goal without depleting your principal – enjoy!

Liquid Assets – Residual Revenue Equivalents

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