Comments on: Consistent Income or One Time Payment http://moneyning.com/money-stories/consistent-income-or-one-time-payment/ A personal finance blog where we share insights on carefully saving money, investing, early retirement, mortgages, stocks because the little things matter in achieving financial freedom! Sat, 21 Nov 2009 08:01:45 -0800 http://wordpress.org/?v=2.8.6 hourly 1 By: Emily http://moneyning.com/money-stories/consistent-income-or-one-time-payment/comment-page-1/#comment-6756 Emily Sun, 18 May 2008 14:19:51 +0000 http://moneyning.com/?p=860#comment-6756 It has to be the big one time payment! It has to be the big one time payment!

]]> By: No Debt Plan http://moneyning.com/money-stories/consistent-income-or-one-time-payment/comment-page-1/#comment-6456 No Debt Plan Mon, 05 May 2008 20:39:46 +0000 http://moneyning.com/?p=860#comment-6456 Money up front every single time. I'd pay off the house, and figure out what I really want to do with my life. We'd still have at least $600-700k after taking care of the house and setting up our parents. I wouldn't live off of the money though... I would just consider myself very lucky to have gotten ahead in the retirement game. I would keep working until I figured out what I really wanted to do. Money up front every single time. I’d pay off the house, and figure out what I really want to do with my life. We’d still have at least $600-700k after taking care of the house and setting up our parents.

I wouldn’t live off of the money though… I would just consider myself very lucky to have gotten ahead in the retirement game. I would keep working until I figured out what I really wanted to do.

]]> By: Rob http://moneyning.com/money-stories/consistent-income-or-one-time-payment/comment-page-1/#comment-6224 Rob Fri, 25 Apr 2008 16:34:44 +0000 http://moneyning.com/?p=860#comment-6224 Turns out there was some problem with my earlier maths, sorry. That's why I shouldnt do maths at 2am in the morning :P Anyways, let's assume that our investments make an average of 6%pa... This means that the present value of 100 payments of $10,000 each months works out to be $785k. This means that even if you received a lump sum payment of $1m, and splurged with $200k worth of purchases, you would _still_ be better off in the long run. Rob. Turns out there was some problem with my earlier maths, sorry. That’s why I shouldnt do maths at 2am in the morning :P

Anyways, let’s assume that our investments make an average of 6%pa…

This means that the present value of 100 payments of $10,000 each months works out to be $785k.

This means that even if you received a lump sum payment of $1m, and splurged with $200k worth of purchases, you would _still_ be better off in the long run.

Rob.

]]> By: Certificate of Deposit Rates http://moneyning.com/money-stories/consistent-income-or-one-time-payment/comment-page-1/#comment-6222 Certificate of Deposit Rates Fri, 25 Apr 2008 15:50:17 +0000 http://moneyning.com/?p=860#comment-6222 Knowing that we aren't always as displined as we need to be, the $10,000 per mo. sounds good. It is funny, yesterday we were talking about what kind of income $1MM invested would bring. We assumed a low average 4% return and came up with $40K. If you then keep working, you do have a good chance at having the $1MM grow. Knowing that we aren’t always as displined as we need to be, the $10,000 per mo. sounds good.

It is funny, yesterday we were talking about what kind of income $1MM invested would bring. We assumed a low average 4% return and came up with $40K. If you then keep working, you do have a good chance at having the $1MM grow.

]]> By: GBlogger (Can I Get Rich On A Salary) http://moneyning.com/money-stories/consistent-income-or-one-time-payment/comment-page-1/#comment-6184 GBlogger (Can I Get Rich On A Salary) Thu, 24 Apr 2008 16:43:37 +0000 http://moneyning.com/?p=860#comment-6184 Between inflation, time-value of money, and the flexibility as to what qualitative types of investments you can consider, it's not close for me either -- I take the money up front. I guess for our family, I'm not all that worried about the risks of the splurge or losing it all in tech stocks. It's interesting to see the actuarial calculation! Between inflation, time-value of money, and the flexibility as to what qualitative types of investments you can consider, it’s not close for me either — I take the money up front. I guess for our family, I’m not all that worried about the risks of the splurge or losing it all in tech stocks. It’s interesting to see the actuarial calculation!

