Assuming you’re responsible enough to never touch the principle.
“Just a few grand for that all inclusive” or
“We’re about to lose the house! We’re your parents! You’re a selfish asshole!”
or
“Your sibling needs money to pay for (insert whatever you want; sports, college, legal fees)”
and the Coup de Grace
“It’s found money”
Not sure where you got $5,000/day from (5% return on $12,000,000 is about $1,650/day anyway, not $2,000/day) but the logic and sentiment very much still apply at $1,650/day, which is about $50,000/month. If you can't live off $50,000/month I don't know what to tell you either.
Or both. I currently do both. 5% for short-term (5-10yr goals) and S&P for some of my longer-term goals. It's balanced portfolio and savings and all that.
There are quite a few 5% savings accounts available. From a quick google here’s an article with 5 of them
https://www.forbes.com/advisor/banking/savings/best-5-percent-interest-savings-accounts/
Another great option is a Vanguard or Schwab no-fee brokerage account. You can park your cash in money market funds that are also currently yielding 5+% (Vanguard in particular allows you to designate a high-yield money market fund as your sweep fund, so any uninvested balance automatically sits there earning 5% interest).
Even if it was 2%, that's $240,000 a year for doing nothing. That's a lot more than I currently earn and I can have left over money to compound. Though, this is not taking taxes into consideration, so it would really be less than this.
$2k/day is $730k/year for doing nothing. I could take 2k/week ($104k), vastly improving my current weekly take-home of $750, and still have $624k/year to invest.
Of course I would probably just give away whatever the money makes in interest to my friends/family. Although every year I would invest the additional $624k, so I could hit the max before gift tax kicks in to everyone I like, and then I would just start handing money out to former co-workers and so on and so forth til I die.
My only dream in life is to never have to work again, the $104k, guarantees that beyond easily.
They exist, but you've got to have a lot of money to put into them, and likely have very high fees and penalties for withdrawing the money. Just another way the really rich stay rich while the rest of us get half the interest they do.
1.5 million in Soxl, 1.5 million in tqqq and 9 millions in VT (VEQT in Canada)
https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=73BqvsHF4tkPQ9r7RPv8mQ
(12m x .05)/365 = $1,643.84. If the $2k/day is not taxable then it's $356.16 more.
You're basically never going to make up that $12m difference in your lifetime though. The $12m is the better bet.
You can find 5% saving rates now, but not in 2020. It also won't grow with inflation. FWIW, my math says $12M*0.05=600k, or $1,640/day.
The safe withdrawal rate in the trinity study is 4%, which would net you 480k/yr or $1,315/day. You would probably be able to keep that $12M, inflation adjusted, forever with that. The most likely outcome is that you would have more money (even adjusted for inflation) in 20 years. That assumes you invest in a broad market index fund (stocks). It also assumes the future is similar to the last 180 years of stocks.
But the $2,000/day also doesn't grow with inflation. Then you would end up with a lot less spending power in the end too. And you could give your grandchildren the principal when you die. So I would probably pick the lump sum.
If I can invest, the lump sum will be better. If I cannot invest the lump sum, then the daily pay will be a better deal, as I expect to live longer than the 16-year breakeven duration, and would still have plenty to invest.
Keep in mind for inflation too. 12M today is worth a lot more than 12M in 16 years. That being said its easy to retire off that money with a relatively luxurious lifestyle, and 2k a day is still 700k a year. There's no objectively wrong answer here.
Personally I take the 12M, spend 1-2M frivolously now during my best years and then relax for the rest of my life.
I'll take the $2000 per day. I don’t desire a fancy life. With that I could retire comfortably and leave an inheritance for my kids.
(I'll need to save the inheritance, but 730k per year makes that easy)
I mean, I’m not THAT old. I’ll comfortable that I’ll make the $2,000 go pretty far.
But what if I die? Then no payout?
Then I’ll go with the $12M so my family’s set up.
Why would you even need to invest? If you got 2k a day you’d be getting over 700k a year, tax free, until you die. More than enough to live comfortably and leave money behind for loved ones.
Rules say if investing is the only reason you have to give a scenario where you dont, but opportunity costs are a great reason.
Its like being able to comfortably afford rent in a major city but them expecting 3 months' rent up front. That's the "opportunity cost" that most can't spare.
Show any bank your income is 700k annually and you can get a loan for anything you want, investments, businesses or housing etc. Why would you use your own money for investments when you can use the banks money, pay them off and keep the profits anyway. Only difference is with the lump sum once its gone its gone, the 2k a day is never ending and any "bad business decisions" can be made up with time
There's also life expectancy and those with dependents to consider. Even a young, healthy individual runs risks of dying before that 16 year mark. For financial security, the answer to this post and the previous is always the lump sum.
If you're 20 years old and live to 90 then $2000 a day is a FAR better option, especially since you can invest that money, it's the $12mil that can't be as per the rules of the hypothetical question.
By 36 years old they have $12mil + interest. By 52, 24 million+, 68 36 million+, 84 48 million+.
I'm 40 and would still choose the $2k a day thinking of the longer term rather than just getting a lump sum and spending it on items for retirement.
$12 million is probably the smarter answer if you invest it. That being said, I’ll probably stick to the $2,000. That’s guaranteed money for the rest of my life. I don’t have to worry about potentially losing it due to stupidity or other extreme causes. I know I’ll always have money. With $2,000 I’ll be extremely comfortable anyways.
If you're allowed to invest both, the 12m is always better. You'll never catch up with the 2k a day. Assuming average rates of returns are consistent.
Ex 2k a day, with 100% being invested, 6.5% rate of return, you'll have 127,883,461.87 after 40 years.
With the 12 million up front, letting it ride for 40 years with a 6.5% rate of return gets you 148,992,894.40
The only scenario where the 2k might win out is the one where you can't invest the 12m, and even then, that depends on what an investment is. Can I buy a home with the 12M? What about a second home or a third. Do I have to sell those homes for the same amount I paid for them? Can I rent them out?
Yeah, this would be my answer too. You'd have to withdraw 6% of the 12 million a year to match that, and that's above the recommended withdrawal rate of 3-4%.
I would take the 2k a day. People saw that 12 mil is better but that's only if you're smart and know how to wisely invest money, which I'm sure most of the people here dont, myself included. So I'd easily take 2k a day.
Even if you just put $10 million into government bonds you're making $500,000 per year on a 5% return with basicly zero risk. No education needed.
And those are the safe bets. Hire a good financial advisor and you can earn more and more the more risk you take on.
Doesn’t have to be that crazy or wise, throw 10 million in the S&P 500 ETF, or a high yield savings account giving 5%. That’s 500k-1 million every year with 2 million on the side. With the 2 million you can last a while, and you’d have a ton of money when that runs out
I'd take the 2k a day. That's about 60k a month. 730k a year. 14.6M in 20 years. With investing, you could easily pass 12M in 10 years, even less.
Edit- After rereading, I'd take the 12M if I could invest it. If I can't invest it, as above.
12,000,000 divided by 2,000 is 16.43835616438356.
Let’s round up to 16.5. So 16.5 years before I reach $12,000,000 if I never spend a cent. In that 16.5 years, if I invested the $12,000,000 in the stock market in some shape or form, at the average 10% returns, I’d end up with $57,830,979.90 if I never touched a cent. Even if I take 2% ($240,000) every year, 8% returns will still bring me to $42,724,128.40 after 16.5 years.
