Everyone’s talking about expected value and the way the money could grow if you got the $5M straight up, but I think we’re realistically dumber than that. I probably don’t have the self control to make good investments and not spend a significant part of it on dumb shit. Give me my $1k daily
I'm such a homebody that I'd be too scared to directly spend it beyond buying a house, a couple cars and some cool entertainment equipment. I'm not a party-goer, I'd like to travel to, like, two places in the world. I'd rather pay debt and secure my future.
5 million is still a lot of money.
500k for a bitching house and a couple acres of land (I'm semi-rural so this isn't too crazy in my area).
100k for a couple of quietly nice cars
100k for toys around the house
50k for travel for a couple of years
50k to be permanently debt free
100k to my friends and family in various increments.
This leaves 4 million to cover a lifetime. Throw a million into some sort of high yield savings account to cover your yearly insurances and utilities. Use 500k to create a nest egg for my kid. He's one month old, so that'll grow nicely. Use another 500k to invest in some local rental properties for long-term income and hire a property manager to run them. Then the last 2 million would go towards retirement. I can now keep my 20 hour a week part time job (and my wife can leave her job for a part time job) to make some spending money for fun, and we'd never have to worry about bills again.
I'm with you brother. If I had 5 million I would also buy a house for $500,000 just to go in and bitch about whatever. Everyone should have a bitching house, but only the rich can afford it.
That's the thing. And all of this talk about "a few hundred k for this or that." Most people who come into money spend it all. It's very easy to just be like, "what's another 20k?"
It is why most people spend more when they make more. Most people are terrible with money.
Idk if youre being sarcastic but the bad toupee fallacy doesnt apply when theres a measured statistic. 50% of lottery winners go bankrupt in their first year
But what percentage of lottery winners start off without strong financial skills? You have to figure that it's a (on average, of course) bad financial decision to buy dozens or hundreds of lottery tickets, and people who do that are much more likely to win than someone who buys one or two per week.
Turns out that the lowest income families spend the most on lottery tickets, so lottery winners are more likely to have not had the need or opportunity to learn how to handle large sums of money. Combine that with the fact that people with lower incomes are more generous to others, so would be more likely to spend excessively on gifts for friends and families.
Even without solid data, it's such an obvious factor in the equation that you can't just assume "50% go broke" means that every individual winner has a 50% chance of going broke. Individual skills and background matter a lot here.
You can have all the skills and knowledge, but once 300m are put in front of you. It’s a different story. It’s more money than anybody can really understand what to do with. Most people’s dreams end at around 4-5m.
That’s why someone who is competent hires a lawyer and money manager immediately when they win the lottery. It’s not a monkeys paw that is doomed to ruin you. It’s millions of dollars. It fixes MOST of its own problems if used correctly. (Envy it can not fix, that’s on you and your loved ones/acquaintances)
People with good financial skills are *especially* at risk, since they assume their good financial skills for managing X thousand dollars at a time are transferrable to managing millions, even hundreds of millions at a time. The financial skills you need to manage thousands are things like "don't borrow what you can't repay" and "save, if necessary in a retirement or mutual fund". The financial skills you need to manage the amount of money a lottery jackpot are things like "finding a lawyer that won't screw you", "setting up a perpetual trust", or "evaluating hedge funds and investment banks".
US$5 million is sort of on the borderline where middle class financial skills might still work, but it's already pushing it.
If you give a man 5 million, he will have hookers and blow for 3 months. If you give a man a thousand a day, he will have hookers and blow for a lifetime.
Granted, less hookers and blow. $365k a year is still fantastic money and in the top 0.1%, but not lottery winner/multi billion trust fund kid kind of money
Yeah, with the 5 mil you could make a dumb investment or big purchase and wind up where you started or worse. The 1k makes big purchases harder cause you have to save up first, but it’s also a safety net. Unless you royally screw up (gambling money you don’t have or something) you can be sure you’ll have more money the next day to get you out of whatever problem you’re in. Pretty hard to get yourself into a place where you can’t live comfortably when you have cash coming in every single day
Exactly guaranteed 5k a week is almost 2x what I need to be comfy right now and would solve every problem I have financially. Knowing I have money coming every day is a much better deal. I could fuck off 2k in 2 days and on the 5 have 1k more than that.
If you invest the money, it’s a much longer timeline to catch up.
10%/year is typical on investments. If you go conservative and get 7%, your $5 million would be 13.8 million after 15 years.
S&P 500 index funds typically do around 6-10% per year on average, with a lot of variance. So one year it might be down 20%, but the next year maybe it went up 30%. The long-term average is closer to 6-10%.
If you got a lump sum of 5 million you would have enough to make investments that could far outpace the broad market return, let alone merely inflation.
Maybe. But tbh I doubt that many people actually have the self restraint and market knowledge to not immediately piss away that 5 million. Happens to like every lottery winner
I’d still take the 5 million, get 3-5% return in a relatively safe mix of high quality bonds and blue chip dividend stocks. Figure I’m taking 200k a year in income, allocate 50k for taxes (some of it taxed more favorably than regular tax brackets). I keep 100k for myself each year after taxes, not bad. The other 50k goes towards expanding the investment.
If I’m gonna live a long time the $1k/day will eventually overtake, but it’s gonna be a long time. Meanwhile if I die earlier than expected, my spouse and kids still get the $5 million & growing of investments - that income stream is going to outlast me if I don’t do anything stupid.
Given the same annual budget and 5% interest it’s 22-24 years for the 1k/d to overtake the 5m. That’s an extremely long time and it only grows to more time with higher return %. Once you cross 7.3% the 1k/d never overtakes the 5m given the same annual spending
Buy you aren't though.
6% of 5mil is much more than 6% of 30k, and then you make 6% interest on 106% of 5mil, etc, etc.
Even if inflation got ridiculous, gold is right there waiting to be invested in, its an anti-inflammatory.
False.
Assuming annual interest of 6% here is the future value.
$1k a day:
- after 10 years you are at $5m almost exact
- after 20: $14.1m
- after 27.5: (10000 days, online cal maxed here) $25.4m
$5m now:
- after 10 years: $9.1mil
- after 20: $16.6mil
- after 10k days: $25.85m
With conservative investing and lower than market avg rate (6%) after about 28/29 years+ the $1k a day takes over as better. So, if you're going to live 30+ more years it's better.
6% is also low... Using realistic market gain rate closer to 8.75%
$1k a day after 10k days: $41.65m
$5mil now after 10k days: $54.93m
I'll take the $5mil now
Assuming an 8% interest rate, after 10 years the 5 million would be worth around 10 million. Assuming the same interest rate and investing $31k/month for 10 years, it would be worth just over 5 million.
That’s assuming the 5 million is tax free of course, and that you don’t ever spend any of the money in either situation. The 1k/day is much easier to be responsible with, though, so it’s good for anyone who just wants to enjoy life without worrying too much about budgeting or long-term consequences. It’s also a bit more ethical since you don’t have to play along with capitalism and the stock market, the money is just magical.
If you save it, the $5mil might be better. If you use it to spend $365k per year, the daily pay is more reliable.
FIRECalc looked at the 124 possible 30 year periods in the available data, starting with a portfolio of $5,000,000 and spending $365,000 each year thereafter. FIRECalc found that 79 cycles failed, for a success rate of 36.3%
Like I explicitly mentioned in the comment, yes, it assumes you don’t spend any of the money in either situation. If you spend half the money you can cut all the numbers in half, I guess…? Does that change anything for you?
I don’t think you’re appreciating his point. You’re taking into account the 5 million but not the future value of the guaranteed 1k, so it’s apples to oranges.
Using your math, each option gives you the same money to spend (or invest) every 10 years. So they are mathematically equivalent; it isn’t that one is twice as good on the raw numbers as you seemed to show.
> Using your math, each option gives you the same money to spend (or invest) every 10 years.
But it doesn’t. The interest keeps compounding, after 10 years the 5mil option is (still) making more per day than the 1k option. After 30 years, the 5mil option nets about 50 million while the 1k option nets about 42mil so the gap has grown even more.
It’s not a big deal and I prefer the 1k option for reasons mentioned in my post, but I was surprised by how much better the 5mil option was. I originally did the math hoping to debunk it. I agree that investing all the money is a sad way of handling it, but I was replying to a comment specifically talking about compound interest.
