$100K/yr.
Yes, with inflation it won’t go as far in subsequent years, but it doesn’t say anywhere that it’s the only source for your income, so you can make more money in other ways, like starting a business or investing some of that $100K in a low risk investment plan that will help you later.
I’d gladly take either of those
2nd option please. Thanks
Just get the 100k and invest 20k a year, and use the rest for your life. Then contribute to FOSS forever
I’ll most likely live long enough to see the $100,000 a year surpass the $2,000,000, so that.
The average return on investment from stocks for the last 150 years is around 9 to 10% worldwide. That includes a few world wars and pandemics.
In the US, Canada and others, only half the money made in that way is taxed.
2 millions would net you 180-200k a year and you’d pay tax as if you made 90-100k.
And that income would continue on to your inheritors, not stop at the end of your life. There’s a clear right answer here.
Inheritors? Who are they? I’m targeting $0 when I die (or a nice debt that’ll never get repayed)
That’s why I didn’t say “children”. Find a worthwhile charity or school and leave them a perpetual endowment.
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You make a really good point about science, it’s fast moving. Anything could happen!
The lump sum has the better expected return over time, provided that you don’t spend a large amount of it up front.
Or you could invest the $100K a year. You have to compare apples to apples.
I could live comfortably on a small fraction of that, so it would pile up really fast if I had long to live. Not going to be billionaire money, but easily in the “think about pouring that somewhere good” money.
Sure, but the expected return of the $2M is greater than $100k yearly, so you’re not really going to be able to get ahead with the $100k/year. Compounding then further tips the scales in favour of the lump sum.
For sure, assuming that the annual amount isn’t indexed to inflation. But the question is just simple math if it isn’t. See my longer answer.
Indexed, $100K/yr wins hands down if you’re young.
It’s a tricky one with pluses on both sides. 100k a year is enough to live a really nice life, plus I’d carry on working. I’m likely going to live long enough that I’d earn way more from it.
BUT. I’m middle aged, I’m not 20 with my whole life ahead me. I absolutely may not live long enough. If I take the lump sum, I can invest it etc and get long term successes.
I’m taking the sure thing, lump sum it is
100k a year please. I’ll send you my bank details in a PM. Thanks!
This is basically a lottery lump sum question but worse payment stream and better taxation (i.e. no taxes!). It is generally already better to get the lump sum in lottery payouts assuming you don’t spend it all in a few short years. The same would apply here
Except in this scenario the $100k is for life. Where the $2mil is only the same as 20 years of payments. At year 21 you would be up from the lump.
But having the lump would allow you to invest more heavily at once.
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If interest rate was 2.8% you could double your money in 20 years. If it was higher, you could double your money quicker, or give yourself some spending money while still accumulating wealth. Compounding interest of the lump sum would make it very difficult for the 100k to come ahead unless you blow through the 2 million quickly as i initially said.
Also i don’t have 20 years left so I’ll take the lump sum
2ed option, and gamble it all like crazy every year
I’d probably make 2 million pretty soon like that
If I were younger I would take the $100,00/year. But it would take 20 years to equal the $2mil. I would rather take the lump and invest it now.
There’s a well established mathematical answer to this and I would post it if I wasn’t lounging in bed. It comes down to the “discount rate” of the annuity ($100K for life) and the length of the annuity (so you’d have to consider your personal health and consult actuarial tables or whatever to estimate your anticipated lifespan). You just compare the discounted future cash flows of the annuity to $2M.
Fixed income mathematics is pretty cool, IMO.
This all would be true, except for the bit that you can’t calculate. Which is the likelihood of the annuity continuing to payout.
You’ll notice I said continuing to pay out.
My grandmother had an annuity before she died. About 10 years before she died, they sent a letter basically saying that they weren’t going to pay out anymore. She worked as an accountant all her life (even before the Rosey the Rivetter years) and kept fucking meticulous records. Honestly, the record keeping she had was impressive enough that it deserves its own post but that is neither here nor there.
Anyways, she still had the paperwork. It had no end clause except death. It was an annuity.
It wasn’t even that much. A couple of hundred a month. They just decided to stop paying because they figured it was highly unlikely that she would fight it.
She was still with it mentally mostly, but my father was doing most of the finances for her by that point because she was in her early 90’s already. And they were right. Fighting it would have taken too much effort.
100k a year for me. I don’t want to work and I don’t want to buy a mansion and sports cars or anything either. I just want to be able to exist and do whatever the hell I want with my own day. I want to be able to spend today working on some creative project, tomorrow not leaving my bed, the day after going out to movies etc.
Basically to do whatever, whenever, without needing to cut my hair, put on a uniform, put on a fake smile and pretend that I’m actually fine with spending 90% of my life in some office or workshop ensuring that the boss gets another Mercedes Benz this year and can send their kids to study overseas.
100k a year would be great. I could rent a flat in the city somewhere, get a scooter or something, or just keep walking and using public transport. And have the money to buy that cool jacket I saw in the second hand store, or go out once in a while and have a social life, or save up a bit and pick a new country to go and be a tourist in every year.
I wouldn’t say no to the 2 million but I think I’d just prefer having the guaranteed income for life.