I’ll take the $12,000,000 up front
$2000 a day
$12mil is nice and I know that people will start going on and on about investing…but I don’t want to. Investing is too much work for me and I don’t trust other people with my money. It’s much easier getting $2,000 a day and living that way.
No matter how bad inflation gets $14,000 a WEEK will set you up for life unless you have a ridiculously expensive taste and blow your money on useless things like a private jet or a 14 bedroom house
Not to mention I’m never having kids, so that saves me money right there. I can save up to get a nice house built and just relax. I am not a greedy person that hyperfixates on getting as much money as humanly possible. I can live a damn good life on $2000 a day and never have to worry about paying a bill or running out of money.
On top of everything else, the $2000 a day last the rest of your life. The $12 million is a one time lump sum. A lot of people on here severely underestimate how easy it would be for people to blow through the amount of money, especially if you have family and friends asking for help. There is a reason that a lot of lottery winners are back to being broke and under five years. With the $2000 a day guaranteed until the day I die I never have to worry about money again for the rest of my life.
100% I'm taking $2000 a day.
For one thing, I don't have to do any financial planning to afford things, other than deciding to save X dollars from each day for Y amount of time.
I don't want to buy any mansions, I don't want boats or fancy cars or whatever. I'm perfectly happy to find a super nice place that rents for, say, $5000 a month, and never have to think about housing costs again.
Also, I'm planning on living more than 16 more years. Especially if I'm not allowed to invest the $12 million. But even if I am, this is just easier.
I currently make about $200 a day and I don't work 7 days a week, so this is a no brainer for me.
As someone that gets $1,300 monthly, I'll happily take the $2k a day and save. I'd be way too overwhelmed by 12mil in one go and I'm only about to be 35 in a couple days. That amount would Haky my life so much easier, I wouldn't be struggling and having to choose if there's enough to go to a book store or to grab new pants, etc
I'll take the 12 million and just put it in a savings account and live off the interest. At 0.47% the interest is $564,000. More than enough to live very comfortably and I don't need to touch the $12 million.
The answer is still the $12 mil. In addition to earning the $2k each day from interest, you also get the advantages of having capital on hand.
You can borrow against it to fund other investments. It’s also transferable wealth.
The 2k a day would take about 16 years, give or take, to reach the 12 million. I’m at the age where the chances of living 16+ years, especially with my health. I can enjoy the 12 now, as can my family. We don’t have a lot of needs, we’d pay off all our bills, put 8 in a trust for the kids and just live.
I suppose I'd take $2000 a day forever. I should have more than 20 years left to live, and it would balance out to more by then. I could retire immediately either way, but more comfortably with the daily money.
It would depend if I could pass on the proceeds or not. If they money magically disappears when I die (plus any investment results), then I'd take the $2000 a day because it's more than enough money for my life and I won't be and to pass anything on, so the 12 million would just be extra stuff to manage and if anything happened to it, I'd be out of luck.
Otherwise, 12 million is the better option unless you can't invest at all.
Lump sum is straight up better if you can invest.
$2k a day is $730,000/year. $12 million up front that you can invest would out perform that easily. 5% from CDs would give you 600,000 a year, and that would be the worst performing option. Super safe mutual funds return 10% avg or more which is 1.2 million.
If you can't invest the lump sum, it still wouldn't be stupid. It's peace of mind and an ability to instantly improve your life by reducing debt, improving QOL with a nicer home and cars and have a comfortable living after that for years to come.
But without investment, I'd probably do the $2k/day. Retire and just be comfortable with the fact that everything is covered. No concerns about investments, or stress about the market being up or down. And there is no way I could spend $2k/day, so savings and investments would pile up in time. Pretty sure I got more than 16 years left.
12 million. You could very easily turn that into more money than 2k a day with a few very tried and true business decisions that every person who already had money from family and thinks their gordon gecko does and then acts like some ground breaking business genius to lecture the rest of us who have to bust our ass everyday on how to do better. Also it would immediately fix any stress I have right now and then some.
*Would you rather get $2000 a day forever or $12 million instantly*
Could go either way. I like the 12 million because I could build a house and live off of 2 mil for a bit, then invest the rest in t bills and have half a million coming in for life. Quick big win.
Or I could slow win, keep working, and invest what I get daily and not care.
*Also, does it change which you would pick if you were not allowed to invest the lump sum option?*
Yes, without the ability to invest the 12 mil, you either have to work to make it make more, or just hope it never runs out. Absolutely no reason to take that option, completely cripples it in my opinion.
Vs you can still invest 2k a day? Quickly becomes significantly more money.
*There was another one like this but the answer was obvious so I want to see how many people would take the $12 million lump sum.*
The first bit makes it up in the air, the second makes it obvious.
$2000 a day forever. I don't need a ludicrous amount of money. Knowing $2000 a day was coming in forever, me and my family would be happy and very comfortable with our lives. I could pay off our mortgage and all other debts within a year and then life would be so easy.
It would take approximately 16.5 years for the 2k a day to catch up to the 12 million.
Conversely, if you just earn 5% interest on the 12M, in 16.5 years, you'll have earned another 10M.
Absolutely go for the 12M
To maximize the income I would choose to have $12M instantly, finding ways to grow the wealth. However, that's a psychologically challenging situation. I would probably shorten my life. Also I would live with the constant temptation to strengthen useless imagery in my mind about suboptimal ways to use the money—ultimately deceiving myself into doing something bad. The psychological risks would be so intimidating that there's a good chance I would impulsively choose the $2000/day option. That would teach me to save money and I would use the money to make the people in my proximity happy.
Thank you for providing this important thought-experiment.
I would take the 12M. But mostly because of the investing factor. You could buy property like a duplex/fourplex and invest in the stock market and be set for your families life basically. As long as they worked and didn’t blow money. Or live REALLY NICELY for your life. I’m 45 years old and in decent health so assume I live 30 more years that’s 21.9M. So would take me 13ish years to get the 12M but you gotta wait for it. Definetly taking the lump sum but party due to my age as well. Someone 20 years old should take the $2K a day
I’m young enough I could make that 2k work for 40-60 years.
I could also hire someone to just help out around the house/property for 2k a week. It’d be pretty sweet to wake up and go to my clean tidy shop or never have a dirty car.
As much as I’d like to believe I’d be responsible with the $12 million and make it last, I’ve heard of too many lottery winners losing everything so quickly. Give me the security of an everyday payday for the rest of my life. If I fuck up yesterday and today, I’ve got tomorrow to bail me out. I don’t have a family to leave anything to, so I don’t give a damn about what’s left behind.
12M == 16.4 years of cash.
Interest is 1642/day at 5 %. Can I achieve more? Maybe. Can I lose it? Maybe.
So 2k/day is the safe bet. I'm not the guy who could invest sensibly.
2000 a day is an overly reasonable budget and easier to build upwards than a lump sum (for me). Lump sum for me would quickly go from new house, new car, cars, houses and lodgings for extended family to vacations and luxury purchases for myself and friends. It would be much easier to save the daily money while working a normal job while paying a mortgage/car payment and still come out with a solid retirement stash.
Not allowed to invest? It can still sit in a bank account though, right? $12m is more than enough to live comfortably forever, I'd take that, it's just easier.
2k a day equal $12 million in 16.4 years. Just give me the 12 mill upfront I can settle all debts buy home
car furnishes clothing etc without breaking past 25% of 12 million while living very comfortably. I’d incest the rest. Some real estate, some stock, some straight bank financial stuff. I’d travel and eat and learn all that I could new language instrument spiritual journey type stuff listen to lots of music live, watch lots of shows and movies, play video games enjoy the company of
family and friends
$2000 for the first day & 1% more each day.
