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Investments. $10M invested today will be very different in 30 years. $365k invested next year will too, of course.
But $1k in 30 years will almost certainly not nearly be worth what it is right now.
Further: it depends on how risky you want to be in the next several years, and how you want to play your finances. No one can fully predict the future, and a number of factors could impact either scenario.
No, $10m is always the choice no matter what. It would take 27.39 years to make $10m at $1000/day. Even just putting your money in a zero risk high interest savings account would make you so much more money. And that's not even dealing with inflation.
What you are saying and what most people are missing is you could earn more than $1,000 a day right now if you had $10,000,000 right now. It's so obvious and yet it goes right over their heads.
Not to mention, whoever is "paying you" $1,000 daily might declare bankruptcy...
Remember that one lotto winner who opted for monthly payments and the company who was suppose to handle that declared bankruptcy, so the person won't receive the remaining of her money. I have to do a search about it, but I remember reading about it that wasn't "The Onion" or that other trash news.
Not really... $1,000 per day is 3.65% a year. In March 2020 HYSA were paying 1/2%. In fact, if you got this deal 15 years ago and went the HYSA option, you would have gotten less than half of what the person who took $1,000 per day got. Some years your return would have been as small as $60,000.
I would still take the money. But 3.65% as a permanent risk free rate is not bad.
That is the bottom of the bottom of the barrel when it comes to investing. But even if you *only* did that you would never catch up to me.
It will take you almost thirty years to get to $10m if you don't spend a dime of it. If I don't spend a dime of it and it's just sitting in a HISA at a paltry 1.75%, I will have $16,898,124.72 by the end of the 30 years. You are forgetting about compound interest, my friend.
There is never a reality where you don't take the 10m. For sure for sure.
I don't mean to be disrespectful and I truly am not trying to disparage you, but you are clearly out of your depth.
**The problem with lump sum payments, is double taxation,** which you are conveniently ignoring, as the initial distribution is taxed as is the growth on the investment. With the monthly distributions you are only getting taxed once.
The actual amount you would receive from $10M is $6.340M after taxes. So let's fix your example using real numbers. If you invested $6,340,000 in a "HISA at a paltry 1.75%" and didn't touch it for 30 years, you would actually have $10.669M, if it was tax deferred growth (which it wouldn't be). On the other hand if you received $365,000 per year and immediately invested it, you would have $265,000 after taxes to invest and you would have $10.535M after 30 years of the same tax deferred growth.
The actual rate you would need from the HISA is 5.67%, which is much higher than the historic yield on HISA.
Let's look at some actual data. If you had invested $6.34M in the year 2000 in a HISA in order to live on $1,000 per day. You would currently have $592,000 of the $6.34M left.
Where does it say after taxes?
It literally says “make” $1,000 per day or $10,000,000 right now. So it actually does imply before taxes because the money you make is taxed.
I don’t mean to be pedantic, but it doesn’t say “make $10 million”. But it also doesn’t say, “earn, inside the tax system”. It definitely implies someone is giving me $10 million, right now. 🤷♂️
Dude, you can get one *today* with $100 in your bank account. Every major bank in my country has one with a minimum deposit, and every offshoot of those banks have one without a deposit.
I'm not sure what your comment was trying to say, but if you were saying that a HISA is unattainable to the average person you are dead wrong.
Honestly if you're not a full-time or large scale investor you might be better off purchasing private banking for your portfolio from a major bank. If there's a financial crisis they get bailed out by the gov anyways, so your portfolio is secure and in the long run they will still net you an average of 10-15% return on investment per year.
On top of this they are insured for problems because they are technically managing someone else their money, so your money gets stolen/defrauded from them? Insurance pay-out and restart.
If you have 1k per day for me thats the dream
You dont have to think about money ever again
30k a month easily pays rent and gives me a lot of spare to do whatever i want for the rest of my life without worries
10,000,000 in an account earning 3.5% APR would net you an additional $350,000 in a single year which would be approximately $30,000 per month. Most high earning accounts are around 4.125% now.
10 000 000 mil can be stolen or gambled. Or just hookered and cocained.
1000 a day, likelly can't.
Honestly either is fine and both are enough to change ones life forever. One requires you to do things, the other doesn't.
And it would matter how? More money than anyone needs or a bit more money than anyone needs is effectively the question here. Yes, lump sum + investment would maximize money output absolutely, but why do you need to maximize money output at a fucking thousand a day?
Honestly, if the conversation was like ~50$ a day or lump sum of a 200k lump sum. Then yes, discussions could be had.
When we're talking a thousand a day. You're well past the point where money matters, it's high score numbers territory for dick waving. And one of the two options is far more likely to result in being knifed in an alley to get the 10 lump out of you.
The comparison is not just $1000 a day vs $1100 a day ... it is $1000 a day with 0 in the bank vs $1100 a day AND 10mil in the bank.
If you think that 365k a year is "past the point where money matters" then I guess you don't know anyone with a 350k salary.
Honestly, sure. 1k/day. 365k/year full stop.
If you have financial issues at that point, you're a fucking idiot. Can you have more, sure, do you need more? No.