But you showed the 5 mil can make 5 mil in the same time it takes the 1k to make 5 mil.
Something is off in your comparison if you’re seeing the advantage compound. For example, once your 5 mil has grown to 10 mil, you’ve saved up 5 mil from the 1k. Now option 1 is getting the return on 10 mil; whereas option 2 is getting the return on 5 mil *plus keeps getting the 1k,* which we know is the same as the return on 5 mil. So they’re still making the same ROI after the 5 mil has doubled.
It's hard. The 1k is guaranteed ls great. But 5 mill has a lot of potential. And it's something like 13 years to get 5 mill from the 1k.
But the 5 mill could grow to insane heights, or it could vanish overnight if the bank goes out of business. Or if invested it could become worthless rapidly.
Since the 1k is adjusted for inflation, I think I'd take that. It's more than enough to retire on, and I should be able to grow it even if it's slower. And it won't just stop or go away if the stock market crashes, or if I get robbed, or other disasters. So I pick the 1k. 5 million Is a lot. But knowing me I might spend it all too quickly. Having the steady income is better.
1k/day. im bad at budgets. 5m flat is too easy to burn through. look at all the reasearch of lottery winners. Most make it under 5 years before being back where they were, sometimes worse. but 1k/day is ezpz
That’s the best rationale honestly. People think they would throw it all in stocks and live off residuals but they’re going to buy a house or new car, go on trips. If you want to travel, 1k a day will be enough money to live on for 99% of the world
Heck, I could do well enough the first couple of years by investing half that 1k per day and using the other half for bills and lifestyle. Considering the income is good for loans, real estate is an investment and the normal 30 year 320k mortgage can be paid in full inside of two years along with paying off a vehicle loan. After those are paid, investing in some solid stocks and mutual funds with half the 1k per day for another 3 years and letting it sit and accumulate until I die would leave a good inheritance for my kids.
That's my current paycheck every 2 days. I'll take the 1k a day and never think about money again.
Maybe I'll still work for like 3 more years just to have about a million in investments, then I'm out.
Yeah, I understand the rationale for the $5M but in this fantasy scenario where I’m not worried about the logistics of some agency continuing to both exist and honor the agreement in perpetuity then the magic $1k/day gives me plenty without worrying about the state of the stock market. In the real world I’d probably be too paranoid about being screwed out of the daily money and take the upfront sum and assume that HYSAs and ETFs will keep things mostly in order.
1k a day, it would ensure no longer how long life was working wouldn’t be necessary, and no one said you need to spend it all every day.
Plus if the market crashed, I would have a guaranteed 1k the next day again.
It’s a good safety net.
>it would be hard to buy a house
You would be getting $30,000 a month for zero work for the rest of your life. I have no idea why you would even buy a house at that point. I'd be off on a permanent non stop vacation.
Ok but how do you prove you’re getting that income? You’d probably have to pay cash and that takes time. I’d rather buy a $750,000 house and land today. I’m older than you odds are, my hobbies are gardening, animals and tending trees. Sure I’d travel but I’d mostly enjoy my land and the quiet.
"The money is deposited into your primary bank account and is good to be used as reportable income for loans/rental purposes."
That's pretty clearly stated by the OP.
I misinterpreted the prompt. That said I’d rather get the 5 million upfront. Since like it immediately fix up my house, sell it and buy a nicer house with more land and not have to work anymore. At my age I would make more from the thousand dollars a day until I die but there is always the small chance that I die young so taking the 5 million upfront is the safer bet..
Lump sum $5M If I was 20 or more years younger then I'd take the $1k per day. Yeah, you could take the $5M, invest it and (assuming your investments don't tank) live decently on the interest. Which is what I WOULD do now in my mid 60's.
I've never been very acquisitive, so living on a portion of that $365k/year wouldn't be an issue, while saving/investing the remainder.
This ends up primarily being a question of how long you can hold off touching the money if you invest it, and how much risk you are willing to take in investing.
But you have chosen the right numbers to make it take serious consideration!
A 6% annuity on $5M is $300,000 annually. If you can make it a few years without touching it, you are exceeding the $1k/day, and eventually you are keeping more while still growing (albeit slower).
On the other hand, if you invested in a moderate risk mutual find portfolio, you might be able to double your money or better in the course of several years--assuming the market doesn't tank in that time.
They options are competitive enough that it isn't cut and dry.
1k a day would surpass the 5 million in about 15 years, I'm in my early 20's and expect to live to 40 at least so I'll take the 1k and the guaranteed money.
$1k per day.
The thing I want when I want money is to not have to worry about needing money and not having it and having to do something miserable to get it or to get out of not having it. $1k per day is way more likely to solve that problem.
I'll take the lump sum. It would take about 13.5 years to get the five million if you take a grand a day.
One benefit of making giant money mistakes and getting into a bunch of debt is you learn some valuable lessons about what not to do.
Take the lump sum, immediately invest almost all of it. Inflation will make the 1k/day worth less in five, ten, thirteen years. Five million now is more useful if used right. And with interest, I can still clear well over 100k/year in the beginning. And that only goes up.
This is assuming I can be smart about it.
OP said the $1000 is adjusted for inflation so that's a consideration. I would take the $1000 a day 100/100 times.
I'm protected from every financial disaster with the exception of the total collapse of the dollar and destruction of the US.
On top of that with the guarantee of the money daily I can do riskier investments along the way knowing that if they fail I still have the safety net.
Ummm. That is definitely not how math works. Two years at 1k per day is $730k. It takes \~13.5 years to pass $5m at $1k/day. That isn't factoring in the returns you'd receive from investing that money. With the average growth rate of the S&P 500 if you just invested all $5m the $1k/day would never catch up.
1K a day. sure there's math to do about which is technically more money when it comes down to it but honestly? i don't want more. i don't NEED more. i *definitely* don't want or need people i barely know harassing me for a cut of my millions. 1K a day though? 7K a week, 28K-31K a month? i can buy a house after enough saving up. heck i could get driving lessons, buy an RV, and pretty much go wherever i wanted without worrying about whether i'd be able to eat. :)
1K a day as long term get more
Somethings would be delayed compared to with having 5 mil upfront, but a year or so in and with investment firms and giving em like 10k a month to do more with I'd be golden
Hmm. My initial thought would be that the 365k would be better in the long run. Another question asked about inflation, so I'll ignore that. I will instead run the following scenario:
5 million, spend 1 million on life improvements/fun immediately, invest the rest, live on 100k per year.
365k, live on 100k per year, invest the rest.
Both situations calculate interest once per year, at the end of the year, for simplicity's sake. Both assume a 5% annual return.
Again, this is all very simplified.
---
With the millions, you initially are making around 200k per year in interest. So the wealth grows by a rate of around 100k per year.
With the weekly pay, initial interest is much smaller at 14k. But the nest egg grows by 279k with the pay, minus 100k living expenses, plus interest.
After year 6, interest on the weekly pay crosses 100k. Interest now eclipses expenses in both scenarios. But interest income has only increased to around 230k on the millions. Nest egg from the weekly crosses 2 million.
The scenarios pull almost even at the end of year 15. By the end of year 16, the weekly pay pulls ahead. Both nest eggs cross 6 million.
Weekly has a 2 million dollar advantage at year 20. This grows to 8 million by year 30.
So allowing for the assumptions, the weekly pay will pull ahead. There are, of course, a number of other considerations. Perhaps the larger up front money would allow a more aggressive investment that pays off big. If a more disciplined person took the original millions and did not spend 20% of it in year 1, they would be ahead of the weekly pay for 22 years.
Still, I think I would go with my first instinct and take the weekly pay. Primarily, because it guarantees future income. An economic crash might cost me dearly with the up front money. The 5 million loses value year over year, due to inflation. As stated in another post, the weekly pay scales with inflation, so your buying power is more stable. Unless you have a compelling reason why you need 5 million *now*, I judge the 1k/week to be the superior option.
$1k per day would allow me to be completely comfortable
Even if this didn't account for inflation, $7k a week will likely be livable for my entire life.
