[quote=UCGal]AN – will you adopt me? $5M is a lot to leave your kids.
My kids will get a paid for college education… and our paid for house. We are *NOT* budgeting in an inheritance. But we also aren’t going to be a burden to them. They will need careers, same as we did.
We’re planning on using our nest egg to live. If the economy tanks for longer/deeper than historically has happened, then they might not get our house – since that’s our plan B. (Sell the house and live off the proceeds.) If we die younger than age 100 – they may get some inheritance…
Hopefully a 3% withdrawal rate should last me 40-50 years. Compounding and all that.
I’m also not of the mindset that you go 100% cash/CDs… not with longevity the way it is. You need to come up with an asset allocation that includes equities/bonds/cash/real estate/precious metals/whatever… pick your percentages based on your risk tolerance. but putting 100% in one asset allocation (cash) is a sure way to see a serious decline in your nest egg.[/quote]
The reason I’m factoring inheritance is because I’ve seen and know it take a long time (many generations) to build wealth. I want my family to become “old money” some day. So, I’m trying to do my part. My parents took a HUGE risk (their lives) to get me here. They live extremely frugal, take appropriate risk and leverage to provide me with an education that I don’t have to pay for. 30 years ago, they don’t speak a single word of English. So, I’m going to take the advantages my parents gave me and grow the family pot and give my kids even more advantage I didn’t have. But, that doesn’t mean my kids will be spoiled. That’s also another reason why we decide to live where we live. I don’t want them to tell me “but my friend just got a BMW for their birthday”. They will work when they’re 16. They will volunteer and give back to society. They will see their parents take care of their grand parents when they’re too old to take care of themselves and be expect to do the same when the times comes. They will learn what it’s like to work for your money and that keeping your wealth is more important than growing it. But they will have an opportunity to continue to grow the family pot the way I’m trying to do so right now. That’s where I’m coming from in reaching my number.
We have been putting money away for their college since the day they’re born. They will not have to worry about the cost of college, even if it’s private school. But they will be expected to put that money to good use or it can be easily taken away. That money is not part of the $5M goal.
I tend to try and plan for the worse (or at least 95% of the worse) case and hope for the best. So, as long as I can get 2% from my $5M, I can live off that indefinitely. My plan is that, most of the $5M will be in CD/bond/etc. and every year that I don’t use up all the interest I made that year, I’ll take that money and invest in very high risk investment, hoping to get high return on it. But if it fail, it won’t affect my initial pot.
