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 Post subject: Is 2 million dollars enough?
PostPosted: Mon Jun 04, 2007 1:34 pm 

Joined: Mon Jun 04, 2007 12:44 pm
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When I first started working (20 years ago), my office mates and I dreamed that our IPO stock would make us rich. The talk would come around to "how much money do you need to call it quits?" One guy said $2 million dollars and another guy agreed. In a conversation with another person a few years later, someone else said $2M.

Some people set $1M as a goal. Some bloggers even post their net worth and a $1M goal but I have to ask "Why $1M?". Why not $2M or $5M?

Before everyone answers "well, we are all different and each has a different answer", I'd like to know where I can read up on this. What blogs and websites do you recommend? In other words, for those of us who want to "get rich slowly" (and who think they might be only a few years away), how do you know when you have arrived?


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PostPosted: Mon Jun 04, 2007 1:43 pm 
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It depends?

I think you know you've arrived when you decide to stay employed for income purposes and start deciding to be employed for non-income reasons

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PostPosted: Mon Jun 04, 2007 2:27 pm 
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Read The Number, by Lee Eisenberg, http://www.thenumberbook.com/


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PostPosted: Tue Jun 05, 2007 11:44 am 

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Yes, I have read it. This book is simply not worth your time. It is full of anecdotes about the rich, "chock full" of very annoying metaphors, and surprisingly content-free.

This book has very little substance and, what there is of it, is treated MUCH BETTER in "Your Money or Your Life" by Joe Dominguez

It's even worse on audiobook because you have to listen to his accents and snide comments.


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PostPosted: Tue Jun 05, 2007 12:10 pm 
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I thought The Number was okay from a "getting people to think about" it perspective, if not from a "how to actually figure your number" perspective. In fact, it barely touched on the latter.

I would recommend noodling around with a few online calculators designed to do this sort of thing. Get a feeling for how different assumptions affect the outcomes, and base your goal on that sort of analysis. The use of multiple calculators will give you a feel for the range of possible outcomes based on the methods of a variety of so-called experts.

Alternatively, you can easily cook up a spreadsheet to figure this out. You'll need to make some assumptions about inflation, investment returns, your desired income at retirement, etc., but it's pretty straightforward. In my case, I assumed I'd want an income equivalent to what I have now, projected that forward based on an assumed rate of inflation, and then figured out how much capital I'd have to have in order to generate that kind of income without touching the principal. Obviously, you can draw down your assets, but I wanted to be conservative.

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PostPosted: Tue Jun 05, 2007 12:26 pm 

Joined: Mon Jun 04, 2007 12:44 pm
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Thanks. If you know of any websites that do this, please let me know.

I've tried the spreadsheet approach and the online calculators from Schwab, etc. I know that to do it correctly requires some monte-carlo simulation, etc., and probably requires me to track my current expenses and then try to project for certain life events. I've never seen that done all in one package...

Has anyone looked at this site? I think I heard about it from this website or another blog (can't remember): http://www.esplanner.com/research.php They basically say that you are probably saving *too much* and help you figure out what the right amount is.

I'd like some feedback before I plunk down ~$150.


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PostPosted: Tue Jun 05, 2007 2:42 pm 
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Try http://dinkytown.net/

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PostPosted: Tue Jun 05, 2007 3:01 pm 

Joined: Thu Apr 05, 2007 3:05 pm
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echris wrote:
Has anyone looked at this site? I think I heard about it from this website or another blog (can't remember): http://www.esplanner.com/research.php They basically say that you are probably saving *too much* and help you figure out what the right amount is.


I've heard good things about esplanner; it was mentioned in a New York Times article awhile back. Certainly has a good pedigree, although you can tell it was put together by economists; it doesn't seem like the most user-friendly program in the world. But it seems very powerful as a financial planning tool. I would buy it myself but there's no Canadian version.


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