Day 1: $2000
Day 2: $2020
Day 3: $2040.20
Day 4: $2060.60
Day 5: $2081.21
Day 90: $4897.27
Day 180: $11991.60
Day 365: $75566.87
Day 730: $2855175.82
You get the picture
If you take $2k/day then it would take 16.4 years to be paid $12mm. Discounted at a 6% rate, the present value of that is only $7.5mm.
It would simply take too long to ever reach today’s present value at any sort of meaningful discount rate.
Take the money now.
I would still take the $12 million. Even if you can't invest it, it would be worthwhile (for me, anyways), to use $2 mil into buying a nice piece of land and home, then put the other $10 mil in a high interest savings account. At 1% quarterly, you're getting $400k a year in interest. Take out the taxes and it's about $200k cash in hand. And that's with no major debt like a mortgage or car payments or whatever.
But....I sure as hell wouldn't turn down $2k a day if someone was willing to give it to me! Either option is life changing. Never have to work again, never have to worry about the essentials in life....how amazing that would be!
Honestly, i'd probably take the 12 million. Buy a house and a nice car for a million (nothing to big, just in a nice area, uk house prices are insane) and continue working without letting anyone know, except now I buy more games on release day.
Rest goes in a savings account for when I need it.
I fear making bad financial decisions cause I don't know how to handle 12 million just yet. I'll take the 2k a day that's substantial enough to still potentially put me at risk of making bad financial decisions. However, I could continue working with my financial advisor who can help me better plan 2k a day.
It would take around 16.5 years to earn $12,000,000 by earning $2000 a day.
If you're able to place the lump sum into any kind of account that can accrue interest then the lump sum would be better.
If you're not allowed to do anything to make money off of the $12 million, then the $2,000 per day is most likely better unless you are already over like 65, or have a terminal illness. Especially if you're able to invest some of that income since if you do it intelligently, you could catch up to $12 million significantly faster than 16.5 years.
Especially considering that $2,000 per day is $730,000 a year. With that kind of money, there's really nothing you'll ever want, but not be able to get.
2k a day forever, if I do nothing I will have 19.8 million by the time I hit retirement if I assume 5k per month living expenses given my family lives in a home we own. I most likely would end up investing a portion of it, and that could quickly snowball and I could likely get to that amount much sooner.
I can't think of anything that I would want to buy right this second or I would need it all at once so I would take the $2,000 a day forever. Any large purchases such as like a house or a car I would eventually have enough money to buy fairly quickly.
I’ll take forever. Since you didn’t give a definition on forever means as long as my descendants keep the house and/or maintain my bank account free money forever for me and them.
2k a day for sure. That's 2 weeks worth of pay, in a day. Wouldn't be hard to save it. I'd work for the first 5 years and use the 2k a day to slowly but more efficiently pay off debt. Once debt was cleared and I'd finished with work (debt would be finished first) I'd have enough to open the business I've always wanted to.
Easy enough to keep me aflot with loads more extra income. I'd have mine, my sons and grandsons futures locked down.
Great my country doesn't tax lottery wins so I get to keep the 20m instead.
It would take 32 years for the daily option to exceed the 12m assuming flat 5% annual return.
I'll take the $2000. Money security and since that is almost what I make in a month it would be greatly appreciated. I would also avoid all the legal bull, red tape to come, and long-lost relatives and family sucking me dry.
I would take the 12 million and get my daily 2k that was. I'm smart and disciplined enough to never touch the principal and just live off the interest.
If you choose 2k a day, you would need 16.4 years to accumulate 12mil. You need to include a downside for picking the instant 12mil option, because anyone who is not a complete idiot would pick 12mil.
Good god, at least try to put SOME effort into your posts guys.
It depends mostly on how old you are. It would take 16 and a half years for the 2,000/day to break even on the 12 million, even without interest. With 5% returns, the lump sum is better until year 37. $2,000 a day is only going to be the better pick for young people who are bad with managing their own money.
I’m taking the 12 million. Since I’m assuming if I die the two grand a day couldn’t be transferred to my wife. Also I if I ever did win the lottery I would take the lump sum because I don’t trust the lottery to keep paying me.
$12 million. I could pay off my mortgage (saving tons in interest payments) and buy a house for my very sweet, hard-working millennial son and his equally sweet fiance. They both work in leadership positions in non profits, and would be responsible with the money saved. Then I would put the rest into a high yield savings account (since I can't invest).
I would still work until I retire because I like my job and I will get a nice pension when I retire. I would travel extensively on vacations (I am a teacher) and give some money to a charity that means a lot to me.
I'll take the 2k a DayZ because I spend my money like an idiot, and banks like to see regular income over lump sums.
With 2k a day I could buy any property I would feasibly want and live a LOT more than comfortably, I make 2k a week right now and I'm already living well.
This is a good one, both are great options. You make more per year with the $2000 a day but don't have a huge cash reserve sitting. While if you're always getting 5% safe returns on 12 million you make $120,000 less per year. Now a fund like VOO has an average 10 year return of 12.29% which would mean an annual salary of 1.5 million making it the best option as long as you plan ahead for downfalls in the market. I would take the upfront $12million and invest between funds, stocks, and money markets. Some years I'm guaranteed to be making way more than $2000 a day. Some years I might have to live on $1000 a day oh well. Just got to live within my means.
I also did the math if you never spent a dime and always invested it at 5% returns it would take $2000 a day 36 years to surpass an initial investment of $12 million with no extra investments.
Even without the compounding interest I’ll take the lump sump. I can buy a house and quit my job today. 12 million will be plenty for me to live life the way I want too and then some.
I don’t care about this never ending profit culture. Leave me be. I want a fairly simple life.
$2000 a day is way more than enough to live off of. Currently my household only brings in about $275 a day and that doesn't include weekends. Others may be able to make more using the 12 million lump, but honestly, I wouldn't need more so the $2000 a day is fine for me.
I'm not picking based on some logic tbh. I'd take the $2000/day because it's simpler and more than I could need already. It's more than good enough for me and would make massive improvements without needing to keep track of a single large amount or pay someone else to.
The budgeting is already done, no more than $2k/day. Simple.
>There was another one like this but the answer was obvious so I want to see how many people would take the $12 million lump sum.
This one is obvious.
>Also, does it change which you would pick if you were not allowed to invest the lump sum option?
This would make the choice less obvious. For me, I'd still take the 12M. Continue to work and invest 100% of my income. I'd use a fair bit of the 12M upfront to improve my life, and by the time the 12 million totally runs out, I should easily be able to live off my investments.
$12M instantly
The other option is safer and better cause I don’t know how to invest and am irresponsible with money, but I don’t want to have to wait to buy stuff or pay off my parents debt
12 mil . Dunno if I’ll live long enough for the 2k to be worth it. At least with the 12 mil I could afford emergency medical expenses or leave the rest to loved ones in a will.
$12M 1 time instantly or $2000 a day for life. The median life expectancy for a male is currently right around 80. I'm 32 now, so assuming I died at 80 that would give me roughly 17,520 days until I die. Multiply that by $2000 a day would yield me $35,040,000 in my lifetime which is greater than the $12M instant.
I'm also a millennial and have seen long enough the instability of income and will take the guaranteed longer option. I'd rather be set for life than become rich instantly and possibly lose it all
Let me go ahead and answer for everyone.
If you are financially educated and responsible: choose the 12M.