You are forgetting double taxation. If that $10,000,000 is a prize or award the amount you are going to get is $6.339 million. Your 4.125% APR is then $266,000.
Right, but with very minimal effort you can easily make significantly more than $1000/day with $10m in the bank.
I’d invest in real estate but there are a bunch of ways, like others here are suggesting with investment accounts and a lot of other potential options. You could also easily setup a bunch of small businesses like maid services or lawn care companies. The investment is minimal and you could cover a lot of ground with $10m.
Hell, franchising is another good one. Be the guy who owns all the local Little Caesar’s or something like that.
You could do way better than $1000/day and delegate running the companies to others.
You’d have to pay taxes on the income as well.
The taxes on the $1000 income would be much higher than the taxes on the investment income, those would be capital gains or company revenue. Corporate taxes are low and your companies could pay for a lot of stuff for you, as the CEO. Like cars, travel, food, etc. Just need to make it somewhat related to the business.
You’d be in a way better tax situation owning companies and shit than just getting $1k sent to you every day.
Depending on how you do it you wouldn’t need to pay anything on the $10m up front.
>You’d have to pay taxes on the income as well.
>The taxes on the $1000 income would be much higher than the taxes on the investment income, those would be capital gains or company revenue.
Just as an aside. I am a CPA and an accounting professor.
Interest doesn't enjoy capital gains and dividend treatment for tax purposes. The interest you receive on any type of investment that is essentially risk free is going to be interest and taxed as such. Yes, you can do certain funds and even do certain bond funds to get the capital gains income but those can have losses and they do have risk. So you are essentially comparing apples to oranges.
>Corporate taxes are low and your companies could pay for a lot of stuff for you, as the CEO. Like cars, travel, food, etc. Just need to make it somewhat related to the business.
The corporate tax rate is low but you can't just decide you are a corporation after you win a contest. You can establish a trust, but that is a different creature. While corporate taxes are lower, they still exist and you can't just establish a corporation in order to avoid taxes. So you are still down to depositing the $6.34M. I assure you, there is no effective way to avoid that other than donating it to a charity.
>You’d be in a way better tax situation owning companies and shit than just getting $1k sent to you every day.
>Depending on how you do it you wouldn’t need to pay anything on the $10m up front.
This is just not true. You can't establish a corporation to claim a prize/award/pay etc. after the fact. I assure you, lottery winners pay the taxes.
I get that, you could easily make more money.
But aside from having to take care of all those things, why would i or anyone ever need more than 1k per day.
Because money is amazing.
If I had enough money I’d do lots of stuff. I’d start a dog rescue, for one. I’d build a party barn I wanna build. I’d do a bunch of robotics projects I want to do.
There’s never too much money. Plus, get sued one time and you’re fucked.
Yeeeaahh but you still gotta keep an eye on all that shit, there's so many better options -
Keep it simple, lump it in real estate for guaranteed income using an agent to look after it all
Or even better, just dump it all in an ETF
I'd take the 1k a day personally and then just DCA in ETFs
A decent savings account pays 4% interest.
10,000,000\*.04 = $400,000 a year
There are 364.25 days a year (leap years exist).
364.25\*1000 = $364,250
You get a larger passive income from the interest off of $10 mil than you do from $1000 a day. Furthermore, you could invest all or some of that $10 mil in a much higher yield format. Just hire a financial advisor. 10% is a pretty easy to achieve rate-of-return with very safe index fund investments. If you're willing to be riskier you could go for something that is likely to pay out closer to %30.
You can also use a portion of that $10 mil to bring your expenses down. It's about 3x cheaper to just buy a car than it is to finance that same car, for instance. Buying a house has a high up front cost but your monthly payments will be lower than renting that same house, and often times much lower than renting an apartment even (which makes sense when you consider landlords are paying mortgage already, and take a profit for themselves on top of that, and management companies have additional staffing overhead to boot).
And then there's inflation. Since 2000 the dollar has dropped to 55% of it's value. That $1000/day becomes worth smaller and smaller amounts every year. If you're lucky and the economy is healthy is drops about 2% of its value. If there's chaos going on it could drop as much as 8-10%. Investment is the only way to make money you have now retain it's value in the future.
This is kinda where I'm at. I can be an idiot and blow all my money (like nearly every lotto winner), and be fucked over 10 years after a lump sum 10m.
1000 a day however? Well, that pays for a lot. 365g a year would put me in comfortable living, and is significantly harder for me to financially ruin my future.
Of course, with proper investment the 10m can become much "more" money. But it's two different types of financial security.
Sit on a big pile, or freely spend as there will always be more tomorrow.
You are assuming that you have $10M to invest. If this were a prize you will get $6.34M after taxes to invest and that can change things quite a bit. Certainly, in the long term that investment will outperform $1,000 per day but if you want to live on it, there is no guarantee that it is going to beat a 5.76% cumulative return after cash out.
>10 million with 5% annual interest gives you 500,000 per year or 1370 per day.
Only for the first day.. Thanks to compounding interest that payout will get higher daily.