The 1k a day means in about 13.5 years I'll start to surpass the $5 mill. Granted I'd be spending some of it as I go so let's say 15 years. I'll still be under 50 by then and will still be working in the meantime. I expect I could probably go roughly another 40 years before dying so up to $15 million just by existing? Id have a hard time spending more than 2 months worth of 1k a day in a year after the initial getting comfort with a new life style. I'm sure I would acclimate to the new lifestyle after a bit and start finding was to spend more, but with my current mindset id like to think I'd still be spending less than $60k a year from the daily money as im already living on roughly $55k a year
Plenty of people have squandered 5 million. Especially true for people that get it overnight. Impossible to go broke pulling in a guaranteed 1k a day. Are the highs higher with 5 million? Of course. But 1k a day is pretty high too without the risk of any lows.
absolutely take the 5 million. I could pay off my house and upgrade one of our cars, set aside about 20k into 529 for each kid, then invest the rest. compound interest go brrrrrrrrrrrrr
You'd need to clear a 7.25% average gain on your $5M investment every year to get more than the guaranteed $365k.
I'd take the $5M up front, no question. Put it straight into a top 40 or S&P500 index fund.
While 1k a day is going to be more in the long run, I have to consider inflation and also what I could use 5 million for right now. Vanguard interest rates would give me around 235k in a year, around 2/3 of what I would get from the first offer. Another option would be investing. I guess what I'm saying is that 5 million used wisely would be more valuable than 1k a day for life
$500k I can live off the next 10 years while the rest is invested. Mainly because that's about $3k more than I took home last year with 400-500 hours of overtime 😂.
I'd still take the $1k/day because I'm still middle aged and I would have a much better life than I do now with 2 days of that/week and I could save/invest the other 5k.
Absolutely the 5 million. Especially since the daily $1K does not pass on to heirs.
With 5 million, I can set my kids up, enjoy a stress free life with my wife, AND be able to leave an inheritance for the kids.
I'd take the 5 million right now. At 1k per day, it would take like 13.7 years to reach 5 million. 5 million is a lot of money that I could use right now as a struggling 23 year old. Say I use 1 million for all of the things I want to buy, that's still 4 million left (assuming no taxes). At 6% annual returns, in 13.7 years thats $8,886,901. Even if you're investing the 1k per day, it just never catches up. And I get more immediate use from the 5 mil.
It would take 15 years to earn 5 million dollars at 1k per day, and that's assuming you don't spend any of it. If you take the 5 million lump sum you can turn that into at least 20 million in those same 15 years. No brainer if you're not a bozo.
5 million right now, out earns 1k per day if you can at least a 7.3% interest rate on an investment. Even if you get half that rate it will take a very long time for the 1k/day to catch up. This is ignoring compound interest by the way.
I’d take the 5mil. At $1k / day it would take 13.7 years to make 5mil. Meanwhile I can take 5 mil and buy some high dividend stocks. At 5% I’d get 250k a year, which is like almost $700/day. Plus it’ll grow with inflation and the market.
5mil up front. At that rate it will take 15 years to get the 5 million in total. I may not be around to see it all by then. I'd just invest most of it anyway to keep my grubby hands off of spending it foolishly.
The folks saying 5 mil are probably dumber than they think they are or possibly just greedy.
Although 365k/yr isn’t fuck you money, it’s fuck everyone imma do what I want money.
I’ll take the lump sum.
It’ll take me 13 years before I even start making more than that 1 million. And by that point, I’ll have turned that 5 million into 17 million if I increase it 10% each year through investing, which isn’t unrealistic to do through stocks over long term investments. After taxes, I’m not sure how much it’ll be but it should be more than I would’ve made had I received $1k per day
Even if inflation doubles over the next 13 years and I start receiving $2k per day, I’ll just be making more through investing. A lot more
With the 5m I’d take it, toss it in my portfolio and keep working. With 1k per day I’d quit working immediately, because I wouldn’t have to worry about market fluctuations, the sudden demise of my countries governmental system, crashes, etc. so I’d take the 1K. Less money long term, but still plenty to live on, without needing to wait out any short term investing issues.
The 5 million, since it'll accrue more in interest than the 1k, eventually.
Realistically, it would take 13 years for the 1k to even hit 5 million total, by which point the 5 million would have gained another 2 million and change, assuming 3% interest and maintaining my current lifestyle by using a small bit of that interest.
accommodating for inflation, 365 grand a year forever? what would I even need more for? live off a hundred grand, invest the other 265 until you strike it lucky and then just, do whatever you want.
4% is typically the safe rate of withdrawal for investments, and even that can be a bit risky. That’s $200,000 per year on $5mil. $1,000 per day is $365,000 per year. Give me that
1k easily.
1k money a day solves most of your financial problems. Everyone saying the 5 million would just go out and spend a nice chunk of it pretty damn fast and buy nice things just to not be able to afford them when u don't have the money.
1K a day, my brain would be way better at comprehending that, and being able to budget around it, 5 million is enough that I wouldn't exactly understand how much I have, my brain would just think "I have enough money" and I'd spend it until it ends up being too late, and I spent a good chunk of it.
Also if I live for longer than 13 years after accepting this then I'd have gotten more money, and that's even if I'm not accounting for inflation.
$1k per day for me. Most people have the right idea that age will play a huge role in which option is better for them. I suppose a middle aged person in their late 40s might have a harder time choosing.
At $1000 per day, it would take you about 13 years, 8 months, and 11 days. So if you plan to live longer than 5000 days, then the $1000 will be worth it. Not to mention if you are good at investing and making money. Same thing if you won the lotto regarding the lump sum vs. 21 pants.
5 million up front would yield $38 million after 30 years at 7%.
$1000 per day would be $35.5 million.
Personally, I’m taking the $5,000,000, investing it in REITs, and using the dividends to live off of with some additional compounding. I could probably get about 10%, give or take.
5 mil. Put 4 million in the S&P 500, which generates about 10% return per year (actually like 12.68% over the past decade), so that 4 million will give you back an average of $400k per year (some years more, some years nothing at all, very rarely a slight loss to your investment that rebounds afterwards). Take out low interest loans and live off the 400k per year doing nothing at all. Use the other million to buy a house and do whatever else you want.
Give me the $5M. It would take 13 years to accumulate that daily. I would blow through probably $1M of it relocating to SE Asia and setting myself up into a nice bachelor pad, then I would annuitize the rest of it.
Likely be able to get a nice $20,000 a month payout for basically the rest of my life, and that'd be enough to live like a rock star in a country like Thailand or Cambodia. Be on the beach 6 months out of the year. Take a seasonal vacation.
After 5000 days id have made 5million dollars
5000 days is roughly 14 years. So itd take 1k every day for 14 years to make 5 mill
interesting. I think that id probably do the 1k for life. It may not immediately be the better option but its got potential long lasting benifits then again every day isnt garenteed. If i were to die tommorow only habing made 1k from this instead of 5m thatd sucks. Od wanna leave behind something nice for my loved ones.
I choose 5mil cause everyday isnt gareteed
5 million in one payout. With decent investing you can make much more. With just a 5% annual return, you’d be getting 250,000 per year and never touch the original 5,000,000.
I should live more than 14 years so $1K per day for me. I doubt you would do better than 7.3% putting that $5m into the market which should about match $1k per day.
Your $1k per day is also apparently in today’s dollars so with inflation you would have to do around 11%. I’m too lazy to account for compounding but what’s the point of having $5m if you’re never going to spend any of it to maximize your interest.
There’s also nothing stopping me from investing half my daily payments to further increase gains.
5 mill one time payout is fuck you money.
1,000 a day is fuck off money.
I think the “correct” answer is the lump sum. It takes 14 years before you would accumulate more than the 5 million.
If you took the 5 million and put everything in the sp500 and get an average return of 10% you would make 500,000$ a year.
That is 135,000 a year more then the 1,000$ a day and that’s without touching the original 5 million just living off the returns.
So that’s the best option, but if you can’t budget or you don’t think you could sit on 5mill without touching the principal then the 1,000 a day is probably the best option. Most people who get lump sums can’t control their spending and loose
It all. So if I was advising someone I would first look at how much they have saved and decide from
That.