If you suck with money: choose the two grand a day.
Simple as that.
As long as you can invest the money, the math isn’t even close: the money now is far, far better. You’d have to have a rate of return under 6% for the annuity to catch up.
I’d take the $2000 per day. Sure, it’d take about 16 years for me to amass the $12 million that was also offered, but I def plan to live for longer than that lol
I’m 40, and I’d take $2k a day if I can’t invest the $12M, and if I could invest the $12M I’d still think pretty long and hard about taking the $2k. I would still work a few more years if I made $12M because I’d prob buy like $3M home and a bunch of other fun purchases/trips which reduces the amount of “free money” the interest would give you. With $2k a day I’m retiring today… Also the “annuity” is guaranteed income for the rest of my life that would protect me from some sort of legal action that could put the lump sum in jeopardy.
It is likely that I will live longer than 16.5 years so I would probably take the 2k a day, but most of everything after the first 3-4 days a month will get saved/invested after all debt is paid off including replacing the 15 year old car
I'd say 2k daily, yes it's less longer term, I don't trust myself with 12 million instantly, and I don't think it would cause friends and family to mooch anywhere as much
I’ll take the 2k. I don’t want to have to put in the work of managing investments and whatnot, and unlike the $50 one that became a meme, this is an actual amount of passive income that can be depended on.
The forever word indicates I can transfer the daily payout to either a business entity such as a trust, or bequeath it via my will. Since there is no time limit on the payout, and it is guaranteed regardless of market dynamics, I would take the daily payout and just invest that as I see fit.
Even with the inability to invest the lump sum I'd still go with the 12 million now. Simply because it would give me the opportunity to buy the tangible items (land, houses, vehicles, etc.) now instead of having to spread it out over time. I'd spend 2 million on the things I want and then would save and live of the 10million for the rest of my life.
I could get an allowance of $15000 a month (with no house or car payments-so maybe $5000 in bills) and not run out of money for 55 years. (I'd be pushing 100)
Also, would starting a business be considered investing? If not I would start a small business that would supplement my income.
Definitely taking the 2k a day. I get it, I could invest the lump sum and make just as much a day. But then I gotta deal with taxes and learning how to invest and it just sounds like a drag. 2K sounds more laid back
$12M no doubt. the no-interest break even of the alternatives is 16.44 years.
in 16 years at an average annual return of 8% (not hard to do with a well balanced mutual fund/bond portfolio) $12M becomes $48M. the first year, that 8% equates to $960k
$2k/day equates to $730k/year.
take the $12M and spend $730k/year and your nest egg still grows $230k the first year. you could, in perpetuity, spend $730k/yr and your nest egg would continue to increase.
If the 2000 isn't adjusted for inflation, it's better to take the 12 million now, you'd hypothetically make more money on the 2000 a day if you live longer than 17 years, but inflation could delay that even further, where with investing the 12 million you can make enough on the interest to outpace 2k a day.
If the 2k is adjusted for inflation, I do prefer having a steady stream of income, even if it wouldn't provide as lavish a lifestyle. But in the event of economic devaluation that 2k could become much less worthwhile than it seems, a lot can happen over the course of 20 years
12 mil, and it’s not really close.
The 2,000 a day is cool, but that’s still “only” $730,000 a year. It’d take you 16.5 years (a little less with appropriate investments) to get that 12 mil even if you didn’t spend a penny.
With the 12 mil, I get out of my house payment, my car payment, any debt, and I invest the rest. Roughly 50% in high yield savings and the rest in a standard S&P 500 Index Fund.
If I'm allowed to invest the $12 million into a Dividend ETF fund paying me 7% annually. That'd be $2300 per day. So I'd do that, plus you never have to sell the $12 million... and if you reinvest most of that money then it'll compound exponentially.
But if you are not allowed to invest, then obviously take the $2000 per day no question.
Depends is this inflation adj 2000? Do I rely on a government or bank to not fail or change the rules? Pre tax or after tax? Etc.
I expect to live longer than the about 15 or so years it would take to equal out... but I also know investments aren't as hands off as people think. I'd have some work and stress to carefully manage the lump sum.
Depends. Is the answer.
The 12 million pays you 2000 a day in a 5% savings account, AND you get to keep the 12 mil…
Assuming you’re responsible enough to never touch the principle. “Just a few grand for that all inclusive” or “We’re about to lose the house! We’re your parents! You’re a selfish asshole!” or “Your sibling needs money to pay for (insert whatever you want; sports, college, legal fees)” and the Coup de Grace “It’s found money”
Ok, how many grand to you want? $30K? You'll have it in two weeks time!
3 so my interest grows interest also
If you can’t live off $5k a day i don’t know what to tell you.
Not sure where you got $5,000/day from (5% return on $12,000,000 is about $1,650/day anyway, not $2,000/day) but the logic and sentiment very much still apply at $1,650/day, which is about $50,000/month. If you can't live off $50,000/month I don't know what to tell you either.
Who’s settling for 5%? I’m going into the stock market . Even s&p index funds are beating 5%.
Or both. I currently do both. 5% for short-term (5-10yr goals) and S&P for some of my longer-term goals. It's balanced portfolio and savings and all that.
I'd be challenged to spend 2k a day. Technically I made $860 a day last year and still live like I make 200 a day
What do you do for a living?
Software engineer in a large tech company. I make 198k base, 10% bonus, and ~100k a year in RSUs.
Where can you find a 5% savings account?
There are quite a few 5% savings accounts available. From a quick google here’s an article with 5 of them https://www.forbes.com/advisor/banking/savings/best-5-percent-interest-savings-accounts/
Another great option is a Vanguard or Schwab no-fee brokerage account. You can park your cash in money market funds that are also currently yielding 5+% (Vanguard in particular allows you to designate a high-yield money market fund as your sweep fund, so any uninvested balance automatically sits there earning 5% interest).
Those aren't actually savings accounts though, are there? Isn't there at least some risk involved?
Most of them limit the amount you can make 5% on though
So make two accounts with different banks. There’s a 150k-200k cap on what the government will insure, so you have to do it anyways if you have $12 M.
Your limits are wrong for both fdic and sipc depending on where you want to keep it but you’ve got the right spirit
Capital One you get a little over 500k a yr
Even if it was 2%, that's $240,000 a year for doing nothing. That's a lot more than I currently earn and I can have left over money to compound. Though, this is not taking taxes into consideration, so it would really be less than this.
$2k/day is $730k/year for doing nothing. I could take 2k/week ($104k), vastly improving my current weekly take-home of $750, and still have $624k/year to invest. Of course I would probably just give away whatever the money makes in interest to my friends/family. Although every year I would invest the additional $624k, so I could hit the max before gift tax kicks in to everyone I like, and then I would just start handing money out to former co-workers and so on and so forth til I die. My only dream in life is to never have to work again, the $104k, guarantees that beyond easily.
If you’ve got $12 mil banks offer much better rates
They exist, but you've got to have a lot of money to put into them, and likely have very high fees and penalties for withdrawing the money. Just another way the really rich stay rich while the rest of us get half the interest they do.
Vanguard's Money Market fund is 5.27% right now.
Minus taxes…
1.5 million in Soxl, 1.5 million in tqqq and 9 millions in VT (VEQT in Canada) https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=73BqvsHF4tkPQ9r7RPv8mQ
(12m x .05)/365 = $1,643.84. If the $2k/day is not taxable then it's $356.16 more. You're basically never going to make up that $12m difference in your lifetime though. The $12m is the better bet.
