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Living off of winnings VS living off of interest.

Topic closed. 53 replies. Last post 6 years ago by rdgrnr.

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How much money would you need to live off of without investing?

$500,000 [ 10 ]  [12.05%]
$1,000,000 [ 3 ]  [3.61%]
$5,000,000 [ 12 ]  [14.46%]
$10,000,000 [ 7 ]  [8.43%]
$20,000,000 [ 13 ]  [15.66%]
$50,000,000 [ 17 ]  [20.48%]
$100,000,000 [ 6 ]  [7.23%]
$1,000,000,000 [ 15 ]  [18.07%]
Total Valid Votes [ 83 ]  
Discarded Votes [ 7 ]  
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lottoville
United States
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August 11, 2010
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Posted: August 23, 2010, 10:04 pm - IP Logged

California doesn't have lottery tax, so you'd just have to pay the federal taxes.  The federal max is like 38% or so, isn't it?  Still bad, but not 55%.

yes 38% is better. ofcourse if I was lucky enough to win big I'd have to see an accountant or maybe even two Banana

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    CA
    United States
    Member #84266
    December 26, 2009
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    Posted: August 24, 2010, 1:36 am - IP Logged

    Federal tax is 25% before you even get your check from the lottery comish.

    California does not have lottery tax.

    Income tax for anything over $373,650 is 35%

    http://www.bargaineering.com/articles/federal-income-irs-tax-brackets.html

      Avatar
      Milwaukee, WI
      United States
      Member #3131
      December 27, 2003
      665 Posts
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      Posted: August 24, 2010, 6:24 am - IP Logged

      So basically all that you have to do is figure out your state max tax and figure out what you have left.

      I play in both Illinois and Wisconsin so I've been figuring it this way.

      In Wisconsin 57.25% left after taxes........

      In illinois 62% left after taxes.

      But that are what taxes are, but if you get creative with your taxes (legally) and  deductions although rich people are eligible for more taxes , they historically pay a smaller percentage of taxes.

      Warren Buffet took note of that. On how much smaller percentage on income than the people that work for him.

      What will be left would be HUGE so I wouldn't whine.

      Cash amount for Mega Millions tonight is $79,500,000.

      My Illinois ticket after taxes would be $49,290,000

      My Wisconsin ticket after taxes would be  $45,513,750.

      Oh boo hoo! How can I live on 45 million? Sign me up for welfare!

      I REALLY have heard in other discusssion groups complaining about on how the rich have to cut back on their lifestyle if Obama lets the Bush tax cuts expire.

      Fortunately there are some rich people who face their responsibility and do feel that if they live in a country that gives them a big income that they should pay their taxes to keep the country going.

      My only complaint would be if you get $100,000,000 in income and donate 100,000,000 you are paying taxes on top of that 100,000,000. Not on what you have left which would be 0.

      I think that is why that if you are going to do charity, but that money into a charity foundation, which would mean that you can't spend it.

      And where do you put that money? In a bank account?

      Put 100,000,000 in a bank and you are insured for only 250,000.....

      Put it in the stock market and that market can go down. Or companies can go out of business.

      Your broker can go out of business.

      I asked my Scottrade man on how much am I insured for and he told me %1,000,000 cash and $25,000,000 in securities.

      So don't even think that you can just sleep on that money.

      Look at Madoff!

      MarkP

        BaristaExpress's avatar - BaristaExpressMX zpsfb0d8b5d.png
        Magnolia, Delaware
        United States
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        Posted: August 24, 2010, 9:26 am - IP Logged

        Markp1950 you are correct about Mr. Warren Buffet and the rest of the wealthy and what they pay in taxes. But even Mr. Buffet has said he wouldn't mind paying more in taxes than he does now. But has anyone seen where he is paying more? Nope! And the reason is he's only paying taxes on the capitol gains of his vested interest in his companies that he owns! And that rate is 15% (on capitol gains) and not the top tax rate of 38% on regular income like a pay check and of course that will depend on what rate/wage he'll be paying himself. That's the reason he pays such low taxes and if really wanted to pay the higher rates all he has to do is draw a regular pay check like the rest of his employees do and he'll pay more in taxes on what he earns! But that will never happen, mark my words.