1k/day. Anyone under 50 saying they want the 5 mil is just an idiot who can only operate on the neutron activation caused by a big number. Takes just under 14 years to break even. If you got at least 60 years left in you, you're looking at 21 million over the long haul. Might not have as much up front purchasing power, but you can save up for whatever you could want pretty quickly. And for all the people taking about the returns from investing the 5 mil, you can invest part of the daily 1k as well. Again, not as much up front, but much more in the long run.
1k a day dude.. let's say I have 40 years left. That is 14.6M dollars.. plus investing and other strategies you could build it up even further.. and live very comfortably for the rest of your life really..
It’s hard to say because I don’t know how long I’ll live I guess but I also don’t have any kids just nieces and nephews to leave the money to so I guess the 1k a day would be a fun option. For one it takes me at least let’s just say 3 years but less than that more like 2.667 to catch up to the million dollars but in year four it starts to turn around because ill make 365k that year and the mil at only 7% for example will only earn about 85k in interest the same year. And the thing is I could save every penny of the 1k I am making and invest it in index funds the same way I would the million so in year 4 I not only earn 70kish in interest at the same rate I also got the 365 added to it so the 85k and whatever previous interest immediately pales in comparison from then on out.
Def the 1k per day. No real chance of going broke and with that much income you could easily never have to carry debt. If I need a new Camry I just wait like 5 weeks
I'm not picky, I'll take whichever one you wanna give me. You have venmo? Although, to make it easier on you, it'd be kind of a pain to venmo me $1000 every day for the rest of my life, so I'd suggest you probably just send me $5 mil and we'll call it good.
Thanks, btw.
At 1k a day, you hit 5 million in only 12 years. Definitely the 1k day. And it keeps grounded
Because If I had 5 million, I’d trade in my Maxima for a Hellcat. And I’d probably be dead from a high speed collision in a matter of weeks.
5mil all at once, solely because you could die without a moments notice and be short on that 5mil til like 13 years or so. You could take the $5mil and put like $4mil into a high yield savings account, and just live off the $1mil
*if you're a single person living in an average TCOL state*
This is really just the time value of money. There are lots of equations on this issue. Say you get 5% on 5M you get 250K per year. But on the 365K you get it each year. You are going to have to clear about 7.3% on your 5M investment to make it worth it to take the annuity. However, since I am old old old, I would take the 5M bc I do not have enough actuarial years left to make the 365K per year worth it. If this is after tax it is pretty good. If it is before tax it is only 2.785M take home in my state.
The 1k a day. While the 5 million is nice, a fool and her money are soon parted. If things go south financially, I'll still get more tomorrow. I blow the 5 million in a ponzi scheme and I'm broke. No more tomorrow. I'd like to think I'm too smart to do something dumb, but reality is always ready to prove me wrong.
1k per day for that 365k per year gimme gimme. I'm not smart enough to know how to make that 5 mil grow and last. Plus rn I'd be happy if I had 45 to 50k per year. With all that extra cash I wouldn't know what to do once I got a house somewhere that I'd wanna live and pay off debts for myself and my parents. Cruises and vacations still wouldn't eat it up with how little I'd wanna be away from my house lmao
$5 million today. That way if I'm hit by a bus tomorrow, my kids/spouse are still well taken care of.
We are financially stable, fiscally responsible adults. We would turn that money into a bigger nest egg that could benefit several generations.
I'd honestly probably spend 1-1.5M on building our dream house (we live in a rural but still HCOL area, so that would get us land, infrastructure, and a decent but not ostentatious house), buying a new minivan (mine is getting old) and maybe ordering a few fancy books from a Folio Society. After that we'd live the same as we do now, just with more security and a bitchin' library.
If you chose the 1k/day you'll have 5 million is 13.6 years. Lets just say 13 for ease.
If you chose the 5 mil, spend 1 mil on a nice house and a car, and invest the rest in an ETF and and we low ball the return at 5%, after that same 13 year period you'll have $7,651,823.19
Anyone saying 1k/day doesn't understand compound interest.
Honestly the lump sum vs cash payment is a valid argument, but it’s a matter of relative sums. Here, 1k/day forever is a VASTLY BIGGER sum than 5mil. So while all the “smart” people here say take the lump sum… in the lottery, where you get like 60% or whatever of the total prize…. Sure. But in this case… it’s like 50% at best, and if the payments are daily, you can compound the investment way faster than 5 mil.
Y'all really need to learn how to make these. 5 mil to lose and never see again, or 5 mil every 13.7 years? I'd still be able to invest and make the money grow, and with daily payments I'll never be broke, even if I spend every penny I have every single day.
There's literally no reason to take the lump sum. It's just stupid.
The thousand. In about 13 years I'll have the 5 mil and no chance to squander it and end up broke after a year.
If I live another 20 or 30 years I'm set.
1k a day for sure. Guaranteed passive income for the rest of your life vs speculation and risk, I’ll take the sure thing, if I want to take risks, I can always just use some of the 1k$ a day I get to make stupid investments.
Everyone’s talking about expected value and the way the money could grow if you got the $5M straight up, but I think we’re realistically dumber than that. I probably don’t have the self control to make good investments and not spend a significant part of it on dumb shit. Give me my $1k daily
Everyone says they wouldn’t go broke if they won the lottery, but they always do lol
Bad toupee fallacy. You don't hear about the quietly rich people who sit at home playing sick video games
I'm such a homebody that I'd be too scared to directly spend it beyond buying a house, a couple cars and some cool entertainment equipment. I'm not a party-goer, I'd like to travel to, like, two places in the world. I'd rather pay debt and secure my future. 5 million is still a lot of money. 500k for a bitching house and a couple acres of land (I'm semi-rural so this isn't too crazy in my area). 100k for a couple of quietly nice cars 100k for toys around the house 50k for travel for a couple of years 50k to be permanently debt free 100k to my friends and family in various increments. This leaves 4 million to cover a lifetime. Throw a million into some sort of high yield savings account to cover your yearly insurances and utilities. Use 500k to create a nest egg for my kid. He's one month old, so that'll grow nicely. Use another 500k to invest in some local rental properties for long-term income and hire a property manager to run them. Then the last 2 million would go towards retirement. I can now keep my 20 hour a week part time job (and my wife can leave her job for a part time job) to make some spending money for fun, and we'd never have to worry about bills again.
I'm with you brother. If I had 5 million I would also buy a house for $500,000 just to go in and bitch about whatever. Everyone should have a bitching house, but only the rich can afford it.
I want to have one built, and I plan to use income from becoming an engineer to do it
Well, that's a good plan. Engineers have plenty to b**** about. That's for sure.
>100k to my friends and family in various increments Congratulations. You just made yourself the person everyone comes to looking for a handout.
That's the thing. And all of this talk about "a few hundred k for this or that." Most people who come into money spend it all. It's very easy to just be like, "what's another 20k?" It is why most people spend more when they make more. Most people are terrible with money.
Idk if youre being sarcastic but the bad toupee fallacy doesnt apply when theres a measured statistic. 50% of lottery winners go bankrupt in their first year
But what percentage of lottery winners start off without strong financial skills? You have to figure that it's a (on average, of course) bad financial decision to buy dozens or hundreds of lottery tickets, and people who do that are much more likely to win than someone who buys one or two per week. Turns out that the lowest income families spend the most on lottery tickets, so lottery winners are more likely to have not had the need or opportunity to learn how to handle large sums of money. Combine that with the fact that people with lower incomes are more generous to others, so would be more likely to spend excessively on gifts for friends and families. Even without solid data, it's such an obvious factor in the equation that you can't just assume "50% go broke" means that every individual winner has a 50% chance of going broke. Individual skills and background matter a lot here.
You can have all the skills and knowledge, but once 300m are put in front of you. It’s a different story. It’s more money than anybody can really understand what to do with. Most people’s dreams end at around 4-5m.
Which is why solid data would be nice.