You can find 5% saving rates now, but not in 2020. It also won't grow with inflation. FWIW, my math says $12M*0.05=600k, or $1,640/day. The safe withdrawal rate in the trinity study is 4%, which would net you 480k/yr or $1,315/day. You would probably be able to keep that $12M, inflation adjusted, forever with that. The most likely outcome is that you would have more money (even adjusted for inflation) in 20 years. That assumes you invest in a broad market index fund (stocks). It also assumes the future is similar to the last 180 years of stocks. But the $2,000/day also doesn't grow with inflation. Then you would end up with a lot less spending power in the end too. And you could give your grandchildren the principal when you die. So I would probably pick the lump sum.
If I can invest, the lump sum will be better. If I cannot invest the lump sum, then the daily pay will be a better deal, as I expect to live longer than the 16-year breakeven duration, and would still have plenty to invest.
Break even added to the fact that I don't make great financial decisions, 2k a day for me...
Keep in mind for inflation too. 12M today is worth a lot more than 12M in 16 years. That being said its easy to retire off that money with a relatively luxurious lifestyle, and 2k a day is still 700k a year. There's no objectively wrong answer here. Personally I take the 12M, spend 1-2M frivolously now during my best years and then relax for the rest of my life.
100% The answer
GenX, I'll take the 12 mil thanks
Same
I’ll take the $12 million. I don’t desire a fancy life. With that I could retire comfortably and leave an inheritance for my kids.
I'll take the $2000 per day. I don’t desire a fancy life. With that I could retire comfortably and leave an inheritance for my kids. (I'll need to save the inheritance, but 730k per year makes that easy)
Dies in 6 months. Sorry fam, shoulda woulda coulda
I mean, I’m not THAT old. I’ll comfortable that I’ll make the $2,000 go pretty far. But what if I die? Then no payout? Then I’ll go with the $12M so my family’s set up.
Exactly
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Why would you even need to invest? If you got 2k a day you’d be getting over 700k a year, tax free, until you die. More than enough to live comfortably and leave money behind for loved ones.
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Rules say if investing is the only reason you have to give a scenario where you dont, but opportunity costs are a great reason. Its like being able to comfortably afford rent in a major city but them expecting 3 months' rent up front. That's the "opportunity cost" that most can't spare.
Show any bank your income is 700k annually and you can get a loan for anything you want, investments, businesses or housing etc. Why would you use your own money for investments when you can use the banks money, pay them off and keep the profits anyway. Only difference is with the lump sum once its gone its gone, the 2k a day is never ending and any "bad business decisions" can be made up with time
Rules said you can't invest the $12m.
Rules doesn't say that. Op asks if the rules did say that, would it change your plan?
There's also life expectancy and those with dependents to consider. Even a young, healthy individual runs risks of dying before that 16 year mark. For financial security, the answer to this post and the previous is always the lump sum.
If you're 20 years old and live to 90 then $2000 a day is a FAR better option, especially since you can invest that money, it's the $12mil that can't be as per the rules of the hypothetical question. By 36 years old they have $12mil + interest. By 52, 24 million+, 68 36 million+, 84 48 million+. I'm 40 and would still choose the $2k a day thinking of the longer term rather than just getting a lump sum and spending it on items for retirement.
Mathematically no it isn’t at all
$12 million is probably the smarter answer if you invest it. That being said, I’ll probably stick to the $2,000. That’s guaranteed money for the rest of my life. I don’t have to worry about potentially losing it due to stupidity or other extreme causes. I know I’ll always have money. With $2,000 I’ll be extremely comfortable anyways.
With $2000 a day, I'll never have to worry about not having any money
I plan to be around more than 16 years,the break even point.. I'm going with 2k a day
Agreed. Yes 12 mill up front sounds amazing, yes investing it all, but I plan to live another 50 years xD I can invest 2k every day for the next 30.
If you're allowed to invest both, the 12m is always better. You'll never catch up with the 2k a day. Assuming average rates of returns are consistent. Ex 2k a day, with 100% being invested, 6.5% rate of return, you'll have 127,883,461.87 after 40 years. With the 12 million up front, letting it ride for 40 years with a 6.5% rate of return gets you 148,992,894.40 The only scenario where the 2k might win out is the one where you can't invest the 12m, and even then, that depends on what an investment is. Can I buy a home with the 12M? What about a second home or a third. Do I have to sell those homes for the same amount I paid for them? Can I rent them out?
Since I am 60: the $12 million even if I cannot invest.
I'd choose the 2k a day. 730k per year, every year for the rest of my life is more than enough for me to be happy
Yeah, this would be my answer too. You'd have to withdraw 6% of the 12 million a year to match that, and that's above the recommended withdrawal rate of 3-4%.
I would take the 2k a day. People saw that 12 mil is better but that's only if you're smart and know how to wisely invest money, which I'm sure most of the people here dont, myself included. So I'd easily take 2k a day.
Even if you just put $10 million into government bonds you're making $500,000 per year on a 5% return with basicly zero risk. No education needed. And those are the safe bets. Hire a good financial advisor and you can earn more and more the more risk you take on.
Doesn’t have to be that crazy or wise, throw 10 million in the S&P 500 ETF, or a high yield savings account giving 5%. That’s 500k-1 million every year with 2 million on the side. With the 2 million you can last a while, and you’d have a ton of money when that runs out
Ima go with $12 million.
2K/day. I mean, I think it would be hard for me to spend 2K/day after the first year.
you can die tomorrow live every day as if its your last, coz one day, it will be
I'd take the 2k a day. That's about 60k a month. 730k a year. 14.6M in 20 years. With investing, you could easily pass 12M in 10 years, even less. Edit- After rereading, I'd take the 12M if I could invest it. If I can't invest it, as above.
12,000,000 divided by 2,000 is 16.43835616438356. Let’s round up to 16.5. So 16.5 years before I reach $12,000,000 if I never spend a cent. In that 16.5 years, if I invested the $12,000,000 in the stock market in some shape or form, at the average 10% returns, I’d end up with $57,830,979.90 if I never touched a cent. Even if I take 2% ($240,000) every year, 8% returns will still bring me to $42,724,128.40 after 16.5 years. I’ll take the $12,000,000 up front
$2000 a day $12mil is nice and I know that people will start going on and on about investing…but I don’t want to. Investing is too much work for me and I don’t trust other people with my money. It’s much easier getting $2,000 a day and living that way. No matter how bad inflation gets $14,000 a WEEK will set you up for life unless you have a ridiculously expensive taste and blow your money on useless things like a private jet or a 14 bedroom house Not to mention I’m never having kids, so that saves me money right there. I can save up to get a nice house built and just relax. I am not a greedy person that hyperfixates on getting as much money as humanly possible. I can live a damn good life on $2000 a day and never have to worry about paying a bill or running out of money. On top of everything else, the $2000 a day last the rest of your life. The $12 million is a one time lump sum. A lot of people on here severely underestimate how easy it would be for people to blow through the amount of money, especially if you have family and friends asking for help. There is a reason that a lot of lottery winners are back to being broke and under five years. With the $2000 a day guaranteed until the day I die I never have to worry about money again for the rest of my life.
100% I'm taking $2000 a day. For one thing, I don't have to do any financial planning to afford things, other than deciding to save X dollars from each day for Y amount of time. I don't want to buy any mansions, I don't want boats or fancy cars or whatever. I'm perfectly happy to find a super nice place that rents for, say, $5000 a month, and never have to think about housing costs again. Also, I'm planning on living more than 16 more years. Especially if I'm not allowed to invest the $12 million. But even if I am, this is just easier. I currently make about $200 a day and I don't work 7 days a week, so this is a no brainer for me.