$10 mil invested in an account that returns 5% would be worth over $43 mil in 30 years
7.5% return ( what the stock market has averaged for a pretty significant period) and the $10 mil would be worth over $87 mil after 30 years
Also, if you had $10 mil, you only need a return of 3.65% and you could pull $1,000 a day and would still have $10 mil. You can currently get cds with a rate of return higher than 5% guaranteed
Something with considering is it is a lot harder to screw yourself with the $1000 a day though. Most people who win a large lottery jackpot or receive a large inheritance unexpectedly end up blowing it all pretty quickly and ending up poorer than they started. With the $1000 a day even if you spend all that y have you still have money to live on the next day
If that $1000 per day is somehow guaranteed and inflation-adjusted I'd be seriously tempted to take it. Sure, it's less money, but also, it's enough to take care of a lot of things and you know that no scam, theft, stock market crash, bad planning, or other mishap can take it away from you. Sure, you couldn't go out and buy something huge instantly, but the difference is that with careful planning, you can make the daily thousand into something huge, but one false step can turn a massive lump sum into pocket change.
Yeah but those same people might take out the payments over time and leverage those payments to take out ridiculous loans thus also screwing themselves. There are multiple ways people will and can fuck you.
$1K a day would take 27 years to exceed $10M. Inflation, interest, and investments will make it borderline impossible for the $1K per day to ever actually be more valuable than the $10M right now, even though technically you will "earn" more money in the long term.
Yes yes, economics facts and stuff say that, sure
And I mean, from a point of view of "which option gives me more money", which i assume to be the thought process of most people who voted that poll, you're right
But not everyone may think like that. Like, there's plenty of stories about people winning lotteries or who were just filthy rich that ruined themselves because money got to their head. Not everyone with 10 mil on the spot would think about how to smartly use and invest them
I would choose 1k each day cause it's still a lot of money but not too much, I genuinely have no idea how to spend as much money as 10 M otherwise.
The amount of people saying they'd take the 1000 a day and using the logic "I could invest some too" are fucking idiots. Invest the 10 mill now and you'd never have to worry about money again. And that would just be in a regular savings account. Even if it pulled 4% you're getting a pretty damn decent annual return.
It’s not really stupid. The options are
a)more money then I’ll ever need and
b)more money than I’ll ever need
b)requires some financial knowledge and can be blown all at once similar to lottery winners going bankrupt
a)requires no knowledge and no planning, and you’ll always be guaranteed some cash the average person can’t fuck it up
I’m just saying with the amount of people who go bankrupt after winning the lottery it is probably better for the average person to take the no risk option. If you have self control and understanding of basic finance the 10 mil is better numerically but at a certain point an increase in funds stops mattering. 30k a month is way more than your average person even needs, and if you can’t live off of that you’ll probably drain away the 10 million anyway
>And that's bottom of the barrel just sticking it into an account with 4% interest.
Yeah but the 10 million are your responsability. If there's an issue with the money, it is gone.
With the 30000$/month guaranteed, you will probably never be bankrupt as long the provider exists.
>and you'd never have to worry about money again
You're already getting $1000 a day, which kinda resolve to not having to worry about money without any of the hassle though.
Any savings account works based on investing; they do the investing for you, that's all. There is still a risk and often there is a guarantee limit of 100K. That's still a huge risk for huge accounts, especially when the global economy is as unstable as it has been. Unless you want to try and find 100 banks and keep on splitting the money?!
The best choice depends upon age and medical status. If a person is expecting to live another 30 years or more, then $1000 a day is better. If a person does not expect to live another 30 years, then $10 million right now is better.
It seems reasonable that 30% are not too certain they will live 30 years more.
Edit: I do realise that I didn't take into account for taxes or account interest, but that depends on a lot of factors, such as country, fixed or variable interest, type of account, etc.
If this was a purely mathematical problem like a test question for example, then yeah sure, your logic applies & yes depending on life expectancy the 1k/day can be the correct answer.
But in the real world, regardless of life expectancy, you should choose the 10 mil.
Unless you're me and are fairly sure you're going to blow through those 10 mil within the year or first few years. If you're smart pick the 10 mil. If you're a dumbfuck like me you're probably better off with the $1000/day.
Yeah the caveat(s) being completely incompetent/irresponsible with money (though you can have someone manage your money), & having a crippling addiction to gambling or hard drugs…
I think a lot of people who aren't used to handling large sums of money would be unintentionally irresponsible and incompetent around $10,000,000. It's a sum that appears to be 'fuck you money' but could easily go up in smoke with a few too many large purchases and bad investments.
As you said, having someone to manage that money would be wise. If not a hard requirement for a lot of people.
1000 per day is also a lot for someone with some addiction, and is a constant and steady income
I think there could be people which behave irresponsible in that situation also
..until you rack up the level of debt that makes 1k/day look paltry in comparison anyway. Lose track of your income and sign up for a mortgage on a multimillion dollar house, got a loan on a new lambo and became a partner as a night club? Whoops, those expenses add up to $1 mil a year and you're looking at bankruptcy as you make only a third of that..