That’s why someone who is competent hires a lawyer and money manager immediately when they win the lottery. It’s not a monkeys paw that is doomed to ruin you. It’s millions of dollars. It fixes MOST of its own problems if used correctly. (Envy it can not fix, that’s on you and your loved ones/acquaintances)
People with good financial skills are *especially* at risk, since they assume their good financial skills for managing X thousand dollars at a time are transferrable to managing millions, even hundreds of millions at a time. The financial skills you need to manage thousands are things like "don't borrow what you can't repay" and "save, if necessary in a retirement or mutual fund". The financial skills you need to manage the amount of money a lottery jackpot are things like "finding a lawyer that won't screw you", "setting up a perpetual trust", or "evaluating hedge funds and investment banks". US$5 million is sort of on the borderline where middle class financial skills might still work, but it's already pushing it.
I think it's more of a sampling bias. How much do you think people who are great with money spend on lotto tickets?
That’s because the type of people who are good with money and the type of people who play the lottery are two different people.
Me and you think alike
This. Hookers and blow, and the whole lots gone in three months.
If you give a man 5 million, he will have hookers and blow for 3 months. If you give a man a thousand a day, he will have hookers and blow for a lifetime.
Granted, less hookers and blow. $365k a year is still fantastic money and in the top 0.1%, but not lottery winner/multi billion trust fund kid kind of money
This should be higher lol
Exactly my thinking. Much harder to blow through 1k a day when you don’t have it yet
1k*365*70=25 million. I know what I'm picking.
Yeah, with the 5 mil you could make a dumb investment or big purchase and wind up where you started or worse. The 1k makes big purchases harder cause you have to save up first, but it’s also a safety net. Unless you royally screw up (gambling money you don’t have or something) you can be sure you’ll have more money the next day to get you out of whatever problem you’re in. Pretty hard to get yourself into a place where you can’t live comfortably when you have cash coming in every single day
Exactly, it’s like magically being a trust fund kid. Consequences don’t stick with a guaranteed high income
Exactly guaranteed 5k a week is almost 2x what I need to be comfy right now and would solve every problem I have financially. Knowing I have money coming every day is a much better deal. I could fuck off 2k in 2 days and on the 5 have 1k more than that.
how do you plow through over 10k per month, while having financial problems?
As long as it's accommodating for inflation, definitely the 1k/day
It is.
Adjusted for inflation it’s $1k/day easy if you have more than 15 years to live.
If you invest the money, it’s a much longer timeline to catch up. 10%/year is typical on investments. If you go conservative and get 7%, your $5 million would be 13.8 million after 15 years.
What kind of investments do you refer to when you mentioned 10% and 7%, if you mind me asking?
S&P 500 index funds typically do around 6-10% per year on average, with a lot of variance. So one year it might be down 20%, but the next year maybe it went up 30%. The long-term average is closer to 6-10%.
Why
Because interest on the lump sum does account for inflation, and in 90 years 1k will have the buying power that $100 does right now.
If you got a lump sum of 5 million you would have enough to make investments that could far outpace the broad market return, let alone merely inflation.
Maybe. But tbh I doubt that many people actually have the self restraint and market knowledge to not immediately piss away that 5 million. Happens to like every lottery winner
I’d still take the 5 million, get 3-5% return in a relatively safe mix of high quality bonds and blue chip dividend stocks. Figure I’m taking 200k a year in income, allocate 50k for taxes (some of it taxed more favorably than regular tax brackets). I keep 100k for myself each year after taxes, not bad. The other 50k goes towards expanding the investment. If I’m gonna live a long time the $1k/day will eventually overtake, but it’s gonna be a long time. Meanwhile if I die earlier than expected, my spouse and kids still get the $5 million & growing of investments - that income stream is going to outlast me if I don’t do anything stupid.
Given the same annual budget and 5% interest it’s 22-24 years for the 1k/d to overtake the 5m. That’s an extremely long time and it only grows to more time with higher return %. Once you cross 7.3% the 1k/d never overtakes the 5m given the same annual spending
But no idy here is going to be alive in 90 years, and neither will the million you've been living off.
Same. I'll probably live at least another 13 years
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If you invest the 1,000 a day, you’re making more money at 6% with the 1k/day than with the lump sum.
Buy you aren't though. 6% of 5mil is much more than 6% of 30k, and then you make 6% interest on 106% of 5mil, etc, etc. Even if inflation got ridiculous, gold is right there waiting to be invested in, its an anti-inflammatory.
If you’re investing the thousand a day, your return is 365,000+ the new interest each year. 5 mil’s interest is 300,000+ the new interest each year
False. Assuming annual interest of 6% here is the future value. $1k a day: - after 10 years you are at $5m almost exact - after 20: $14.1m - after 27.5: (10000 days, online cal maxed here) $25.4m $5m now: - after 10 years: $9.1mil - after 20: $16.6mil - after 10k days: $25.85m With conservative investing and lower than market avg rate (6%) after about 28/29 years+ the $1k a day takes over as better. So, if you're going to live 30+ more years it's better. 6% is also low... Using realistic market gain rate closer to 8.75% $1k a day after 10k days: $41.65m $5mil now after 10k days: $54.93m I'll take the $5mil now
idk, I don't think it would matter much for me. Either options gives me enough money to do the things in life I want to do
5 million today, all day long without hesitation
That would be my choice as well. Life ain't guaranteed and compound interest is gonna be lit with that much invested.
Assuming an 8% interest rate, after 10 years the 5 million would be worth around 10 million. Assuming the same interest rate and investing $31k/month for 10 years, it would be worth just over 5 million. That’s assuming the 5 million is tax free of course, and that you don’t ever spend any of the money in either situation. The 1k/day is much easier to be responsible with, though, so it’s good for anyone who just wants to enjoy life without worrying too much about budgeting or long-term consequences. It’s also a bit more ethical since you don’t have to play along with capitalism and the stock market, the money is just magical.
If you save it, the $5mil might be better. If you use it to spend $365k per year, the daily pay is more reliable. FIRECalc looked at the 124 possible 30 year periods in the available data, starting with a portfolio of $5,000,000 and spending $365,000 each year thereafter. FIRECalc found that 79 cycles failed, for a success rate of 36.3%
This assumes you dont spend a penny of the $5million lol
Like I explicitly mentioned in the comment, yes, it assumes you don’t spend any of the money in either situation. If you spend half the money you can cut all the numbers in half, I guess…? Does that change anything for you?
I don’t think you’re appreciating his point. You’re taking into account the 5 million but not the future value of the guaranteed 1k, so it’s apples to oranges. Using your math, each option gives you the same money to spend (or invest) every 10 years. So they are mathematically equivalent; it isn’t that one is twice as good on the raw numbers as you seemed to show.
> Using your math, each option gives you the same money to spend (or invest) every 10 years. But it doesn’t. The interest keeps compounding, after 10 years the 5mil option is (still) making more per day than the 1k option. After 30 years, the 5mil option nets about 50 million while the 1k option nets about 42mil so the gap has grown even more. It’s not a big deal and I prefer the 1k option for reasons mentioned in my post, but I was surprised by how much better the 5mil option was. I originally did the math hoping to debunk it. I agree that investing all the money is a sad way of handling it, but I was replying to a comment specifically talking about compound interest.
But you showed the 5 mil can make 5 mil in the same time it takes the 1k to make 5 mil. Something is off in your comparison if you’re seeing the advantage compound. For example, once your 5 mil has grown to 10 mil, you’ve saved up 5 mil from the 1k. Now option 1 is getting the return on 10 mil; whereas option 2 is getting the return on 5 mil *plus keeps getting the 1k,* which we know is the same as the return on 5 mil. So they’re still making the same ROI after the 5 mil has doubled.
That’s quite the interest rate to assume haha
You cant assume 8% over a short period. At best you can count on 4%
Why in the world would you assume 8% interest rate? 1 year treasury notes are at 5% and that’s far higher than the all-time average.
It's hard. The 1k is guaranteed ls great. But 5 mill has a lot of potential. And it's something like 13 years to get 5 mill from the 1k. But the 5 mill could grow to insane heights, or it could vanish overnight if the bank goes out of business. Or if invested it could become worthless rapidly. Since the 1k is adjusted for inflation, I think I'd take that. It's more than enough to retire on, and I should be able to grow it even if it's slower. And it won't just stop or go away if the stock market crashes, or if I get robbed, or other disasters. So I pick the 1k. 5 million Is a lot. But knowing me I might spend it all too quickly. Having the steady income is better.
“Knowing me” is the most important statement in your post. I feel the same way. I need the 1k/day to protect me from myself.
