This is something I've thought about recently since I know a lot of people in the working world always talk about how if they just had such and such amount of money how things would be different... or how they would be happy. It seems to me that they are sort of delusional about what just having some lump sum of money can really accomplish?

Assuming that some standard college graduate that's working in his career gets a lump sum of $50k, all he can really do with it is use it to pay off some debt, put it in the bank to save, or put it into some low risk investment and then they would just continue on with the work grind, no? The only ways I can think of to change your lifestyle, get out of the rat race, and improve your overall quality of life would be:

1) Get enough of a lump sum of money that you can retire off

2) Invest the money in some way that would generate enough passive income that you can use to support yourself and stop working

3) Just get a job that you absolutely love so that your quality of life is high in your daily grind since that's where all your hours are spent anyway.

In order to invest $50k in such a way that you can get out of the rat race and change your lifestyle it would require lots of knowledge/experience/connections... in which case if you have those then getting the money to work with at that point should not be hard because you will have something of value to offer. Otherwise you'll just invest it somewhere hoping for 5%+.

After that you'd just have $50k invested somewhere that you're not spending and still be doing the same day to day grind/job/career as before?

$50k isn't even anywhere near enough for any kind of "set and forget" plan to live off.

nah, $50k ought to do it.

lol, i mean, I'm of the opinion you guys are as well, I'm just looking for counter arguments since basically it seems to me as though unless you come into an amount that's big enough to live off or you actually have the knowledge to invest it in a way that will produce passive income that you can live off (in which case you probably wouldn't need $50k to begin with if you know what you're doing already), then it basically seems like someone getting a lump sum of money does absolutely nothing, yet most people think it's going to be the answer to their problems.

Basically the idea for me to make the thread came about when I was talking with a friend trying to tell him that just getting more money wouldn't change anything in his life except maybe buy a cool toy and he thought it would change a lot. I think his opinion would be very common with the general population in the working world.

Most people would just end up blowing the $50k.

However, getting $50k at a young age and investing it wisely/conservatively will put you ahead of 99% of the population and put you in a position where you CAN retire and live off of passive income at much earlier age. Also, I don't get why you think just getting average returns would be a bad thing. That's all you need.

It takes a long time to save up that much money, especially right out of college. Unless you post on 2+2 then you are already insanely rich and wipe your ass with $50k.

i think what people need to do is stop saying "I wish this happened to me" and start asking themselves "what do I need to do to make this happen to me and how soon can I make it happen"

For everyone it's going to be different because we all have different qualities of life and such.

50K...you gotta be kidding. Try about $1Mil + a paid off home to be independent. That's on the light side and $1.5Mil would be closer to reality.

I'd put my true financial freedom number closer to 10 million. You could definetly be independent and free-er with 1.5 but I would still be working if I was handed 1.5 mil.

It really depends upon what stage of your life you are in, and what your individual circumstances are. For me, about 5 years ago I had debts of $20k on a school loan, $10k on my wife's school loan, and $20k on credit cards, not including my mortgage. A one-time gift would have enabled us to get rid of that in one swoop, which would have made our "financial life" significantly easier. Instead, we worked hard for a little over 2 years to get rid of all of it.

It it happened right now, we would probably just stick it in an investment account, and somewhere later down the line when we were ready to retire we would tap it, so it would make a substantially smaller impact, although would still be pretty nice.

$50k is nothing.

dream bigger.

You get 50k at the age of 21 it's not going to evolve you to "Balla" status. You could get a nice car or some other toy, but not a house or anything of real significance.

But if that 21 year old invests it in the market and doesn't touch it for 30 years, still working and going on with his normal life, he will have a significant lifestyle change when he can retire off the nestegg at 50 and everyone else who didn't get that added bonus still works until mid-60's.

This is what I was trying to say, except you said it much better.

or the market could just be flat over that time period like it was in the 60's and 70s and wasting money in the stock market would be a huge opportunity cost. Check out a chart of the Dow. This "the market is guaranteed 9% a yr over the long term so it's safe" is a fantasy scenario created by the industry so they can sell you and take your money.

Yeah but as far as lifestyle is concerned, in the example you gave it doesn't sound like it would change anything. The 50k would just be used to pay off debt... and then you'd continue the working life in the same way you would with no debt, you'd get 50k, sock it away somewhere and continue working.

Basically it seems like unless a person gets a HUGE amount then random amounts lower than that would just be used to retire at maybe 60 instead of 65 or be used to buy a couple of cool toys, which doesn't really change ones lifestyle at all. And for me, call me young and naive, but once I get to 60+ I'm not too concerned with my lifestyle since I feel like I already missed the boat to enjoy life which is why something that can impact it more for the duration of it is far more valuable imo.

and the capitalists like it like that. The big players control the nations wealth(over 80% of it) and everybody else "dreams" they can have a big slice of that pie when in reality the system is set against it from happening. It's really sort of a brilliant economy/way for the 10% of the population to have everybody else dream about it. Since the workers movements I guess it has maybe even become a more realistic dream but still a dream I guess for the majority. Funny thing is one of the reasons so many southerners wanted to fight for the south's way of life in the Civil War was bc it was ingrained in southern culture the idea that the small poor farmer could dream and one day have that big plantation with many slaves that would give them economic prosperity.