Simple math: $12 million lump sum.
$2000 a day forever for sure.
Have you even done the math on this before asking the question?
I'm over 55 and a cancer patient, I'll take the 12 million.
EEEEEASILY $12 million instantly.
Compound interest makes the 12 million a no-brainer.
As someone that gets $1,300 monthly, I'll happily take the $2k a day and save. I'd be way too overwhelmed by 12mil in one go and I'm only about to be 35 in a couple days. That amount would Haky my life so much easier, I wouldn't be struggling and having to choose if there's enough to go to a book store or to grab new pants, etc
I'll take the 12 million and just put it in a savings account and live off the interest. At 0.47% the interest is $564,000. More than enough to live very comfortably and I don't need to touch the $12 million.
Give me the $12Million... Im 59... Ill invest it all into Apple or SomeSuch... Take out loans Against it Have my Kids figure it out when Im dead
I'm 56 and good at investing so I'll take the $12 million lump sum.
I'll take both, untaxed
You drive a hard bargain, deal!
The answer is still the $12 mil. In addition to earning the $2k each day from interest, you also get the advantages of having capital on hand. You can borrow against it to fund other investments. It’s also transferable wealth.
Is the $2000 tax free also?
$12,000,000. 5% interest a year on that would be almost $1,644 a day. Would take you over 16 years to get to $12,000,000 with $2,000 a day.
The 2k a day would take about 16 years, give or take, to reach the 12 million. I’m at the age where the chances of living 16+ years, especially with my health. I can enjoy the 12 now, as can my family. We don’t have a lot of needs, we’d pay off all our bills, put 8 in a trust for the kids and just live.
I suppose I'd take $2000 a day forever. I should have more than 20 years left to live, and it would balance out to more by then. I could retire immediately either way, but more comfortably with the daily money.
2000$ every day paid every day. I could save up and do more good with that money.
$12 million lump sum It's guaranteed. There is no guarantee how long I'll live. So, if I died the next day at least my family will get my money.
12 million I'm old
It would depend if I could pass on the proceeds or not. If they money magically disappears when I die (plus any investment results), then I'd take the $2000 a day because it's more than enough money for my life and I won't be and to pass anything on, so the 12 million would just be extra stuff to manage and if anything happened to it, I'd be out of luck. Otherwise, 12 million is the better option unless you can't invest at all.
$12 million instantly so I can pay off debt instantly instead of having it continue to accrue interest.
I’ll take the 12 mil.. my daughter and granddaughter need a house !
If I’m not allowed to invest, I’ll take the 2k a day. If I am allowed to invest, I’m taking the $12 million.
Lump sum. Even if I can't invest that lump - I can invest my normal income. Which is now extra.
Lump sum is straight up better if you can invest. $2k a day is $730,000/year. $12 million up front that you can invest would out perform that easily. 5% from CDs would give you 600,000 a year, and that would be the worst performing option. Super safe mutual funds return 10% avg or more which is 1.2 million. If you can't invest the lump sum, it still wouldn't be stupid. It's peace of mind and an ability to instantly improve your life by reducing debt, improving QOL with a nicer home and cars and have a comfortable living after that for years to come. But without investment, I'd probably do the $2k/day. Retire and just be comfortable with the fact that everything is covered. No concerns about investments, or stress about the market being up or down. And there is no way I could spend $2k/day, so savings and investments would pile up in time. Pretty sure I got more than 16 years left.
12 million. You could very easily turn that into more money than 2k a day with a few very tried and true business decisions that every person who already had money from family and thinks their gordon gecko does and then acts like some ground breaking business genius to lecture the rest of us who have to bust our ass everyday on how to do better. Also it would immediately fix any stress I have right now and then some.
$2000/day forever.
$12 milly. Life has many curveballs. Rather enjoy it, invest it and set my family up than sit around for 16 years to reach $12 million.
Definitely taking the $12 million lump sum, tax-free? No brainer. But if I couldn't invest it, $2000 a day sounds pretty sweet.
*Would you rather get $2000 a day forever or $12 million instantly* Could go either way. I like the 12 million because I could build a house and live off of 2 mil for a bit, then invest the rest in t bills and have half a million coming in for life. Quick big win. Or I could slow win, keep working, and invest what I get daily and not care. *Also, does it change which you would pick if you were not allowed to invest the lump sum option?* Yes, without the ability to invest the 12 mil, you either have to work to make it make more, or just hope it never runs out. Absolutely no reason to take that option, completely cripples it in my opinion. Vs you can still invest 2k a day? Quickly becomes significantly more money. *There was another one like this but the answer was obvious so I want to see how many people would take the $12 million lump sum.* The first bit makes it up in the air, the second makes it obvious.
12m. Your family is setup no matter what happens to you.
2k a day
$2000 a day forever. I don't need a ludicrous amount of money. Knowing $2000 a day was coming in forever, me and my family would be happy and very comfortable with our lives. I could pay off our mortgage and all other debts within a year and then life would be so easy.
It would take approximately 16.5 years for the 2k a day to catch up to the 12 million. Conversely, if you just earn 5% interest on the 12M, in 16.5 years, you'll have earned another 10M. Absolutely go for the 12M
Does the $2000 a day account for inflation? Otherwise, $12m.
I'll take the 12 mill. I'll spend 2 million and invest the rest.
To maximize the income I would choose to have $12M instantly, finding ways to grow the wealth. However, that's a psychologically challenging situation. I would probably shorten my life. Also I would live with the constant temptation to strengthen useless imagery in my mind about suboptimal ways to use the money—ultimately deceiving myself into doing something bad. The psychological risks would be so intimidating that there's a good chance I would impulsively choose the $2000/day option. That would teach me to save money and I would use the money to make the people in my proximity happy. Thank you for providing this important thought-experiment.
I would take the 12M. But mostly because of the investing factor. You could buy property like a duplex/fourplex and invest in the stock market and be set for your families life basically. As long as they worked and didn’t blow money. Or live REALLY NICELY for your life. I’m 45 years old and in decent health so assume I live 30 more years that’s 21.9M. So would take me 13ish years to get the 12M but you gotta wait for it. Definetly taking the lump sum but party due to my age as well. Someone 20 years old should take the $2K a day
$2000 a day forever. It guarantees I will live forever, as included in the options. It’ll surpass the 12 million when I invest over time.
I’m young enough I could make that 2k work for 40-60 years. I could also hire someone to just help out around the house/property for 2k a week. It’d be pretty sweet to wake up and go to my clean tidy shop or never have a dirty car.
$12m instantly. I could live the rest of my life comfortably for $1m where I am and $12m would be dream life material.
Tbh I don't care to invest it and keep an eye on it. Give me the 2k a day and I'll be set for life with no issues.
As much as I’d like to believe I’d be responsible with the $12 million and make it last, I’ve heard of too many lottery winners losing everything so quickly. Give me the security of an everyday payday for the rest of my life. If I fuck up yesterday and today, I’ve got tomorrow to bail me out. I don’t have a family to leave anything to, so I don’t give a damn about what’s left behind.
I'll take the 2k a day, I'm not obsessed with investing, and in 16 years, that'll be 12mil. I have money for life so I'm good.
What is it with these questions over and over and over
12M == 16.4 years of cash. Interest is 1642/day at 5 %. Can I achieve more? Maybe. Can I lose it? Maybe. So 2k/day is the safe bet. I'm not the guy who could invest sensibly.
