Anonymous
What will you do with $500k? Want to reach FIRE and rest for a while before embarking on anything else. Will prob have additional $200k in 2 years after I sell an investment property and expenses can drop from 3.5k to 2k after that. Early 30s.
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Hariz Arthur Maloy
21 Jan 2020
Independent Financial Advisor at Promiseland Independent
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Pang Zhe Liang
21 Jan 2020
Fee-Based Financial Advisory Manager at Financial Alliance Pte Ltd (IFA Firm)
Firstly, we need to have a complete understanding on our cashflow. Through this process, we will understand our earning ability and spending habit. Here is a guide to help you: https://www.blog.pzl.sg/understanding-your-pers...
Next, construct a financial portfolio that is capable to help you reach your goals. For the most part, it will be important to have a well-balanced portfolio that yields both guaranteed and non-guaranteed returns. Accordingly, this ensures that you have a safety cushion during a market downturn while enjoying the returns in the bull market.
Examples of tools that generate guaranteed returns: bank deposits, bonds, annuity
Examples of common investments that generate non-guaranteed returns: ETFs, equity funds, blue chips, stocks
If you plan your finances properly and do not have huge expenses, you will be on track to FIRE.
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Construct an investment portfolio that yields at least 5% income, which should amount to $25k/yr, $2...
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Ok I'll assume you're 33 now and 35 in 2 years time. See, you'll need this money to last you probably 60 years. Mathematically, if you have a 4% yearly return on your portfolio, you'll be able to withdraw 2.5k/mth for 60 years before your 700k becomes 0.
But this doesn't adjust your withdrawal for inflation.
So there are a few ways you can do this. You can invest the 200k from the property in a globally diversified equity portfolio, hopefully make a 7% compounded return on that for 25 years giving you another $1.5m from 60 onwards.
Spend the inital 500k (at a 4% return) over 27 years and take out 2.5k/mth. And then that 1.5m at 60 can last you another 35 years by taking out an inflation adjusted 6.5k.
SO TLDR
Invest 500k in a conservative dividend portfolio giving you 4% per year. Spend that over 30 years by taking out 2.5k/mth.
Invest the 200k from the condo over 25 years in a moderately aggressive portfolio at 7% compounded return giving you 1.5m by 60. Invest that in a conservative portfolio giving you 4% per year. Then you can spend 6.6k over 30 years till you're 95.
Hopefully by then, you die.