        Keep dreaming the impossible dream, it just may come true! Thumbs Up

          savagegoose's avatar - ProfilePho
          adelaide sa
          Australia
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          April 11, 2006
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          Posted: August 24, 2010, 1:48 pm - IP Logged

          yeah when i dream about winning,  i often think about setting up an investment  trust, and paying myself to run it, saves about %15 on the tax bill, just paying yourself a wage, and leaving most of the profits in the trust.

           

          if you ever want to splurge and get something real nice, you can do a special dividend, getting some personal money out the trust. and pay full tax rate on it, and buy that ferrari.

           

          its nice to dream

          2014 = -1016; 2015= -1409; 2016 JAN = -106; FEB= -81; MAR= -131; APR= - 87: MAY= -91; JUN= -39; JUL=-134; AUG= -124; SEP = -123; OCT= -84  NOV=- 73 TOT= -3498

          keno historic = -2291 ; 2015= -603; 2016= JAN=-32, FEB= +12 , MAR= -86, APR = -77. MAY= -48, JUN= -29, JUL=-71; AUG = -52; SEPT= -43; OCT = +56 NOV = -33 TOT= -3297

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            CA
            United States
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            December 26, 2009
            410 Posts
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            Posted: August 24, 2010, 5:26 pm - IP Logged

            So basically all that you have to do is figure out your state max tax and figure out what you have left.

            I play in both Illinois and Wisconsin so I've been figuring it this way.

            In Wisconsin 57.25% left after taxes........

            In illinois 62% left after taxes.

            But that are what taxes are, but if you get creative with your taxes (legally) and  deductions although rich people are eligible for more taxes , they historically pay a smaller percentage of taxes.

            Warren Buffet took note of that. On how much smaller percentage on income than the people that work for him.

            What will be left would be HUGE so I wouldn't whine.

            Cash amount for Mega Millions tonight is $79,500,000.

            My Illinois ticket after taxes would be $49,290,000

            My Wisconsin ticket after taxes would be  $45,513,750.

            Oh boo hoo! How can I live on 45 million? Sign me up for welfare!

            I REALLY have heard in other discusssion groups complaining about on how the rich have to cut back on their lifestyle if Obama lets the Bush tax cuts expire.

            Fortunately there are some rich people who face their responsibility and do feel that if they live in a country that gives them a big income that they should pay their taxes to keep the country going.

            My only complaint would be if you get $100,000,000 in income and donate 100,000,000 you are paying taxes on top of that 100,000,000. Not on what you have left which would be 0.

            I think that is why that if you are going to do charity, but that money into a charity foundation, which would mean that you can't spend it.

            And where do you put that money? In a bank account?

            Put 100,000,000 in a bank and you are insured for only 250,000.....

            Put it in the stock market and that market can go down. Or companies can go out of business.

            Your broker can go out of business.

            I asked my Scottrade man on how much am I insured for and he told me %1,000,000 cash and $25,000,000 in securities.

            So don't even think that you can just sleep on that money.

            Look at Madoff!

            MarkP

            I used to worry about the insured amount of only $250,000 too but I figured if I put the money in a bank that is big enough, it is unlikely it would go bankrupt. That is why I plan on getting a CMA at HSBC, "The World's Bank". Lol.

              Colt45ML's avatar - 4eyes
              Jawja
              United States
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              February 25, 2010
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              Posted: August 25, 2010, 1:22 am - IP Logged

              This is a hard question to answer because I have no idea how long my better half and I will live.  Also, what about the very real possibility of hyper inflation of the dollar in the not so distant future? 

              In reality, I could never just live off principle anyway.  There are too many ways to make safe, easy money when you have that much liquid wealth.  One of them fancy adjustable rate Swiss or Litchtenstien annuities or life insurance policies seems very sensible when asset protection is taken into consideration.