]]> By: Rob http://moneyning.com/money-stories/consistent-income-or-one-time-payment/comment-page-1/#comment-6183 Rob Thu, 24 Apr 2008 16:22:26 +0000 http://moneyning.com/?p=860#comment-6183 Hi, I am an Actuarial student in Melbourne, Australia. I can tell you, without a doubt, that $1m right now is better than $10,000 once a month for the next 100 months. If we assume that the return on invested funds is a terribly-modest 2% then the present value of the 100 $10k payments is only $198,639. The only circumstance where this would not be the case is where the interest rate is well under .1%pa, not terribly likely at all. Rob. Hi, I am an Actuarial student in Melbourne, Australia.

I can tell you, without a doubt, that $1m right now is better than $10,000 once a month for the next 100 months.

If we assume that the return on invested funds is a terribly-modest 2% then the present value of the 100 $10k payments is only $198,639.

The only circumstance where this would not be the case is where the interest rate is well under .1%pa, not terribly likely at all.

Rob.

]]> By: Dividend Growth Investor -Blogs and Free Money - April 18,2008 http://moneyning.com/money-stories/consistent-income-or-one-time-payment/comment-page-1/#comment-6181 Dividend Growth Investor -Blogs and Free Money - April 18,2008 Thu, 24 Apr 2008 15:44:47 +0000 http://moneyning.com/?p=860#comment-6181 That's a very tricky question. I recently read an article about a lottery winner, who sold his annual payments from the lottery to a firm for a lump sum amount. He then invested it all in tech stocks in late 1990's/early 2000's.. He lost 98% of the money. Many people believe that they can manage to make money off the money by investing it. It's a common psychological thing that makes people overestimate their own capabilities. From a tax perspective though getting 1 million right away will definitely make you pay high taxes right now.. 100 monthly payments means that you only need to wait for your money for 8 years or so. That way you will have time to assess your new situation, get a plan and dollar cost average into your investments. Personally I would love to get the $1,000,000 upfront. But that's because I know how to invest it now(or I think I know how to). But I won't be able to generate income of 120,000 from the 1 mln. 40,000/year sounds much more achievable. That’s a very tricky question. I recently read an article about a lottery winner, who sold his annual payments from the lottery to a firm for a lump sum amount. He then invested it all in tech stocks in late 1990’s/early 2000’s.. He lost 98% of the money.
Many people believe that they can manage to make money off the money by investing it. It’s a common psychological thing that makes people overestimate their own capabilities.
From a tax perspective though getting 1 million right away will definitely make you pay high taxes right now..
100 monthly payments means that you only need to wait for your money for 8 years or so. That way you will have time to assess your new situation, get a plan and dollar cost average into your investments.
Personally I would love to get the $1,000,000 upfront. But that’s because I know how to invest it now(or I think I know how to).
But I won’t be able to generate income of 120,000 from the 1 mln. 40,000/year sounds much more achievable.

]]> By: FFB http://moneyning.com/money-stories/consistent-income-or-one-time-payment/comment-page-1/#comment-6180 FFB Thu, 24 Apr 2008 15:17:30 +0000 http://moneyning.com/?p=860#comment-6180 All up front. Know why? Inflation! Over time those $10,000 payments will be worth less and less. Even over one year the money will be worth less. All up front. Know why? Inflation! Over time those $10,000 payments will be worth less and less. Even over one year the money will be worth less.

]]> By: SavingDiva http://moneyning.com/money-stories/consistent-income-or-one-time-payment/comment-page-1/#comment-6178 SavingDiva Thu, 24 Apr 2008 13:47:09 +0000 http://moneyning.com/?p=860#comment-6178 I would love to get it all at once. I would be a lot more motivated to invest a large section of it. With $10,000/month coming in, I might not be motivated to continue working.... I would love to get it all at once. I would be a lot more motivated to invest a large section of it. With $10,000/month coming in, I might not be motivated to continue working….

]]> By: Money Kacper http://moneyning.com/money-stories/consistent-income-or-one-time-payment/comment-page-1/#comment-6175 Money Kacper Thu, 24 Apr 2008 12:42:39 +0000 http://moneyning.com/?p=860#comment-6175 Yes, I would definitely prefer one time 1 million $$$. This way I would be able to more flexible manage it. The simplest and no risk way would be to allow myself to spend 10 000$ a month while rest works on my saving account. It is much better solution than getting 100 times 10 000$ per month, right? Yes, I would definitely prefer one time 1 million $$$. This way I would be able to more flexible manage it.

The simplest and no risk way would be to allow myself to spend 10 000$ a month while rest works on my saving account. It is much better solution than getting 100 times 10 000$ per month, right?

]]>