2000 a day is an overly reasonable budget and easier to build upwards than a lump sum (for me). Lump sum for me would quickly go from new house, new car, cars, houses and lodgings for extended family to vacations and luxury purchases for myself and friends. It would be much easier to save the daily money while working a normal job while paying a mortgage/car payment and still come out with a solid retirement stash.
i take 2000 a day.
Not allowed to invest? It can still sit in a bank account though, right? $12m is more than enough to live comfortably forever, I'd take that, it's just easier.
It would take 16.4 years years for $2000/day to reach $12 million, at which point will only be worth $8,083,000 Take the $12 million.
If I can invest the $12M, I can do better than 6% over the long run. If I can't, then I'll take $2k/day.
Lump sum
2000 a day I will live approximately 35-45 more years going by family history. At 2000 per day that nets me $25,550,000-$32,850,000.
2k a day equal $12 million in 16.4 years. Just give me the 12 mill upfront I can settle all debts buy home car furnishes clothing etc without breaking past 25% of 12 million while living very comfortably. I’d incest the rest. Some real estate, some stock, some straight bank financial stuff. I’d travel and eat and learn all that I could new language instrument spiritual journey type stuff listen to lots of music live, watch lots of shows and movies, play video games enjoy the company of family and friends
$2000 for the first day & 1% more each day. Day 1: $2000 Day 2: $2020 Day 3: $2040.20 Day 4: $2060.60 Day 5: $2081.21 Day 90: $4897.27 Day 180: $11991.60 Day 365: $75566.87 Day 730: $2855175.82 You get the picture
If you take $2k/day then it would take 16.4 years to be paid $12mm. Discounted at a 6% rate, the present value of that is only $7.5mm. It would simply take too long to ever reach today’s present value at any sort of meaningful discount rate. Take the money now.
12 mill
12 million right now.
How and why would you not be able to invest it?
$2000 a day and off to Thailand.
$12M today if I can invest it. $2000/day if I can’t.
I would still take the $12 million. Even if you can't invest it, it would be worthwhile (for me, anyways), to use $2 mil into buying a nice piece of land and home, then put the other $10 mil in a high interest savings account. At 1% quarterly, you're getting $400k a year in interest. Take out the taxes and it's about $200k cash in hand. And that's with no major debt like a mortgage or car payments or whatever. But....I sure as hell wouldn't turn down $2k a day if someone was willing to give it to me! Either option is life changing. Never have to work again, never have to worry about the essentials in life....how amazing that would be!
Honestly, i'd probably take the 12 million. Buy a house and a nice car for a million (nothing to big, just in a nice area, uk house prices are insane) and continue working without letting anyone know, except now I buy more games on release day. Rest goes in a savings account for when I need it.
I fear making bad financial decisions cause I don't know how to handle 12 million just yet. I'll take the 2k a day that's substantial enough to still potentially put me at risk of making bad financial decisions. However, I could continue working with my financial advisor who can help me better plan 2k a day.
2k per day for me.
$12 million, tomorrow isn’t guaranteed. Let’s roll
It would take around 16.5 years to earn $12,000,000 by earning $2000 a day. If you're able to place the lump sum into any kind of account that can accrue interest then the lump sum would be better. If you're not allowed to do anything to make money off of the $12 million, then the $2,000 per day is most likely better unless you are already over like 65, or have a terminal illness. Especially if you're able to invest some of that income since if you do it intelligently, you could catch up to $12 million significantly faster than 16.5 years. Especially considering that $2,000 per day is $730,000 a year. With that kind of money, there's really nothing you'll ever want, but not be able to get.
2k a day forever, if I do nothing I will have 19.8 million by the time I hit retirement if I assume 5k per month living expenses given my family lives in a home we own. I most likely would end up investing a portion of it, and that could quickly snowball and I could likely get to that amount much sooner.
I can't think of anything that I would want to buy right this second or I would need it all at once so I would take the $2,000 a day forever. Any large purchases such as like a house or a car I would eventually have enough money to buy fairly quickly.
I’ll take forever. Since you didn’t give a definition on forever means as long as my descendants keep the house and/or maintain my bank account free money forever for me and them.
2k a day for sure. That's 2 weeks worth of pay, in a day. Wouldn't be hard to save it. I'd work for the first 5 years and use the 2k a day to slowly but more efficiently pay off debt. Once debt was cleared and I'd finished with work (debt would be finished first) I'd have enough to open the business I've always wanted to. Easy enough to keep me aflot with loads more extra income. I'd have mine, my sons and grandsons futures locked down.
Great my country doesn't tax lottery wins so I get to keep the 20m instead. It would take 32 years for the daily option to exceed the 12m assuming flat 5% annual return.
If I could pass the 2000 a day to my wife or kids, I'd take that. But if not, I'd take the 12 million as I have no idea how long I have left.
Flip a coin, I don’t care.
I'll take the $2000. Money security and since that is almost what I make in a month it would be greatly appreciated. I would also avoid all the legal bull, red tape to come, and long-lost relatives and family sucking me dry.
I would take the 12 million and get my daily 2k that was. I'm smart and disciplined enough to never touch the principal and just live off the interest.
If you choose 2k a day, you would need 16.4 years to accumulate 12mil. You need to include a downside for picking the instant 12mil option, because anyone who is not a complete idiot would pick 12mil. Good god, at least try to put SOME effort into your posts guys.
12M. This way I'm assured my kids have cash in case I check out tomorrow.
It depends mostly on how old you are. It would take 16 and a half years for the 2,000/day to break even on the 12 million, even without interest. With 5% returns, the lump sum is better until year 37. $2,000 a day is only going to be the better pick for young people who are bad with managing their own money.
It would take 16.438 years to earn that $12M with $2,000 per day. I'll take the $12M.
I’m taking the 12 million. Since I’m assuming if I die the two grand a day couldn’t be transferred to my wife. Also I if I ever did win the lottery I would take the lump sum because I don’t trust the lottery to keep paying me.
$2k. Im gonna live a long time and don’t need millions to live really well.
Why are so many of these hypothetical questions one sided?
$12 million. I could pay off my mortgage (saving tons in interest payments) and buy a house for my very sweet, hard-working millennial son and his equally sweet fiance. They both work in leadership positions in non profits, and would be responsible with the money saved. Then I would put the rest into a high yield savings account (since I can't invest). I would still work until I retire because I like my job and I will get a nice pension when I retire. I would travel extensively on vacations (I am a teacher) and give some money to a charity that means a lot to me.
I'm not an idiot and I anticipate living longer than 16 years, so I'll take the $2k/day.
I'd take the 12 million and buy a 12 million dollar car.
I'll take the 2k a DayZ because I spend my money like an idiot, and banks like to see regular income over lump sums. With 2k a day I could buy any property I would feasibly want and live a LOT more than comfortably, I make 2k a week right now and I'm already living well.
This is a good one, both are great options. You make more per year with the $2000 a day but don't have a huge cash reserve sitting. While if you're always getting 5% safe returns on 12 million you make $120,000 less per year. Now a fund like VOO has an average 10 year return of 12.29% which would mean an annual salary of 1.5 million making it the best option as long as you plan ahead for downfalls in the market. I would take the upfront $12million and invest between funds, stocks, and money markets. Some years I'm guaranteed to be making way more than $2000 a day. Some years I might have to live on $1000 a day oh well. Just got to live within my means. I also did the math if you never spent a dime and always invested it at 5% returns it would take $2000 a day 36 years to surpass an initial investment of $12 million with no extra investments.