$50k? Well I guess I could relax till Halloween.

The number depends on your lifestyle and ability to generate semi-passive returns but realistically I'd put the minimum at $850k if you wanted to live a waiting to die life, $3M for a decent life, and $10M for a good life.

OPer: you're already realizing at a young age what many people don't realize until much later in life and often at a point where it is too late. Specifically, that there is a huge difference between income and wealth, what you're making and what you have. Income buys you stuff, wealth is true freedom and independence.

To stop working you need enough wealth to generate income not just for current but future needs and/or family needs with the expectation that prices will rise over time.

And you alluded to another complicating factor, that there's more fun (economic term: utility) spending money when you're young than when you're old. So there's a balance to be struck on spending vs. investing to increase wealth, as you age.

Right now with guaranteed returns at a very low interest rates, to generate even $50,000 a year income you'd need quite a stack. Otherwise you'd have to risk principal to achieve higher returns.

Make it your lifelong habit to focus on and continuously recalculate your net worth. If it is negative now, get it to zero. Pay off debt and then get into + numbers. Once you start accumulating, if you do it steadily and avoid (number one investment rule!!) significant losses, you should be a successful.

This.

$1 million is not even remotely rich anymore...
It's basically Middle Class...
You can't even buy a decent house for that.

I would say $2 million to be "independent" for life...
And "rich" might start at about $5 million...
And this is all AFTER TAXES.

Remember it's a LONG LIFE...
50K might be a nice roll if you're 22...
But if you're 40 or 50 and not well into 7 figures...
You will def not feel financially successful...
And it's all about psychology in the end.

You can't even buy a decent house with $1M? I guess if you need 10,000+ square feet covered in marble. As long as you are willing to live outside of California/NYC.

The only way I could see a 50k lump sum being life changing is if someone used it to start their own business and that business was both successful and made the person happy.

Otherwise, 50k would cover 10-11 months rent and daycare costs, so I guess I couldn't quit my day job.

Had I gotten 50k when I was younger and single, I would probably have paid off my student loans and then frittered the rest away. Hopefully I would have taken some trips to some really cool places.

+1

This is a little off topic, but it is relevant to the delusions (imo) of the working man. It really blows my mind how people are satisfied giving up their absolute prime years rotting away at a desk job, just to dream of retirement at 50+ when at that point it doesn't even matter b/c there lives are over anyway.

I just don't understand how you can accept giving up 5 days of your week every week for the majority of your life to grind out work for someone else.

Obviously this post wreaks of the fact that I am in my first job outside of college (1+ yr so far), but after 6mos in I started making moves into starting my own business (will be a "critique my venture" thread in the near future), and will be launching in 1-2 months.

<Insert Henry17, etc. clamouring to tell me how I am too young to possibly manage a successful business> whatever, atleast it gives me a shot at getting out of the grind, and I won't have to leave my job to manage it.

I'm in my post-lunch-hate-this-job mode so I apologize for being whiny/bloggy.

$50k if you have a wife and 4 kids is far from life changing money. If thats you then you will probably be working your whole life anyways, so pretty much who cares (just set up kids college fund or something). If you are a single guy with a modest lifestyle, $50k, although not life changing per se, would get you to where you want to be a lot faster than just grinding out the 8 to 5er.

That actually isn't an accurate characterization of my position on young people and starting a business. I actually have no stance on age. If someone has a special skill and the financial resources then age is irrelevant. While it is true that those characteristics are generally correlated with age someone who has those characteristics at a young age would actually have a slight to moderate edge over someone older. My criticism of young entrepreneur-wanna-bes is that the vast majority have neither a special skill or the financial resources but are nevertheless determined to start a business even though it has zero chance of success simply because they dislike working are are sufficiently delusional to think they are special despite the complete lack of evidence to support that.

I live in Toronto, Canada...
So housing prices are fairly expensive...
But much like desirable US urban centers.

My context is this:

One generation ago in the 70s...
** Single income per family was still typical **...
An engineer or an accountant or other professional...
Would buy a house for about $100,000.

That house today sells for $1,000,000...
Really just an upper middle class house...
Not remotely "rich".

I doubt that even 2 married professionals...
Could buy and carry the same house...
That one engineer's income would cover in the 70s.

Anyway...
Here are the US HOUSEHOLD wealth stats...
The 90th percentile is net worth $833,000...
Rich would be 98-99th percentile...
And is probably several million.

I doubt that anyone here in there 20s or 30s...
Is planning on being "average"...
So financial success is typically several million.

http://www.bankrate.com/brm/news/ret..._wealth_a1.asp