$5 million? At what age? If you mean 65 that's hard to believe. No matter how many kids you have they'll likely be 18+ and should be out of the house. Your house/condo will have long been fully paid off. If you have 5 million and just dump it into a high interest savings account paying 2%, you'll get $100,000 a year just on the interest alone. Nobody needs that much to retire.
I think that's great news for me!
Moving from Toronto to Chicago is an upgrade, assuming you live in a decent part of town i.e. near the Magnificent Mile, the Loop, Millenium Park, Navy Pier etc.
That corresponds to a compound annual return of more than 23%. I would be wary of someone selling you an investment promising that kind of return.
Apart from the math, that's another aspect of the problem... psychological. Hindsight is 20/20, but at the time, how many of us were willing to risk most or all of our savings by going "ALL IN"? I wasn't. Like JD, I put a few thousand in and was happy with that return, while wishing/fantasizing I had put all my money in, mortgaged the house, and maxed my line of credit for the big score. But most of us won't do that. While in retrospect we might kick ourselves at missing this "sure thing", it hardly felt like a sure thing at the time.
Funny, but I don't know anyone who has that kind of money. Are you all making 6 figures or more? :Eek:
What do I think? I think less than 2 or 3% of the population will have that
You probably do know someone with that kind of money, and just don't know it. Part of the reason they have it is likely because they don't show it (i.e. they avoid conspicuous consumption).
I think that's great news for me!
Seriously though... it completely depends on what your intended lifestyle in retirement will be, and how long you expect that lifestyle to continue. Each person will define "comfortably" very differently.
If you are happy gardening, enjoying nature, going out for the occasional dinner and movie, maybe a modest vacation every year, you might only need a few hundred thousand, especially if you qualify for full CPP and OAS. If you have a spouse who similarly qualifies, even better.
If you want to travel the world and stay in 5-star hotels, eat out in expensive restaurants on a regular basis, have expensive hobbies (including hobbying), staying current with toys and fashion, etc, then you'll blow through a few million in a few years.
Age is only one factor (and I would argue not even the most important one).
What if the stock goes down 5% then you are now left with 255K... so you wait.. all the time your margin is burining 24K/year in interest.. ......
Exactly, and I think that this is the answer for most Canadians. I personally don't plan on retiring, unless I win the lottery. I started out late in life with lousy paying jobs, and have kids in their late teens at home. Thanks to asshole Bush Jr et al, my RRSPs suffered tremendously.
Depends on your life style. I was told in 2011 that numbers similar to yours would be enough if you had a middle class suburban type life.
After 2007/2008, most brokers I've seen (in Canada) are lending at 2:3 or so (meaning they will lend you $2 for every $3 of equity you have). That also depends on which securities you are holding... if they deem the securities particularly risky, they will lend less.
)The devil is in the details. That 5% return is only conservative over an extended period. In the short-term, pretty much anything can happen with an equity. Meanwhile you are paying interest to the broker at 3% to 4%+.
As nottyboi pointed out, if the stock drops 5% you've lost $45K of your money while you still owe $600K to the lender. Your debt:equity is also messed up so you WILL get a margin call to come up with more money or they will liquidate some of your stock at a loss, making it harder still to break even.