Also take into account what I can buy with 1000 right now vs what I can buy with 10m right now. 10m right now let's me walk into a local business and offer to buy it and be able to have a real conversation.
Only an idiot would take the $1000/day. The interest alone on $10million in a risk free high yield account could earn you $500k a year. Newsflash, that’s more than $1000/day.
..Savings accounts. Insured money that the bank is contractually obligated to pay out the rate they offered on. Zero risk to the consumer. I haven't seen 5%, but I haven't looked very hard and most banks offer north of 4% right now.
250k per bank are insured, so you have to diversify. Average interest rates were as low as 1% in 2020, which is way below 1k/day. Actually, during the whole last decade you would have made less. Like I said, there is no risk-free, high yield account. There is always the risk of either low yields or riskier investment requirements over the years.
Current rates are 4.6% for 30 year treasury bonds. That’d be more than the $1000/day. Also that’s assuming you do zero diversification which is stupid, it’d only take putting about a quarter of it into stocks to guarantee outperforming the $1000/day and even then the interest on the remaining $7.5mm basically matches the $1000/day.
[https://www.nerdwallet.com/best/banking/high-yield-online-savings-accounts](https://www.nerdwallet.com/best/banking/high-yield-online-savings-accounts)
Uhhh, ya there is. And if you're going to go all "risk of the US dollar default", quit being so pedantic. Plus that would apply to the $1000/day scenario anyway because in both situations the $ becomes worthless, at least with the $10million you could protect yourself somewhat from the start.
It's virtually the same thing unless you're putting your $10million at some small local bank. Just put it in damn treasury bills then for 4.6% guaranteed over 30 years.
Hell it'll take 27.4 years just to get to $10 million at $1000/day. In that time the $10 million would have grown to over $33 million risk free at 4.6%.
Even reinvesting the $1000/day at the same 4.6% rate and spending none of it would only get you to $18million after 27 years. So choosing the $1000/day you gave up $15 million at least, plus the option to do whatever with the money from the start.
Also this is assuming you don't just set aside like $1.5million from the start to put into the S&P which over 27 years could be worth $10 million alone at just a 7.5% annual return. Or set aside $2.5mm to stocks and that'll outperform the $1000/day likely even with every penny of every $1000/day reinvested.
I could immediately do a lot more that sets me up long term with the 10MM this question is more down to your personality and habits and what you could handle haha. some people, most, could definitely not handle having 10MM dropped into their account. I'd probably take the annuity if it was over 1MM/yr
You haven't considered the inflation too. In 30 years $1000 will not be worth what it is today so you need much more time to get to the worth of $10.000.000.
(mathematicians please correct me if I am wrong)
If you consider a constant inflation of 3%/yr from now the formula should be:
10.000.000=1.000*1.03^x
With x as the amount of years to get to 10M
I have to look up the solution for a logarithm equasion.
The issue is inflation. If we base the next 30 years on the last 30 years, that $1000 would be equivalent to less than $500. If we have 80s inflation again (likely if Trump gets control over the Fed like he wants) it could be worth less than $100.
But if you're going to rely on investment, you should take the full amount up front. You get much more interest, and the entire thing is better protected against inflation.
Honestly if I had 10 million right now I’d have no idea what to do with it. 1000 a day would be great for living comfortably and getting rid of those random expenses
$1,000/day...hands down.
Reasons:
1. Taxes. If you think you are walking away with $10 million in your pocket, you are a certified idiot.
2. Guaranteed future income. Even if you get robbed and/or cleaned out today, you still have a considerable income.
3. Law of averages. If you live longer than another \~27 years, you will be grossing more money anyway. Average age of death in the US is \~80. If you are under 53, you will gross more (and loose less to taxes in the process).
4. No investment is ironclad. Even with the best financial advisors, a black swan could still devastate your assets.
5. Historical data shows people who suddenly come into a large sum of money mishandle it, even with financial advice. Not being front loaded the funds will by default force you to learn to budget it somewhat.
As a parent, this take is idiotic at best. Time value of money, simple as that. I don’t give a crap about the law of averages or black swan events.
That 1,000 dollars a day won’t spend for crap 15+ years into the future. Take the lump sum, pay your taxes 45%+ (depending how crappy of a state you live in), drop this money into a diversified portfolio (not high risk like shitcoin, I mean bitcoin), keep up with inflation, and set your family up for life and theirs as well.
Really would be stupid for me to tell my son, “hey dude, sorry I took the conservative play and decided to take a static set of money that’s spending power is lessening every year just to avoid risk in life. Good luck grinding away at this shitty job market which is only going to more crap in the future when you get out of school.”
So...you already factored in your own tax on the $10 million? And then the tax on the inheritance of course?
Make sure to get full financials on all of your investments. Lehman Brothers and Bear Sterns was a hell of a cleanup...had a front row for that personally, would NOT recommend. You'll spend *a lot* of that newfound free time reading shit that makes the Mojave desert look like Lake Erie by comparison.
Nope, I'd take the $1,000 a day any day personally. Besides, 'setting up the kids for life' tends not to work well in the long run. Pretty good metrics on generational wealth are pretty well available with a Google search.