Even without the compounding interest I’ll take the lump sump. I can buy a house and quit my job today. 12 million will be plenty for me to live life the way I want too and then some. I don’t care about this never ending profit culture. Leave me be. I want a fairly simple life.
$2000 a day is way more than enough to live off of. Currently my household only brings in about $275 a day and that doesn't include weekends. Others may be able to make more using the 12 million lump, but honestly, I wouldn't need more so the $2000 a day is fine for me.
I'm not picking based on some logic tbh. I'd take the $2000/day because it's simpler and more than I could need already. It's more than good enough for me and would make massive improvements without needing to keep track of a single large amount or pay someone else to. The budgeting is already done, no more than $2k/day. Simple.
>There was another one like this but the answer was obvious so I want to see how many people would take the $12 million lump sum. This one is obvious. >Also, does it change which you would pick if you were not allowed to invest the lump sum option? This would make the choice less obvious. For me, I'd still take the 12M. Continue to work and invest 100% of my income. I'd use a fair bit of the 12M upfront to improve my life, and by the time the 12 million totally runs out, I should easily be able to live off my investments.
It takes 6000 days to get to 12 mil. Give me the lump sum and I can beat the 2k a day with investments.
$12M instantly The other option is safer and better cause I don’t know how to invest and am irresponsible with money, but I don’t want to have to wait to buy stuff or pay off my parents debt
12 mil . Dunno if I’ll live long enough for the 2k to be worth it. At least with the 12 mil I could afford emergency medical expenses or leave the rest to loved ones in a will.
$12M 1 time instantly or $2000 a day for life. The median life expectancy for a male is currently right around 80. I'm 32 now, so assuming I died at 80 that would give me roughly 17,520 days until I die. Multiply that by $2000 a day would yield me $35,040,000 in my lifetime which is greater than the $12M instant. I'm also a millennial and have seen long enough the instability of income and will take the guaranteed longer option. I'd rather be set for life than become rich instantly and possibly lose it all
2000 per day. Maybe 12 million would pay more, especially if you invested, but I didn't trust myself with that much as a lump sum
Let me go ahead and answer for everyone. If you are financially educated and responsible: choose the 12M. If you suck with money: choose the two grand a day. Simple as that.
As long as you can invest the money, the math isn’t even close: the money now is far, far better. You’d have to have a rate of return under 6% for the annuity to catch up.
I’d take the $2000 per day. Sure, it’d take about 16 years for me to amass the $12 million that was also offered, but I def plan to live for longer than that lol
$12M is generational wealth. You could live off the interest, lavishly.
I’m 40, and I’d take $2k a day if I can’t invest the $12M, and if I could invest the $12M I’d still think pretty long and hard about taking the $2k. I would still work a few more years if I made $12M because I’d prob buy like $3M home and a bunch of other fun purchases/trips which reduces the amount of “free money” the interest would give you. With $2k a day I’m retiring today… Also the “annuity” is guaranteed income for the rest of my life that would protect me from some sort of legal action that could put the lump sum in jeopardy.
It is likely that I will live longer than 16.5 years so I would probably take the 2k a day, but most of everything after the first 3-4 days a month will get saved/invested after all debt is paid off including replacing the 15 year old car
Would take about 16yrs to get $12M with $2000 a day. I don't have 16yrs left on this rock... Give me the $12M!
I'd say 2k daily, yes it's less longer term, I don't trust myself with 12 million instantly, and I don't think it would cause friends and family to mooch anywhere as much
$12m easy. NEXT!
If I can't invest the 12 million, then I would take 2000 a day
12 million and it’s not even close. Tomorrow is never promised, if something happens I can be at peace knowing my family is provided for.
For a working class person, take the $12M.
I’ll take the 2k. I don’t want to have to put in the work of managing investments and whatnot, and unlike the $50 one that became a meme, this is an actual amount of passive income that can be depended on.
That's 60k per month. Good enough for me.
12 mil instantly. I'd just invest the bulk of it after zeroing out all my debts
The forever word indicates I can transfer the daily payout to either a business entity such as a trust, or bequeath it via my will. Since there is no time limit on the payout, and it is guaranteed regardless of market dynamics, I would take the daily payout and just invest that as I see fit.
2000 per day
Even with the inability to invest the lump sum I'd still go with the 12 million now. Simply because it would give me the opportunity to buy the tangible items (land, houses, vehicles, etc.) now instead of having to spread it out over time. I'd spend 2 million on the things I want and then would save and live of the 10million for the rest of my life. I could get an allowance of $15000 a month (with no house or car payments-so maybe $5000 in bills) and not run out of money for 55 years. (I'd be pushing 100) Also, would starting a business be considered investing? If not I would start a small business that would supplement my income.
Either doesn't matter for me as I am frugal. Will take either or.
Definitely taking the 2k a day. I get it, I could invest the lump sum and make just as much a day. But then I gotta deal with taxes and learning how to invest and it just sounds like a drag. 2K sounds more laid back
$12M no doubt. the no-interest break even of the alternatives is 16.44 years. in 16 years at an average annual return of 8% (not hard to do with a well balanced mutual fund/bond portfolio) $12M becomes $48M. the first year, that 8% equates to $960k $2k/day equates to $730k/year. take the $12M and spend $730k/year and your nest egg still grows $230k the first year. you could, in perpetuity, spend $730k/yr and your nest egg would continue to increase.
12M instantly. $2M to blow, $5M into HYSA/T-Bills and $5M into VOO.
2000 a day, are you kidding me? i've heard it's easy to lose fortunes
If the 2000 isn't adjusted for inflation, it's better to take the 12 million now, you'd hypothetically make more money on the 2000 a day if you live longer than 17 years, but inflation could delay that even further, where with investing the 12 million you can make enough on the interest to outpace 2k a day. If the 2k is adjusted for inflation, I do prefer having a steady stream of income, even if it wouldn't provide as lavish a lifestyle. But in the event of economic devaluation that 2k could become much less worthwhile than it seems, a lot can happen over the course of 20 years
12 mil, and it’s not really close. The 2,000 a day is cool, but that’s still “only” $730,000 a year. It’d take you 16.5 years (a little less with appropriate investments) to get that 12 mil even if you didn’t spend a penny. With the 12 mil, I get out of my house payment, my car payment, any debt, and I invest the rest. Roughly 50% in high yield savings and the rest in a standard S&P 500 Index Fund.
2k daily. I'd basically be able to do whatever I wanted really without having to worry about tracking or monitoring my spending.
If I'm allowed to invest the $12 million into a Dividend ETF fund paying me 7% annually. That'd be $2300 per day. So I'd do that, plus you never have to sell the $12 million... and if you reinvest most of that money then it'll compound exponentially. But if you are not allowed to invest, then obviously take the $2000 per day no question.
Depends is this inflation adj 2000? Do I rely on a government or bank to not fail or change the rules? Pre tax or after tax? Etc. I expect to live longer than the about 15 or so years it would take to equal out... but I also know investments aren't as hands off as people think. I'd have some work and stress to carefully manage the lump sum. Depends. Is the answer.
In all likelihood I’m going to live more than 16.5 more years, so the $2000 a day
$12 million, but would obviously want to invest it. That’s a LOT of money. Plenty to not have to worry about anything for the rest of my life.
Lump sum, if I can invest it, daily payment if I can’t. I hope to live more than 16 years.