Two Plus Two Publishing LLC Two Plus Two Publishing LLC
 

Go Back   Two Plus Two Poker Forums > >

Notices

Business, Finance, and Investing Making money, investing in markets, and running businesses

Reply
 
Thread Tools Display Modes
Old 02-27-2017, 11:44 PM   #1
LVpokerPRO
old hand
 
Join Date: Jul 2009
Posts: 1,931
Is $750k cash enough to retire in your 30's?

Had a debate with a friend today, he's done quite well in his 10 years of poker and owns his house outright and has roughly 750,000 in cash saved. He is 37 and wants to retire now (staying in USA). I do know he is strong willed enough to quit playing poker, but I told him he would get bored and eventually it will just dwindle away.

His argument was that he can invest half a million into index funds and then just take a salary every month from that to golf and do whatever he wants to do every month. He said he would possibly take up something part time like working at a golf course if he gets bored ( loves golf ) but he would never have to work full time again.

Thoughts? I argued that with inflation, and a possible 50 years left to live that's not even $20,000 per year.

Oh, and before someone thinks it's me, it's not. My name should've been changed years ago, I am back in school and suck at poker =)
LVpokerPRO is offline   Reply With Quote
Old 02-27-2017, 11:51 PM   #2
jalexand42
Hypothetical Ubermonkey
 
jalexand42's Avatar
 
Join Date: Oct 2005
Location: Open Shoving My Range
Posts: 4,991
Re: Is $750k cash enough to retire in your 30's?

If he can live on $15-20k/year, sure (assuming $500k invested).

This of course is pretty conservative and is based on 3-4% withdraw rate which minimizes his risk of ruin. His investment choices and the ultimate performance of those matter a lot in this question.
jalexand42 is offline   Reply With Quote
Old 02-28-2017, 01:37 AM   #3
krunic
Pooh-Bah
 
Join Date: Sep 2013
Location: Chicago
Posts: 3,654
Re: Is $750k cash enough to retire in your 30's?

You said he has 750k but only wants to invest 500k. What's he planning to do with the other 250k?

For me personally I could be totally happy going the rest of my life with 750k in high div stocks making like 30k/year (before taxes) if my only housing expenses were property taxes. But this is because I don't have any expensive hobbies and don't care about spending money on random ****.

Golf could easily become a 20-30k/year hobby if that's all you want to do with your life. A part time job at a golf course would be a really good idea imo. I worked part time at a golf course for two summers when I was 19-20 making $8/hour. Since employees could play for free, I ended up getting way more value out of the free golf than the wages. There were a couple of old guys who worked 1 day a week there who got the jobs just for the free greens fees.

Last edited by krunic; 02-28-2017 at 01:54 AM.
krunic is offline   Reply With Quote
Old 02-28-2017, 01:53 AM   #4
LVpokerPRO
old hand
 
Join Date: Jul 2009
Posts: 1,931
Re: Is $750k cash enough to retire in your 30's?

Quote:
Originally Posted by krunic View Post
You said he has 750k but only wants to invest 500k. What's he planning to do with the other 250k?
It was just the number he threw out. I told him he should invest 650k and keep 100k liquid. Let that extra 150k keep compounding. But ya these are just the numbers we were arguing over.
LVpokerPRO is offline   Reply With Quote
Old 02-28-2017, 02:47 AM   #5
cstevens
adept
 
Join Date: Sep 2009
Posts: 916
Re: Is $750k cash enough to retire in your 30's?

i like to run these types of models for fun. where does your friend live and does he plan on staying in that area or moving once he retires? any plans for kids? he's only 37.

assuming he did quite well in poker when the games were good he's prob a smart enough guy to get into something else to make efficient use of his new free time and make some good $ while doing so. does he have these drives or does he just want to literally lay back and golf and not have to ever think anymore?

i wouldn't do it with 750k in cash as my only asset along with a fully paid off house. he has no way to generate good income so he really has no cushion if the market retracts in the next half decade or so (will eventually happen) and now he's taking less distributions bc his stock portfolio just took a hit. if he was able to get into something else and make good part time hourly rate then its a no brainer.