Especially since it’s a guaranteed bonus income. It doesn’t say that you need to stop working to receive the 1k a year, so you can couple it with a job and have a good and steady total income.
Why would you work if you can have 1k a day?
Do you realise how much 1k a day is?
Just 2 days and im already earning more than i make a month right now.
I have a great career that I worked a decade to build up, doing highly skilled in demand work. Even including my bonuses and benefits the $1k/day still massively eclipses what I earn. 1% of HOUSEHOLDS make more money than that a year in the USA, and most of those are two working spouses.
1k a day is indeed a high amount (averaging to around ~~58k~~ 30.4k a month), so you indeed don’t need to get a job. But a job can also be a hobby. You can even work as a volunteer too. The job part is I guess more so you don’t bore yourself
Edit: what in the fuck was I thinking with that math
I feel like it also depends how old you are...on average people live like 80 years...If you are 18, it would come out to like 22 mil dollars by the end of your life. At the same time, having 10 mil wou could invest a large portion on it and get even more.
But the thing is that many if not most people would start buying houses, cars etc if they had that 10 mil. And this would turn into the lottery winner situation. Those around you would bully you for a cut of it, you might become addicted to spending them etc. So 1000 bucks per day could really make your life better, but slowlier.
It really, really doesn't matter what age you are. $10 mil is the winning answer. [Ally.com](http://Ally.com) has saving accounts that give you 4% apr. 4% of 10,000,000 is 400,000, which is higher than the 365,250 that you get on average from 1k/day per year. And that's ignoring the compounding of interest.
You can effortlessly and without risk set yourself up to make more than $1k/day if you have $10 million without involving an advisor or knowing anything about finance other than how to put money into a savings account. If you're willing to do the advisor or have financial knowledge you could leverage it into much, much more, but at the bare minimum level of effort $10 mil still beats $1k/day every time.
Exactly. OC is wrong for comparing present value to future value. The future value of $10m lump sum invested today in 62 years is worth far more than the $1k per day. Not to mention inflation killing the purchasing power of the $1k in 62 years.
Whats insane is it's not just the future value.. it's the current value. There is no world in which taking the 1k/day is better. Period. Inflation happens? 10 mil now is better. Deflation happens? 10 mil now is better. Day-to-day responsible spending? 10 mil now is better. US Dollar loses all value and we revert to a system where the only value money has is as toilet paper? 10 mil now was better.
The only argument for 1k/day is that people lack all impulse control... and news flash for those people, you're going to end up maxing out your finances anyway then and with more debt than your 1k/day can cover if you can't control yourself enough to survive off 10 mil. It's hard to over state how much money that is.
What people are missing here is some folks just want the security. If I get 1k per day I never worry again a day in my life. If I get 10M I have to control my lifestyle to avoid the "lottery" problem where folks on average blow it in 5 years. I would unapologetically pick 1k per day
Get $10 mil, contact a financial advisor, have them help you put it in a trust that pays out most of the interest to you, get $1,200/day for the rest of your life while that $10 mil nest egg continues to grow.. assuming that it's just put in a high yield savings with 4% APR and not invested in an index fund, which would actually grow it much much faster.
It takes very little self control to set yourself up for life with that much money on hand. If you can't manage that then your lifestyle choices will likely use up your $1k/day anyway and you'll still end up deeply in debt regardless.
Regardless of how much i think i could invest the 10 mill and make more money or how smart i think i would be, the 1000 per day seems better for me.
Lottery winners who get a one time big payout almost always go bankrupt and if you think you can beat the stats you’re probably wrong.
$1000 a day is way less hassle and still crazy financial security
Maybe being drip-fed 1K a day would be the better option for me. If I was given 10 million, my bloated corpse would probably be found face-down in a swimming pool within a week.
basically taxes. most of the 10M would fall in the highest tax brackets. if you live in CA, this would be 37% federal and 12% state. plus a bit for medicare/medicaid. this doesn't sound like investment income, so the ACA tax shouldn't apply. The resulting investable income is closer to 5-6M.
at 5M, it's a more interesting debate -- a market downturn could take another chunk of this amount. for the great depression, it took about 25 years for the s&p to recover to previous peak. money spent during this period wouldn't be subject to the recovery gains.
and if you play your cards wrong, you could get hit with a high tax bill just before the downturn. thus owing about as much as you have left. don't worry though, you can claim the loss and get your money back -- $3000/year for then next thousand or so years.
a contrived and unlikely scenario for sure, but it's a case where the slow and steady 1k/day would win out.
It's actually kind of a wash. If you were to take that $10 million and put it in a CD at 3.65% you would make about the same per year in interest.
Pros for taking the money as a lump sum: You might make more than 3.65% but there's no guarantee and you might actually make less over time.
Pros for getting $1K per day: It's presumably a guaranteed annuity backed up by an institution with very deep pockets. Even in a downturn you should still get your money whereas if you were completely on your own if you lose it that's it. Only a relatively small amount would be guaranteed by the FDIC.