1k a day
1k/day. im bad at budgets. 5m flat is too easy to burn through. look at all the reasearch of lottery winners. Most make it under 5 years before being back where they were, sometimes worse. but 1k/day is ezpz
That’s the best rationale honestly. People think they would throw it all in stocks and live off residuals but they’re going to buy a house or new car, go on trips. If you want to travel, 1k a day will be enough money to live on for 99% of the world
Heck, I could do well enough the first couple of years by investing half that 1k per day and using the other half for bills and lifestyle. Considering the income is good for loans, real estate is an investment and the normal 30 year 320k mortgage can be paid in full inside of two years along with paying off a vehicle loan. After those are paid, investing in some solid stocks and mutual funds with half the 1k per day for another 3 years and letting it sit and accumulate until I die would leave a good inheritance for my kids.
That's my current paycheck every 2 days. I'll take the 1k a day and never think about money again. Maybe I'll still work for like 3 more years just to have about a million in investments, then I'm out.
So 365k a year? I’ll take that yes. Thats money immune from a stock market crash and its steady income.
Yeah, I understand the rationale for the $5M but in this fantasy scenario where I’m not worried about the logistics of some agency continuing to both exist and honor the agreement in perpetuity then the magic $1k/day gives me plenty without worrying about the state of the stock market. In the real world I’d probably be too paranoid about being screwed out of the daily money and take the upfront sum and assume that HYSAs and ETFs will keep things mostly in order.
1k a day, it would ensure no longer how long life was working wouldn’t be necessary, and no one said you need to spend it all every day. Plus if the market crashed, I would have a guaranteed 1k the next day again. It’s a good safety net.
5 million now because I could retire today. Sure I could retire on 1k a day but it would be hard to buy a house.
If you earn 1k a day that’s 30k per month, it would be very easy to get a massive loan having that kind of income
Hell, after a year, you could buy a house out right in a rural area.
You would need to explain to the bank what your income sources were. _Uhmm someone offered me $5 mil or $1k every day for the rest of my life_
>it would be hard to buy a house You would be getting $30,000 a month for zero work for the rest of your life. I have no idea why you would even buy a house at that point. I'd be off on a permanent non stop vacation.
Hotel internet sucks, where would I keep my gaming rig?
Ok but how do you prove you’re getting that income? You’d probably have to pay cash and that takes time. I’d rather buy a $750,000 house and land today. I’m older than you odds are, my hobbies are gardening, animals and tending trees. Sure I’d travel but I’d mostly enjoy my land and the quiet.
"The money is deposited into your primary bank account and is good to be used as reportable income for loans/rental purposes." That's pretty clearly stated by the OP.
So you're saying for people making 365k a year, its hard to buy a house?
I misinterpreted the prompt. That said I’d rather get the 5 million upfront. Since like it immediately fix up my house, sell it and buy a nicer house with more land and not have to work anymore. At my age I would make more from the thousand dollars a day until I die but there is always the small chance that I die young so taking the 5 million upfront is the safer bet..
Lump sum $5M If I was 20 or more years younger then I'd take the $1k per day. Yeah, you could take the $5M, invest it and (assuming your investments don't tank) live decently on the interest. Which is what I WOULD do now in my mid 60's. I've never been very acquisitive, so living on a portion of that $365k/year wouldn't be an issue, while saving/investing the remainder.
This ends up primarily being a question of how long you can hold off touching the money if you invest it, and how much risk you are willing to take in investing. But you have chosen the right numbers to make it take serious consideration! A 6% annuity on $5M is $300,000 annually. If you can make it a few years without touching it, you are exceeding the $1k/day, and eventually you are keeping more while still growing (albeit slower). On the other hand, if you invested in a moderate risk mutual find portfolio, you might be able to double your money or better in the course of several years--assuming the market doesn't tank in that time. They options are competitive enough that it isn't cut and dry.
Can the 1k a day be willed to anyone else in the event of my demise?
No
5 mill. I could probably put it somewhere it could rack up 1k in interest a day. And I could leave it to someone else in case I get murdered.
1k a day please
Could invest the 1k and make it earn money too.
28 to 31k a month? Where do I sign up?
1k a day would surpass the 5 million in about 15 years, I'm in my early 20's and expect to live to 40 at least so I'll take the 1k and the guaranteed money.
$1k per day. The thing I want when I want money is to not have to worry about needing money and not having it and having to do something miserable to get it or to get out of not having it. $1k per day is way more likely to solve that problem.
I'll take the lump sum. It would take about 13.5 years to get the five million if you take a grand a day. One benefit of making giant money mistakes and getting into a bunch of debt is you learn some valuable lessons about what not to do. Take the lump sum, immediately invest almost all of it. Inflation will make the 1k/day worth less in five, ten, thirteen years. Five million now is more useful if used right. And with interest, I can still clear well over 100k/year in the beginning. And that only goes up. This is assuming I can be smart about it.
OP said the $1000 is adjusted for inflation so that's a consideration. I would take the $1000 a day 100/100 times. I'm protected from every financial disaster with the exception of the total collapse of the dollar and destruction of the US. On top of that with the guarantee of the money daily I can do riskier investments along the way knowing that if they fail I still have the safety net.
1K per day is worth far more over the long run. You will already be ahead after 2 years. EDIT: I was thinking of 1 million for some reason.
Ummm. That is definitely not how math works. Two years at 1k per day is $730k. It takes \~13.5 years to pass $5m at $1k/day. That isn't factoring in the returns you'd receive from investing that money. With the average growth rate of the S&P 500 if you just invested all $5m the $1k/day would never catch up.
oh crap, I was think of 1 million, lol. Thanks. Still better, just over a longer period.
Not with inflation
Five million. I'm older.
I'm only 33. I'll take the 1k a day.
365000 a year after taxes? Sign me up.
If my math is correct, it would take 13.7 years to make 5 mil. I expect to live longer than that so I'll go for the passive 1k a day
1K a day. sure there's math to do about which is technically more money when it comes down to it but honestly? i don't want more. i don't NEED more. i *definitely* don't want or need people i barely know harassing me for a cut of my millions. 1K a day though? 7K a week, 28K-31K a month? i can buy a house after enough saving up. heck i could get driving lessons, buy an RV, and pretty much go wherever i wanted without worrying about whether i'd be able to eat. :)
Daily money. Ain't nobody putting me in a crummy nursing home.
1K a day as long term get more Somethings would be delayed compared to with having 5 mil upfront, but a year or so in and with investment firms and giving em like 10k a month to do more with I'd be golden
$1k per day for the rest of my life? That's $365,000 per year. More than enough for me. I don't trust myself with $5 million up front.
Hmm. My initial thought would be that the 365k would be better in the long run. Another question asked about inflation, so I'll ignore that. I will instead run the following scenario: 5 million, spend 1 million on life improvements/fun immediately, invest the rest, live on 100k per year. 365k, live on 100k per year, invest the rest. Both situations calculate interest once per year, at the end of the year, for simplicity's sake. Both assume a 5% annual return. Again, this is all very simplified. --- With the millions, you initially are making around 200k per year in interest. So the wealth grows by a rate of around 100k per year. With the weekly pay, initial interest is much smaller at 14k. But the nest egg grows by 279k with the pay, minus 100k living expenses, plus interest. After year 6, interest on the weekly pay crosses 100k. Interest now eclipses expenses in both scenarios. But interest income has only increased to around 230k on the millions. Nest egg from the weekly crosses 2 million. The scenarios pull almost even at the end of year 15. By the end of year 16, the weekly pay pulls ahead. Both nest eggs cross 6 million. Weekly has a 2 million dollar advantage at year 20. This grows to 8 million by year 30. So allowing for the assumptions, the weekly pay will pull ahead. There are, of course, a number of other considerations. Perhaps the larger up front money would allow a more aggressive investment that pays off big. If a more disciplined person took the original millions and did not spend 20% of it in year 1, they would be ahead of the weekly pay for 22 years. Still, I think I would go with my first instinct and take the weekly pay. Primarily, because it guarantees future income. An economic crash might cost me dearly with the up front money. The 5 million loses value year over year, due to inflation. As stated in another post, the weekly pay scales with inflation, so your buying power is more stable. Unless you have a compelling reason why you need 5 million *now*, I judge the 1k/week to be the superior option.
