alt Hacker NewsHow much do you really need for generational wealth? In my opinion, if you're more than 10 years away from retirement and received a surprise $1 million, you're setup for the rest of your life and your children as well assuming they don't immediately blow it all when you die (that's what a good trust should be for).
Assuming historical returns, your money doubles roughly every 7 years, so within the rest of your lifetime, that 1 million should turn into at least 8. That's an extremely comfortable upper-middle-class lifestyle on the interest payments alone. If your children don't spend it all, your grandchildren would easily have private jet money by the time their parents retire.
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To do that, you would have to never touch the money and invest aggressively. Most wouldn’t do that unless they didn’t need the money, i.e. already rich so not newfound wealth.
You would also have to train your kids to responsibly use the money without demonstrating it, as you’d just be hoarding it. People don’t have a good track record there, either.
I think the best you could do generationally with a million would be to try to invest moderately and draw down a small percentage (2-3%) to demonstrate fully considered use of the money. This would keep you in a middle class income but give you more ability to donate charitably, vacation together, let one spouse retire earlier, solve a financial crisis for a child, etc.
Letting them in on the thinking would give them a good chance to handle a high six/low seven figure inheritance, depending on how the investing goes.
> How much do you really need for generational wealth?
Common definition is somewhere between 1.5 to 5 million per child.
Assuming you're investing aggressively and not touching that money for the next 20 years, with the nominal return of 6% per year, adjusted for the inflation rate of 3% per year, 1M will increase to 1.8M. Not sure how you came up with 8M.
You said 10 years away from retirement so that’s closer to 2 million than 8.
$1M is a newly built condo in the East Bay with HOA >$800/month. Not even an 80 year old 1,300 sqft house in the same area.
1 mil as generational wealth? what?
I'd agree with that sentiment but that number would be more like $5M (which is nothing in the context of this acquisition). Inflation is not going to relent and having enough to actually enjoy some of that payout to have pseudo FU money and leave enough invested for children and grandchildren (a well-managed trust).
Buying a house in desirable areas is going to be in the ~ $1M range, college is going to be hundreds of thousands, etc.
Assuming historical returns might be a little unsafe at a point in time near the peak of a bubble popping.
1 mil is not generational wealth in the US. It is a big chunk of money, no doubt. It’ll buy a reasonable 2-3 bedroom house in the city I live in, with nothing left over. No one’s definition of generational wealth involves not touching the money for two generations…