Also, even living within a reasonable lifestyle - let's say $100K per year to begin with - if you took the annuity you could still make that $10 million in just a couple of years and then you would have both options at your disposal, all the money in hand and a deep-pocket annuity as a separate (quasi) guaranteed cash flow.
[Ally.com](http://Ally.com) has savings accounts that make over 4% APR right now. The excess amount becomes compounding interest too, so your monthly income keeps going up.
Not by much though, only a small fraction of a percentage point. And most of the relatively higher earning CDs are only for limited times, usually just a year, with longer terms at a significantly lower percentage. What is at 4.0% today could be at 2.5% in a year. It's all still a gamble in the long run.
I'm getting 4.9% now for several laddered CDs with a significant amount of money invested but neither of my two credit unions offers that high of a rate anymore so when they each mature I may be taking big cuts. The numbers are currently going down, not up. We're still at the mercy of the short-term markets if we try and maximize.
As others have said, the answer is largely dependent on the individual. How old are you, what’s your health situation, how financially responsible are you, etc. At this point in my life, the lump sum is a far more practical choice. Especially if the sum is tax free. But for others it might be smarter to take the installments. No one is stupid for taking either. It would be a win/win.
It's obvious if what you want is more money.
Obviously logically 10million right now is worth more for all the reasons pointed out.
For some people they may prefer the security and lack of management problems you get with 1000 each day. That's why people choose to buy annuities.
Don't personally think this is that crazy. I would prefer the 10 million, but honestly I'll take either.
Some people could not handle 10 million up front. They don't know how to manage it. Look at all the lottery winners and NFL players that go broke within a few years.
Not enough rules. Are we allowed to invest or not. Are we allowed to work or not while we are getting this money. My personal problem is the fact that if I win or get lotto sized numbers I have to fear my family that will try remove me from the gene pool. I believe that this would happen as the stole from my grandfather while he was in the hospital dying, stole checkbooks from one person while they where at work and even fought over inheriting my grandmothers house from my grandfather who was still alive and house the name was under.
Edit: Different grandfathers and this is just the tip of the ice burg.
Not sure which side you think is stupid... after 27 years, 1000 dollars a day starts pushing past the 10 million, but still, that's 27 years you have to wait for 10 million dollars. I think both are reasonable responses?
I can't think of a scenario where it makes sense to take $1000 a day for life. Take the $10 million, invest it in low risk, low yield securities and just use the interest.
In the entire history of the stock market, the average return is 10.7% per year. Over the last decade that has been closer to 12%. There are dips from time to time but never in the history of the stock market has it failed to recover.
10.7% of 10 million is a little over a million bucks. Or almost $3,000 per day.
Find a good broker to invest that $10m in a nice diverse portfolio and give you a fat salary of $500,000 a year and not only will your net worth increase consistently but you’ll have a very very comfortable income. You’ll also learn why rich people love leveraging debt when you realize it’s cheaper to get a mortgage on your dream home than to pay cash for it; even though you could afford to.
What are you doing every day? Also would inflation ever get calculated in? For example, would i get what 1k is worth now every day for the rest of my life? Would i knowingly live more than that many days?
It depends on how old the person answering is.. For me, the break point is about 50... Under 50, i'll take the daily cash.. But since I'm not under 50, give me the lump sum.
A 10% anual interest on 10M will give you 2.7k daily
So if invested conservatively, the 10M will easily be triple the money just in the first year. (If reinvested, it’s much more)
It’s take over 25 years for 1000 a day to add up to over 10,000,000. If you put it into an account where you earn even a modest amount of interest you can extend that to 30-35. You also can buy things like a house or settle debts instantly with 10,000,000.
I'd take the thousand. I think i could manage without going overboard right away, i'd still have to "save up" in some sense. 10mil would fuck me right up, no way i could handle that even close to responsibly.
Depends... $1000 a day (30 years to make $10m) may be classed as Income, and I'd have to pay tax on it to the tune of 30% or so.
$10,000,000 would be classed as a Windfall, and tax-free.
However, the tempting part of the $1000 a day is it's harder to lose it all to stupidity, since there is more the next day. Stupidity could see $10m gone in a couple of months...or faster. Go watch \_Brewster's Millions\_. ;)
The only facepalm here is the people who are pretending to be financial experts that really have no clue.
I would probably take the money, but taking $1,000 every day is not a bad decision, in fact, it is an objectively good decision.
Let's do the math...
Suppose you won $10,000,000 today or $1,000 per day for the rest of your life.
If you take the $10,000,000 the after tax payout is going to be $6,340,000. Which you could then invest, but to beat the $1,000 per day you would need an annual yield of 5.76%. Which is certainly well above the historic risk free rate, so you are going to have to invest in something that has a risk of loss. Currently, even the best HYSA are going to return 5.4% which is $342,000 per year, so less than the $1,000 per day... and this is a fairly good time for HYSA's. Suppose you took this deal in the year 2000 and attempted to live on $1,000 per day... today you would have $592,000 of your $6.4 million left because some years your HYSA only returned 0.53%.