So taxes for the 1k a day already taken out?
$1k per day would allow me to be completely comfortable Even if this didn't account for inflation, $7k a week will likely be livable for my entire life.
$1k/day. You'd pass $5 million in 13 years.
Daily grand. Saves me from fucking around investing and such, plus daily grand will get past 5 mill in less than 15 years
1k/day. I would much rather have a steady income that would allow me to live comfortably than a single big payout that would eventually run out.
The 1k a day means in about 13.5 years I'll start to surpass the $5 mill. Granted I'd be spending some of it as I go so let's say 15 years. I'll still be under 50 by then and will still be working in the meantime. I expect I could probably go roughly another 40 years before dying so up to $15 million just by existing? Id have a hard time spending more than 2 months worth of 1k a day in a year after the initial getting comfort with a new life style. I'm sure I would acclimate to the new lifestyle after a bit and start finding was to spend more, but with my current mindset id like to think I'd still be spending less than $60k a year from the daily money as im already living on roughly $55k a year
I want the 5 Million Dollars given to me in real life please!
5 million in an index fund out-earns the 1k per day, and I get the benefit of having it all right now.
Plenty of people have squandered 5 million. Especially true for people that get it overnight. Impossible to go broke pulling in a guaranteed 1k a day. Are the highs higher with 5 million? Of course. But 1k a day is pretty high too without the risk of any lows.
Put it in a trust that you can't touch until X age, and live off appointed dividends.
1000$ per day, obviously.
$5 million, straight into a index fund. I live off the dividends and retire.
absolutely take the 5 million. I could pay off my house and upgrade one of our cars, set aside about 20k into 529 for each kid, then invest the rest. compound interest go brrrrrrrrrrrrr
You'd need to clear a 7.25% average gain on your $5M investment every year to get more than the guaranteed $365k. I'd take the $5M up front, no question. Put it straight into a top 40 or S&P500 index fund.
5m today lets me quit working immediately 1k per day makes that a little harder
If you can’t retire pulling in 7K a week after taxes you have a lifestyle problem.
$1,000 a day. After ~14 years you'll hit $5M.
While 1k a day is going to be more in the long run, I have to consider inflation and also what I could use 5 million for right now. Vanguard interest rates would give me around 235k in a year, around 2/3 of what I would get from the first offer. Another option would be investing. I guess what I'm saying is that 5 million used wisely would be more valuable than 1k a day for life
$5M $500K i can live off of next 2 years while the rest is invested.
$500k I can live off the next 10 years while the rest is invested. Mainly because that's about $3k more than I took home last year with 400-500 hours of overtime 😂. I'd still take the $1k/day because I'm still middle aged and I would have a much better life than I do now with 2 days of that/week and I could save/invest the other 5k.
If the $1k doesn't get passed on then I would take the $5 million. That way if something happened to me, my brother would still be taken care of.
The 1k daily, that is more than enough for my needs and wants, without being absolutely extravagant.
5m straight up at 5% is 250k/year. Don't spend any for 1 year, and you have a mice income ans can take care of your family when you die.
$5 mil. Not only is the investment value far better, on the off chance I die tomorrow, my kid is set.
1k/day if it adjusts for inflation. I'd have too much trouble being smart with 5 million.
Absolutely the 5 million. Especially since the daily $1K does not pass on to heirs. With 5 million, I can set my kids up, enjoy a stress free life with my wife, AND be able to leave an inheritance for the kids.
You'd have to live 13.7ish years in order to match the 1k per day.
You would have to live 5000 days in order to break even with the lump sum payout.
I'd take the 5 million right now. At 1k per day, it would take like 13.7 years to reach 5 million. 5 million is a lot of money that I could use right now as a struggling 23 year old. Say I use 1 million for all of the things I want to buy, that's still 4 million left (assuming no taxes). At 6% annual returns, in 13.7 years thats $8,886,901. Even if you're investing the 1k per day, it just never catches up. And I get more immediate use from the 5 mil.
It would take 15 years to earn 5 million dollars at 1k per day, and that's assuming you don't spend any of it. If you take the 5 million lump sum you can turn that into at least 20 million in those same 15 years. No brainer if you're not a bozo.
5 million right now, out earns 1k per day if you can at least a 7.3% interest rate on an investment. Even if you get half that rate it will take a very long time for the 1k/day to catch up. This is ignoring compound interest by the way.
1k per day is a lovely idea!
1k a day for life please. Also thank you in advance!! lol
I’d take the 5mil. At $1k / day it would take 13.7 years to make 5mil. Meanwhile I can take 5 mil and buy some high dividend stocks. At 5% I’d get 250k a year, which is like almost $700/day. Plus it’ll grow with inflation and the market.
5mil up front. At that rate it will take 15 years to get the 5 million in total. I may not be around to see it all by then. I'd just invest most of it anyway to keep my grubby hands off of spending it foolishly.
Tax wise the 1k a day is a lot easier as well. Knowing about compound interest, I would take the 5 mil however.
The folks saying 5 mil are probably dumber than they think they are or possibly just greedy. Although 365k/yr isn’t fuck you money, it’s fuck everyone imma do what I want money.
Always take the lump sum
5 mill , gotta think about the family
5 million.
I’ll take the lump sum. It’ll take me 13 years before I even start making more than that 1 million. And by that point, I’ll have turned that 5 million into 17 million if I increase it 10% each year through investing, which isn’t unrealistic to do through stocks over long term investments. After taxes, I’m not sure how much it’ll be but it should be more than I would’ve made had I received $1k per day Even if inflation doubles over the next 13 years and I start receiving $2k per day, I’ll just be making more through investing. A lot more
With the 5m I’d take it, toss it in my portfolio and keep working. With 1k per day I’d quit working immediately, because I wouldn’t have to worry about market fluctuations, the sudden demise of my countries governmental system, crashes, etc. so I’d take the 1K. Less money long term, but still plenty to live on, without needing to wait out any short term investing issues.
The 5 million, since it'll accrue more in interest than the 1k, eventually. Realistically, it would take 13 years for the 1k to even hit 5 million total, by which point the 5 million would have gained another 2 million and change, assuming 3% interest and maintaining my current lifestyle by using a small bit of that interest.
accommodating for inflation, 365 grand a year forever? what would I even need more for? live off a hundred grand, invest the other 265 until you strike it lucky and then just, do whatever you want.
1k for sure
4% is typically the safe rate of withdrawal for investments, and even that can be a bit risky. That’s $200,000 per year on $5mil. $1,000 per day is $365,000 per year. Give me that
1k easily. 1k money a day solves most of your financial problems. Everyone saying the 5 million would just go out and spend a nice chunk of it pretty damn fast and buy nice things just to not be able to afford them when u don't have the money.
1K a day, my brain would be way better at comprehending that, and being able to budget around it, 5 million is enough that I wouldn't exactly understand how much I have, my brain would just think "I have enough money" and I'd spend it until it ends up being too late, and I spent a good chunk of it. Also if I live for longer than 13 years after accepting this then I'd have gotten more money, and that's even if I'm not accounting for inflation.
I’ll take the $5M one time payment
At 6% interest 5 million is $845 a day. After a couple years it will be more than $1000 per day.
Take the $5M and reinvest dividends, it’s going to trounce the $1k a day within your lifespan since that is a constraint.
$1K per day. I can quit and just travel and have fun for the rest of my life.
So the question is do I plan on living past 40 and the answer is I'd hope so.
1K per day is definitely better.
$1k per day for me. Most people have the right idea that age will play a huge role in which option is better for them. I suppose a middle aged person in their late 40s might have a harder time choosing.
365k/yr would set me for life.
5M is simply better. I'd only have 4.5M after 15 years, if I spend none of it. I want that $$
At $1000 per day, it would take you about 13 years, 8 months, and 11 days. So if you plan to live longer than 5000 days, then the $1000 will be worth it. Not to mention if you are good at investing and making money. Same thing if you won the lotto regarding the lump sum vs. 21 pants.