              Be sassy and be happy.

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                Milwaukee, WI
                United States
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                December 27, 2003
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                Posted: August 25, 2010, 6:28 am - IP Logged

                We are in a strange point in the history of this country where  many are concerned if the country of the dollar can survive.  I don't want to start controversy on the wisdom of it but we put in huge debt to stop the collapse of this country. I don't think that we can survive another 2008.

                So they are talking some real hard assets for security. Many say gold.  I would look at some great Iowa farmland if things got crazy again. I definately would get hunkerd down somewhat. I would build somewhere and in a house where I could be 100% off the grid. Only reason to be on the grid would be to get rid of extra electricity  Even be able to grow much of my own food.

                Once that I'm set up that way I can go out and live comfortably and enjoy life. But in the future you can never leave your guard down.

                You do have to be active daily in your finances. No matter how much you have. And no matter who you have managing your finances.

                Fortunately, now days, you can do that from almost everywhere.

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                  NY
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                  October 16, 2005
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                  Posted: August 27, 2010, 1:08 am - IP Logged

                  "Think of the tax benefits of not investing."

                  Do you also see a tax benefit of investing at 2% instead of 4%? With an income that's only  half as much your taxes would be less than half as much. Do you think that really makes sense, or do you see how obviously stupid it is? Even if the income tax rate was 75%  investing means you'd still have 25% of the rate of return instead of 0% of it. If you don't already have one foot in the grave and you won enough that you could live off of the principal then even that 25% would be a significant annual income.

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                    January 13, 2010
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                    Posted: August 27, 2010, 7:58 pm - IP Logged

                    I work with investments at the institutional level. I have heard from folks that I deal with that their investment advisor told them to do this or that...Funny thing is that it defies logic.....Half the time the investment advisor is a close friend that gets lucky every once in a while and the other half try to get the biggest payout from what they recommend. 

                    I do see the importance of investing across all types of asset classes (not putting all of your eggs in one basket).  Stock Mutual Funds (Large cap, mid cap, small cap, international) REITS, Bond Mutual Funds, precious metals and other commodities.  Not too much in any one thing. I base my decision on two things: how long do I want to keep the money tied up and what level of risk can I afford during that time frame. 

                    On a large win, one could, conceivably, payoff debt and have money left in cash or CDs.  What one keeps in cash should be determined by future tax liability (real estate tax, local, state, and Federal), Costs of managing the money, legal retainers etc. Since FDIC insurance is at $250,000 for now, I would probably keep about $2,000,000 spread across several banks with no more than $200,000 in each account.

                    As for the vast majority of the money, I would have several brokerage Cash Management accounts where I can invest in the types of investments listed above and still buy FDIC insured CDs from several banks across the country.  I might have a broker manage a $1million account and the rest might be held in other places.

                    I would look at buying some real estate with a small fraction of the winnings.  There are carrying costs of owning real estate and it isn't liquid enough to sell tomorrow if I don't want to dump it off at a loss. That's why I won't invest most of my money there.

                    The best investment would be for my sons' education and well being. When they get old enough, they will have to earn the car and not have a choice of Hummer of the day.  Preferably, I would like to stay anonymous for their well being....I don't need the "Daddy buy me this or buy me that" crap going on and I don't need them to have false friends looking for a free ride. So earning some type of interest and earnings would allow the money to grow for them during their lifetime.

                    There would be a special account set up for charitable giving that would allow me to give until the day I die.

                    So if I own real estate, including my home, I am going to file and pay taxes in some way, so why not invest, earn interest and dividends and deduct the real estate taxes on my Federal return.  If I keep the winnings in mason jars to avoid taxes on interest earnings, the snakey white trash could hit me over the head and take all my money...they just better hope there is no quick sand.

                    "It's not a matter of 'if,' but a matter of 'WHEN!!!'  "

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                      Posted: August 27, 2010, 8:10 pm - IP Logged

                      We are in a strange point in the history of this country where  many are concerned if the country of the dollar can survive.  I don't want to start controversy on the wisdom of it but we put in huge debt to stop the collapse of this country. I don't think that we can survive another 2008.