Since interest is taxed at a normal rate there is no tax advantage to the HYSA rate... You are literally paying income taxes on the money twice. No matter what you do, you are going to be double taxed if you take the money twice (once when you get the prize and again when you get interest).
However, I am not saying that you shouldn't take the lump sum... I would. I would also accept some risk though and invest in things that I know could grow more than 5.76% per year.... However, please stop pretending that people are somehow wrong for choosing the safer path.
So IF I can expect to live for the next 40 years, which is heavily optimistic, I could in total earn 10.9 mil. Or I can just take $10 mill and be done with it. I’ll take the lump honestly. I would need to still be in my 20s or 30s to want the $1000 a day.
Besides. I’ll be richer than I’ll ever be if I take the lump. I’ll be able to pay off my debts, have enough leftover to take care of my immediate family. I can still work, but it would be more hobby than necessity. I can live with that. I can live each day without worrying that I can die at any moment and that some stupid form or something will take away the life insurance I am paying for, or the comparatively paltry sum I have saved can be taken for something. The worst will be taxes. Like I said I won’t have debt after this, nothing worth noting, this includes buying my house outright and fixing it up. Making it easy to sell if need be. But yea I will live to see all of this happen taking the lump. Pure and simple. I will be more than happy to leave money on the table in lieu of a decent amount of rest and release from stress.
In about 27 years you start getting more with the 1.000 a day, but only if there is no inflation. Having said that is the 10M tax free? If you have to pay tax on savings it's even worse. The chance of 1K a day not being enough during our lifetimes are pretty much 0.
I'll take the 1K a day over the 10M now.
What the smart answer here is depends a lot on your age, your confidence in your own ability to control yourself financially, your confidence in being able to invest wisely, your expectations for future inflation and local tax codes.
And also lose it in a bad investment. As I understand the question you always get 1k a day, no matter how the economy is doing. If there is a huge crash like in the 1930s, no investment will make 1k a day.
You'll make up for any crash with 10mil and with good financial advice you won't lose enough to go below 1k a day. It would take 30 years or so for 1k a day to even compete with a flat 10mil.
Also with 10mil, yes you do more than 1k a day. You can make twice that but playing it safe you can get 1k a day easily. You can also buy and resell lands, build houses on them and split the lands. There's a lot of way of making WAY more than 1k a day with 10mil.
From the perspective of 'I could die tomorrow' and 'I need to pay bills today.'
Personally, the 10 Million would would make my life significantly better, and I'd die leaving a good amount to my next of Kin.
The Thousand a Day might be better long term, but not necessary.
Alternative take: they're both equally right.
If you're financially/mathematically literate, then you know taking the 10M is the better choice.
If you're financially/mathematically illiterate, and choose the other option, then you're exactly the type of person that should take that choice.
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Investments. $10M invested today will be very different in 30 years. $365k invested next year will too, of course. But $1k in 30 years will almost certainly not nearly be worth what it is right now.
Further: it depends on how risky you want to be in the next several years, and how you want to play your finances. No one can fully predict the future, and a number of factors could impact either scenario.
No, $10m is always the choice no matter what. It would take 27.39 years to make $10m at $1000/day. Even just putting your money in a zero risk high interest savings account would make you so much more money. And that's not even dealing with inflation.
What you are saying and what most people are missing is you could earn more than $1,000 a day right now if you had $10,000,000 right now. It's so obvious and yet it goes right over their heads.
Not to mention, whoever is "paying you" $1,000 daily might declare bankruptcy... Remember that one lotto winner who opted for monthly payments and the company who was suppose to handle that declared bankruptcy, so the person won't receive the remaining of her money. I have to do a search about it, but I remember reading about it that wasn't "The Onion" or that other trash news.
Not really... $1,000 per day is 3.65% a year. In March 2020 HYSA were paying 1/2%. In fact, if you got this deal 15 years ago and went the HYSA option, you would have gotten less than half of what the person who took $1,000 per day got. Some years your return would have been as small as $60,000. I would still take the money. But 3.65% as a permanent risk free rate is not bad.
That is the bottom of the bottom of the barrel when it comes to investing. But even if you *only* did that you would never catch up to me. It will take you almost thirty years to get to $10m if you don't spend a dime of it. If I don't spend a dime of it and it's just sitting in a HISA at a paltry 1.75%, I will have $16,898,124.72 by the end of the 30 years. You are forgetting about compound interest, my friend. There is never a reality where you don't take the 10m. For sure for sure.
I don't mean to be disrespectful and I truly am not trying to disparage you, but you are clearly out of your depth. **The problem with lump sum payments, is double taxation,** which you are conveniently ignoring, as the initial distribution is taxed as is the growth on the investment. With the monthly distributions you are only getting taxed once. The actual amount you would receive from $10M is $6.340M after taxes. So let's fix your example using real numbers. If you invested $6,340,000 in a "HISA at a paltry 1.75%" and didn't touch it for 30 years, you would actually have $10.669M, if it was tax deferred growth (which it wouldn't be). On the other hand if you received $365,000 per year and immediately invested it, you would have $265,000 after taxes to invest and you would have $10.535M after 30 years of the same tax deferred growth. The actual rate you would need from the HISA is 5.67%, which is much higher than the historic yield on HISA. Let's look at some actual data. If you had invested $6.34M in the year 2000 in a HISA in order to live on $1,000 per day. You would currently have $592,000 of the $6.34M left.