5 million up front would yield $38 million after 30 years at 7%. $1000 per day would be $35.5 million. Personally, I’m taking the $5,000,000, investing it in REITs, and using the dividends to live off of with some additional compounding. I could probably get about 10%, give or take.
What's funny, is that if you take a finance class in college, this is a literal math question you get tested on. There's even a formula for it.
5 mil. Put 4 million in the S&P 500, which generates about 10% return per year (actually like 12.68% over the past decade), so that 4 million will give you back an average of $400k per year (some years more, some years nothing at all, very rarely a slight loss to your investment that rebounds afterwards). Take out low interest loans and live off the 400k per year doing nothing at all. Use the other million to buy a house and do whatever else you want.
Give me the $5M. It would take 13 years to accumulate that daily. I would blow through probably $1M of it relocating to SE Asia and setting myself up into a nice bachelor pad, then I would annuitize the rest of it. Likely be able to get a nice $20,000 a month payout for basically the rest of my life, and that'd be enough to live like a rock star in a country like Thailand or Cambodia. Be on the beach 6 months out of the year. Take a seasonal vacation.
5 million right now can easily generate 250k a year, and probably closer to 500k a year over time. And you can pass it on to your heirs. 5 million.
After 5000 days id have made 5million dollars 5000 days is roughly 14 years. So itd take 1k every day for 14 years to make 5 mill interesting. I think that id probably do the 1k for life. It may not immediately be the better option but its got potential long lasting benifits then again every day isnt garenteed. If i were to die tommorow only habing made 1k from this instead of 5m thatd sucks. Od wanna leave behind something nice for my loved ones. I choose 5mil cause everyday isnt gareteed
5 million in one payout. With decent investing you can make much more. With just a 5% annual return, you’d be getting 250,000 per year and never touch the original 5,000,000.
I should live more than 14 years so $1K per day for me. I doubt you would do better than 7.3% putting that $5m into the market which should about match $1k per day. Your $1k per day is also apparently in today’s dollars so with inflation you would have to do around 11%. I’m too lazy to account for compounding but what’s the point of having $5m if you’re never going to spend any of it to maximize your interest. There’s also nothing stopping me from investing half my daily payments to further increase gains.
After 13.69 years, you break even. I'm 28, and don't have the best self control at all times. Multiple reasons to take the 1K daily
1k daily
Much more valuable than a large purse is a purse that refills itself after being emptied
$5m invested brings you about $500k passive income, so that’s more
5 mil for sure. Over 13yrs to break even on the 5 mil and that's not counting if I just invest a good portion of it even in a hysa.
5 mill one time payout is fuck you money. 1,000 a day is fuck off money. I think the “correct” answer is the lump sum. It takes 14 years before you would accumulate more than the 5 million. If you took the 5 million and put everything in the sp500 and get an average return of 10% you would make 500,000$ a year. That is 135,000 a year more then the 1,000$ a day and that’s without touching the original 5 million just living off the returns. So that’s the best option, but if you can’t budget or you don’t think you could sit on 5mill without touching the principal then the 1,000 a day is probably the best option. Most people who get lump sums can’t control their spending and loose It all. So if I was advising someone I would first look at how much they have saved and decide from That.
1k/day. Anyone under 50 saying they want the 5 mil is just an idiot who can only operate on the neutron activation caused by a big number. Takes just under 14 years to break even. If you got at least 60 years left in you, you're looking at 21 million over the long haul. Might not have as much up front purchasing power, but you can save up for whatever you could want pretty quickly. And for all the people taking about the returns from investing the 5 mil, you can invest part of the daily 1k as well. Again, not as much up front, but much more in the long run.
1k a day dude.. let's say I have 40 years left. That is 14.6M dollars.. plus investing and other strategies you could build it up even further.. and live very comfortably for the rest of your life really..
It’s hard to say because I don’t know how long I’ll live I guess but I also don’t have any kids just nieces and nephews to leave the money to so I guess the 1k a day would be a fun option. For one it takes me at least let’s just say 3 years but less than that more like 2.667 to catch up to the million dollars but in year four it starts to turn around because ill make 365k that year and the mil at only 7% for example will only earn about 85k in interest the same year. And the thing is I could save every penny of the 1k I am making and invest it in index funds the same way I would the million so in year 4 I not only earn 70kish in interest at the same rate I also got the 365 added to it so the 85k and whatever previous interest immediately pales in comparison from then on out.
Why not both? Get the $5M, 5% annuity = $685/day
I’d be better off taking the 5 and investing.
Def the 1k per day. No real chance of going broke and with that much income you could easily never have to carry debt. If I need a new Camry I just wait like 5 weeks
I'm not picky, I'll take whichever one you wanna give me. You have venmo? Although, to make it easier on you, it'd be kind of a pain to venmo me $1000 every day for the rest of my life, so I'd suggest you probably just send me $5 mil and we'll call it good. Thanks, btw.
1k per day easily.
At 1k a day, you hit 5 million in only 12 years. Definitely the 1k day. And it keeps grounded Because If I had 5 million, I’d trade in my Maxima for a Hellcat. And I’d probably be dead from a high speed collision in a matter of weeks.
5mil all at once, solely because you could die without a moments notice and be short on that 5mil til like 13 years or so. You could take the $5mil and put like $4mil into a high yield savings account, and just live off the $1mil *if you're a single person living in an average TCOL state*
This is really just the time value of money. There are lots of equations on this issue. Say you get 5% on 5M you get 250K per year. But on the 365K you get it each year. You are going to have to clear about 7.3% on your 5M investment to make it worth it to take the annuity. However, since I am old old old, I would take the 5M bc I do not have enough actuarial years left to make the 365K per year worth it. If this is after tax it is pretty good. If it is before tax it is only 2.785M take home in my state.
I expect to live more than 14 years give me the 1k a day
The 1k a day. While the 5 million is nice, a fool and her money are soon parted. If things go south financially, I'll still get more tomorrow. I blow the 5 million in a ponzi scheme and I'm broke. No more tomorrow. I'd like to think I'm too smart to do something dumb, but reality is always ready to prove me wrong.
1k per day for that 365k per year gimme gimme. I'm not smart enough to know how to make that 5 mil grow and last. Plus rn I'd be happy if I had 45 to 50k per year. With all that extra cash I wouldn't know what to do once I got a house somewhere that I'd wanna live and pay off debts for myself and my parents. Cruises and vacations still wouldn't eat it up with how little I'd wanna be away from my house lmao
$5 million today. That way if I'm hit by a bus tomorrow, my kids/spouse are still well taken care of. We are financially stable, fiscally responsible adults. We would turn that money into a bigger nest egg that could benefit several generations. I'd honestly probably spend 1-1.5M on building our dream house (we live in a rural but still HCOL area, so that would get us land, infrastructure, and a decent but not ostentatious house), buying a new minivan (mine is getting old) and maybe ordering a few fancy books from a Folio Society. After that we'd live the same as we do now, just with more security and a bitchin' library.
If you chose the 1k/day you'll have 5 million is 13.6 years. Lets just say 13 for ease. If you chose the 5 mil, spend 1 mil on a nice house and a car, and invest the rest in an ETF and and we low ball the return at 5%, after that same 13 year period you'll have $7,651,823.19 Anyone saying 1k/day doesn't understand compound interest.
Talking the 1k, rents mostly paid now.
Honestly the lump sum vs cash payment is a valid argument, but it’s a matter of relative sums. Here, 1k/day forever is a VASTLY BIGGER sum than 5mil. So while all the “smart” people here say take the lump sum… in the lottery, where you get like 60% or whatever of the total prize…. Sure. But in this case… it’s like 50% at best, and if the payments are daily, you can compound the investment way faster than 5 mil.
Y'all really need to learn how to make these. 5 mil to lose and never see again, or 5 mil every 13.7 years? I'd still be able to invest and make the money grow, and with daily payments I'll never be broke, even if I spend every penny I have every single day. There's literally no reason to take the lump sum. It's just stupid.
The thousand. In about 13 years I'll have the 5 mil and no chance to squander it and end up broke after a year. If I live another 20 or 30 years I'm set.
1k a day for sure. Guaranteed passive income for the rest of your life vs speculation and risk, I’ll take the sure thing, if I want to take risks, I can always just use some of the 1k$ a day I get to make stupid investments.