the main thing to worry about is your friend has to figure out a way to protect this 750k because its really all he has to live on for the rest of his life. assuming he has no degree / real life skills / blank resume as a hedge to the economy id say he prob needs at least 1MM even if he lives in a super cheap place like ohio.
cstevens is offline   Reply With Quote
Old 02-28-2017, 03:22 AM   #6
donfairplay
journeyman
 
Join Date: Nov 2006
Posts: 376
Re: Is $750k cash enough to retire in your 30's?

http://firecalc.com/

Firecalc says 100% success rate at $20,000 spending for 50 years on a $750,000 portfolio.
donfairplay is offline   Reply With Quote
Old 02-28-2017, 04:40 AM   #7
stinkypete
Carpal \'Tunnel
 
stinkypete's Avatar
 
Join Date: Jul 2004
Location: somewhere
Posts: 13,714
Re: Is $750k cash enough to retire in your 30's?

Investing $500k of it is stupid. Investing $650k of it is stupid.

His best shot is to invest it all, ideally leveraged to like 140%.

Unless he can really live on $20k/year. If that's the case he can invest it pretty conservatively, but he still needs to invest all of it.

Of course if he'd been investing it all along he could probably retire pretty comfortably now.

Last edited by stinkypete; 02-28-2017 at 04:49 AM.
stinkypete is offline   Reply With Quote
Old 02-28-2017, 05:03 AM   #8
donfairplay
journeyman
 
Join Date: Nov 2006
Posts: 376
Re: Is $750k cash enough to retire in your 30's?

81.3% success rate at $20,000 spending for 50 years on $500,000. $250,000 as a cushion, that's one hell of a cushion.

stinkypete, I'd like to know why he has to lever up his entire wad to 140% with a paid off house.
donfairplay is offline   Reply With Quote
Old 02-28-2017, 05:08 AM   #9
Pinkmann
grinder
 
Pinkmann's Avatar
 
Join Date: Nov 2014
Posts: 619
Re: Is $750k cash enough to retire in your 30's?

Inflation is the biggest issue imo. Whatever yearly return he gets now is basically the bare minimum anyone should want to live on in the US. Twenty years of inflation later that will be near poverty, all the while that 750k was not compounding at a higher rate.
Pinkmann is offline   Reply With Quote
Old 02-28-2017, 05:09 AM   #10
stinkypete
Carpal \'Tunnel
 
stinkypete's Avatar
 
Join Date: Jul 2004
Location: somewhere
Posts: 13,714
Re: Is $750k cash enough to retire in your 30's?

woops i missed the house part. 100% is probably reasonable. 120% wouldn't hurt. it really depends on what his spending goals are realistically. he has more leeway to leverage if he has a valuable house to fall back on (no idea what it's worth).
stinkypete is offline   Reply With Quote
Old 02-28-2017, 05:22 AM   #11
donfairplay
journeyman
 
Join Date: Nov 2006
Posts: 376
Re: Is $750k cash enough to retire in your 30's?

Yea but he really doesn't have to invest 100%.

$500k portfolio
4% withdrawal rate ($20k)
50 year end date (ending in 2067)
60% equity, 40% bonds

There's no way that fails on any sim because of the low withdrawal rate, try cfiresim

And that's excluding the $250k cushion earning 1% or whatever.
donfairplay is offline   Reply With Quote
Old 02-28-2017, 06:57 AM   #12
stinkypete
Carpal \'Tunnel
 
stinkypete's Avatar
 
Join Date: Jul 2004
Location: somewhere
Posts: 13,714
Re: Is $750k cash enough to retire in your 30's?

Fails 13% of the time with the $250k cash earning 1%.

It fails a lot more if you live another 5 years.

If you invest all of it it fails never.

But that's all based on optimistic historical data.

Last edited by stinkypete; 02-28-2017 at 07:03 AM. Reason: These are withdrawing $20k per year. You can't just withdraw less if your portfolio goes down.
stinkypete is offline   Reply With Quote
Old 02-28-2017, 08:41 AM   #13
ahnuld
Carpal \'Tunnel
 
ahnuld's Avatar
 
Join Date: May 2005
Location: buy side
Posts: 17,271
Re: Is $750k cash enough to retire in your 30's?

rough rule of thumb is 3-4% withdrawals per year leaves you enough growth to deal with inflation.

my partner argues you cant retire comfortably with less than 20mm, but he just conceded yesterday 10mm may suffice. To each his own
ahnuld is offline   Reply With Quote
Old 02-28-2017, 10:29 AM   #14
Love Sosa
veteran
 
Love Sosa's Avatar
 
Join Date: Jan 2013
Location: these bitches
Posts: 2,032
Re: Is $750k cash enough to retire in your 30's?