                      So they are talking some real hard assets for security. Many say gold.  I would look at some great Iowa farmland if things got crazy again. I definately would get hunkerd down somewhat. I would build somewhere and in a house where I could be 100% off the grid. Only reason to be on the grid would be to get rid of extra electricity  Even be able to grow much of my own food.

                      Once that I'm set up that way I can go out and live comfortably and enjoy life. But in the future you can never leave your guard down.

                      You do have to be active daily in your finances. No matter how much you have. And no matter who you have managing your finances.

                      Fortunately, now days, you can do that from almost everywhere.

                      With a large win, some winners have had to leave their jobs because overseeing the management of their money is a full time job.

                      If you think about it, there are several aspects of money that people don't necessarily think of when it comes to a large win:

                      Investments, taxes, Legal, security, insurance, charitable giving and everyday expenses (food, clothing and shelter , transportation and health care.) Where you live, what you drive will have expenses...things break and need fixed it's a fact of life...If you can't fix it yourself, you have to pay someone.

                      I hope my ramblings in this topic don't seem over the top. I like reading the good stories, not the hard luck ones.

                      "It's not a matter of 'if,' but a matter of 'WHEN!!!'  "

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                        CA
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                        Posted: August 27, 2010, 9:49 pm - IP Logged

                        I always say that the more money you have, the harder it is to manage it all. I personally don't understand mutual funds, bonds or the stock market so I will most likely just have CD accounts and a CMA.

                        It would be great if there is just one safe place to keep your money.

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                          Posted: August 27, 2010, 11:35 pm - IP Logged

                          I always say that the more money you have, the harder it is to manage it all. I personally don't understand mutual funds, bonds or the stock market so I will most likely just have CD accounts and a CMA.

                          It would be great if there is just one safe place to keep your money.

                          Simply put:

                          Stocks represent shares of ownership in a company.

                          Bonds represent loans to issuers of that bond....you become the lender.

                          I like to describe mutual funds as a "bucket" where it may hold stocks, bonds or both from many different issuers.  In terms of a pure stock mutual fund, a fund manager will buy and sell many different stocks. The advantage is that when you buy shares of the mutual fund, you are not buying stock in one company, but many companies.....through the mutual fund....This is a very simplistic explanation to get your feet wet.  I would suggest a book that explains the fundamentals of investing in very basic terms....this will help you build a foundation of knowledge, whether you win or not. 

                          As far as investing in general (whether investing in stocks, bonds, CDs, real estate, gold, beanie babies):

                          Use common sense

                          Don't put all your eggs in one basket.

                          Buy lo sell hi

                          Uncertainty (good or bad) is what makes the market typically go down. When people get used to market conditons, the market typically moves in a positive direction because even gloom and doom can become status quo (look at 2009 returns) Vague but true

                          Market cycles generally span 5-7 years.

                          There is no such thing as a sure thing.

                          Slow and steady wins the race....no such thing as get rich quick

                           

                          Good luck and good nite all.

                          "It's not a matter of 'if,' but a matter of 'WHEN!!!'  "

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                            New Member
                            London
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                            Posted: September 29, 2010, 8:22 am - IP Logged

                            The perfect answer is that you can never have too much money; but if I have to put a minimum, it would be around £50M ($75M) for someone aged under 50.

                            However, I would also be happy to accept an annuity of £2M a year for life.

                              Colt45ML's avatar - 4eyes
                              Jawja
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                              Posted: September 29, 2010, 9:31 am - IP Logged

                              That's right.  Rich, one worlder socialists like Warren Buffet talk a good game, but when it comes to them putting their money where their mouth is their hypocracy goes dayglow.  Give me a good, honest, selfish capitalist any day.  More trustworthy, and more likely to not go out of his way to harm me in my quest to become rich like him.

                              Be sassy and be happy.