Quote:
Originally Posted by LVpokerPRO View Post

His argument was that he can invest half a million into index funds and then just take a salary every month from that to golf and do whatever he wants to do every month.
Start indexing with the majority of your net worth when the market is near the end of the second longest bull run in history? Not too crazy about that idea.

I hope your friend is good at cheap livin', because it could get real cheap.
Love Sosa is offline   Reply With Quote
Old 02-28-2017, 11:41 AM   #15
AllinPoker
enthusiast
 
Join Date: Nov 2012
Posts: 90
Re: Is $750k cash enough to retire in your 30's?

Quote:
Originally Posted by Love Sosa View Post
Start indexing with the majority of your net worth when the market is near the end of the second longest bull run in history? Not too crazy about that idea.

I hope your friend is good at cheap livin', because it could get real cheap.
I agree, the timing with the market at being at all time highs and so far into the business cycle seems bad to this. If he knew how to value invest and pick out undervalued small caps with no debt would be a better imo. Maybe something he could start learning while playing part time.

But I think with a paid off house, $750k should be fine if your very cheap and single. Would be easier if you worked a little part time perhaps or lived in South America or Southeast Asia where living expenses are very cheap.
AllinPoker is offline   Reply With Quote
Old 02-28-2017, 11:43 AM   #16
Mihkel05
Pooh-Bah
 
Join Date: Jul 2015
Posts: 3,644
Re: Is $750k cash enough to retire in your 30's?

Basically impossible. Upkeep on the house is gonna eat up a giant chunk of that perceived 20k a year budget.
Mihkel05 is offline   Reply With Quote
Old 02-28-2017, 11:48 AM   #17
maxtower
Carpal \'Tunnel
 
maxtower's Avatar
 
Join Date: Sep 2005
Posts: 7,691
Re: Is $750k cash enough to retire in your 30's?

Buy 3 houses somewhere in the midwest for $250k each. You should be able to find a place where you can collect $1500-2000 in rent for each at that price level. After expenses, he should be clearing about $3k/month for a cool $36k/yr.

Rents and equity go up with inflation, so he is protected there.

I wouldn't attempt retiring on $750k in the stock market. It's too volatile and one early bad year effs your withdraw plans.

He probably can't buy properties cheap enough in the NorthEast or West Coast to do this.
maxtower is offline   Reply With Quote
Old 02-28-2017, 12:23 PM   #18
Abbaddabba
Pooh-Bah
 
Join Date: Jul 2005
Location: Toronto
Posts: 4,139
Re: Is $750k cash enough to retire in your 30's?

For what it's worth the post seems to say that he owns the house AND has 750k. That means his net worth is likely between 1-2.5m depending on where he lives. It roughly doubles his potential investment income, it just means that he's using a lot of it to consume in terms of choosing to live in it.

I feel like when people declare their retirement at that age what they really mean is they have no intention of going to work a regular job for a salary, which makes sense if you don't have specialized skills since there're always going to be people who're hungrier and will work twice as hard for half as much. What doesn't make sense is completely checking out mentally and refusing to make even a bit of effort into learning / looking into new opportunities. I doubt that he'd be doing the latter since making that kind of money from grinding poker requires a mindset where you're always looking for value.
Abbaddabba is offline   Reply With Quote
Old 02-28-2017, 12:41 PM   #19
LVpokerPRO
old hand
 
Join Date: Jul 2009
Posts: 1,931
Re: Is $750k cash enough to retire in your 30's?

His house is worth about 240k in vegas
LVpokerPRO is offline   Reply With Quote
Old 02-28-2017, 01:16 PM   #20
Pride of Cucamonga
adept
 
Join Date: Dec 2008
Location: Florida
Posts: 902
Re: Is $750k cash enough to retire in your 30's?

Quote:
Originally Posted by Love Sosa View Post
Start indexing with the majority of your net worth when the market is near the end of the second longest bull run in history? Not too crazy about that idea.
agree BIG-TIME with the above.

$20K a year to live on with fully paid-off house (no mortgage), but he still has to pay:

His property taxes are probably north of $5K/year...plus insurance, utilities, upkeep & repairs, on average what's that going to cost him? Yes, he could take in roommates to offset those costs, but OP doesn't mention that as an option.

Presumably this guy is going to want to own a car...even if that's paid off, again, there's still insurance, gas, & repairs to consider.

Health care costs are perhaps not a big factor in his life or even a concern to him now, but trust me, that will change.

37 years old & single...not too much discretionary spending left over for dating...then again that may be the least of his worries, not too many single women in their 30's are going to be into dating a guy living a bare-bones existence on 20K/year...

For what it's worth, I'm knocking on 50, single/no kids and considering retiring early w/ zero debt & 2 mill liquid, and I'm still assuming that I'll need to develop some side hustles to generate extra $$ along the way.

Not knowing how long you'll need your money to last (i.e., how long you'll live) & what your health care costs will be along the way is the real conundrum. Plus of course the threat of future price inflation / loss of purchasing power of the dollar.
Pride of Cucamonga is offline   Reply With Quote
Old 02-28-2017, 01:26 PM   #21
BetzPH
grinder
 
BetzPH's Avatar
 
Join Date: Dec 2008
Posts: 414
Re: Is $750k cash enough to retire in your 30's?

Quote:
Originally Posted by stinkypete View Post
Investing $500k of it is stupid. Investing $650k of it is stupid.

His best shot is to invest it all, ideally leveraged to like 140%.


Unless he can really live on $20k/year. If that's the case he can invest it pretty conservatively, but he still needs to invest all of it.

Of course if he'd been investing it all along he could probably retire pretty comfortably now.
Interested to here what you mean by the bolded, are you saying real estate?
BetzPH is offline   Reply With Quote
Old 02-28-2017, 02:55 PM   #22
jsmo0th10
adept
 
Join Date: Apr 2011
Posts: 708
Re: Is $750k cash enough to retire in your 30's?

Your boy is lazy

If he can make sure to die within 40 years and keep his monthly nut under $1,500 my math says he's good to wither away on the golf course
jsmo0th10 is offline   Reply With Quote
Old 02-28-2017, 02:59 PM   #23
ESKiMO-SiCKNE5S
What SN is this?
 
ESKiMO-SiCKNE5S's Avatar
 
Join Date: Aug 2005
Location: RoMAN EmpIre ЯR ЯR
Posts: 28,681
Re: Is $750k cash enough to retire in your 30's?

Is he single?

Definitely not possible to retire permanently. To quit for a few years and then consider his options? Sure $750k is fine for that.
ESKiMO-SiCKNE5S is offline   Reply With Quote
Old 02-28-2017, 03:19 PM   #24
jalexand42
Hypothetical Ubermonkey
 
jalexand42's Avatar
 
Join Date: Oct 2005
Location: Open Shoving My Range
Posts: 4,991
Re: Is $750k cash enough to retire in your 30's?

Quote:
Originally Posted by Pride of Cucamonga View Post
For what it's worth, I'm knocking on 50, single/no kids and considering retiring early w/ zero debt & 2 mill liquid, and I'm still assuming that I'll need to develop some side hustles to generate extra $$ along the way.

Congrats! One of my favorite posts to see on the boglehead forums is when people hit two commas after lots of discipline.
jalexand42 is offline   Reply With Quote
Old 02-28-2017, 03:21 PM   #25
Frankie Fuzz
grinder
 
Join Date: Aug 2013
Posts: 510
Re: Is $750k cash enough to retire in your 30's?

Obviously it completely depends on what his expenses currently are and the anticipated increase (or decrease) in his expenses in the future. The posts that say "obviously he can" or "obviously he can't" are just as bad as the posts that say you should always buy instead of rent. If his expenses are low enough and he is willing to get some part-time work if markets take a big dive early on in retirement (or his expenses increase), it shouldn't be a problem.
Frankie Fuzz is offline   Reply With Quote

Reply
      

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


Forum Jump


All times are GMT -4. The time now is 10:24 PM.


Powered by vBulletin®
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
Copyright © 2008-2010, Two Plus Two Interactive
 
 
Poker Players - Streaming Live Online