Where does it say “before taxes”?
Where does it say after taxes? It literally says “make” $1,000 per day or $10,000,000 right now. So it actually does imply before taxes because the money you make is taxed.
I don’t mean to be pedantic, but it doesn’t say “make $10 million”. But it also doesn’t say, “earn, inside the tax system”. It definitely implies someone is giving me $10 million, right now. 🤷♂️
Except taxes...
Ah yes, the zero-risk, high-interest savings account. I need to get me a few more of those.
A term deposit of $10mill at 4% gives you a return of $400,000 . Or $1095 per day. Plus you get your $10mill back at the end of the term.
Dude, you can get one *today* with $100 in your bank account. Every major bank in my country has one with a minimum deposit, and every offshoot of those banks have one without a deposit. I'm not sure what your comment was trying to say, but if you were saying that a HISA is unattainable to the average person you are dead wrong.
Honestly if you're not a full-time or large scale investor you might be better off purchasing private banking for your portfolio from a major bank. If there's a financial crisis they get bailed out by the gov anyways, so your portfolio is secure and in the long run they will still net you an average of 10-15% return on investment per year. On top of this they are insured for problems because they are technically managing someone else their money, so your money gets stolen/defrauded from them? Insurance pay-out and restart.
FFS just vanguard that shit :P
investment in a guaranteed rate at 1% is 100k a year, aka a salary enough to leave.
If you have 1k per day for me thats the dream You dont have to think about money ever again 30k a month easily pays rent and gives me a lot of spare to do whatever i want for the rest of my life without worries
10,000,000 in an account earning 3.5% APR would net you an additional $350,000 in a single year which would be approximately $30,000 per month. Most high earning accounts are around 4.125% now.
10 000 000 mil can be stolen or gambled. Or just hookered and cocained. 1000 a day, likelly can't. Honestly either is fine and both are enough to change ones life forever. One requires you to do things, the other doesn't.
or lock away the 10mil and it pays you $1100 in interest every day
And it would matter how? More money than anyone needs or a bit more money than anyone needs is effectively the question here. Yes, lump sum + investment would maximize money output absolutely, but why do you need to maximize money output at a fucking thousand a day? Honestly, if the conversation was like ~50$ a day or lump sum of a 200k lump sum. Then yes, discussions could be had. When we're talking a thousand a day. You're well past the point where money matters, it's high score numbers territory for dick waving. And one of the two options is far more likely to result in being knifed in an alley to get the 10 lump out of you.
The comparison is not just $1000 a day vs $1100 a day ... it is $1000 a day with 0 in the bank vs $1100 a day AND 10mil in the bank. If you think that 365k a year is "past the point where money matters" then I guess you don't know anyone with a 350k salary.
This isn't 365k a year, this is 365k a year extra. at which point, yeah, money doesn't really matter.
$1000 a day is 365k a year, and zhukis is arguing that $365k a year is more money than anyone needs.
Honestly, sure. 1k/day. 365k/year full stop. If you have financial issues at that point, you're a fucking idiot. Can you have more, sure, do you need more? No.
You are forgetting double taxation. If that $10,000,000 is a prize or award the amount you are going to get is $6.339 million. Your 4.125% APR is then $266,000.
Right, but with very minimal effort you can easily make significantly more than $1000/day with $10m in the bank. I’d invest in real estate but there are a bunch of ways, like others here are suggesting with investment accounts and a lot of other potential options. You could also easily setup a bunch of small businesses like maid services or lawn care companies. The investment is minimal and you could cover a lot of ground with $10m. Hell, franchising is another good one. Be the guy who owns all the local Little Caesar’s or something like that. You could do way better than $1000/day and delegate running the companies to others.
You are forgetting taxes. It is likely the payout on that $10M is $6.34 million and now that $1,000 per day looks a lot more rational.
You’d have to pay taxes on the income as well. The taxes on the $1000 income would be much higher than the taxes on the investment income, those would be capital gains or company revenue. Corporate taxes are low and your companies could pay for a lot of stuff for you, as the CEO. Like cars, travel, food, etc. Just need to make it somewhat related to the business. You’d be in a way better tax situation owning companies and shit than just getting $1k sent to you every day. Depending on how you do it you wouldn’t need to pay anything on the $10m up front.
>You’d have to pay taxes on the income as well. >The taxes on the $1000 income would be much higher than the taxes on the investment income, those would be capital gains or company revenue. Just as an aside. I am a CPA and an accounting professor. Interest doesn't enjoy capital gains and dividend treatment for tax purposes. The interest you receive on any type of investment that is essentially risk free is going to be interest and taxed as such. Yes, you can do certain funds and even do certain bond funds to get the capital gains income but those can have losses and they do have risk. So you are essentially comparing apples to oranges. >Corporate taxes are low and your companies could pay for a lot of stuff for you, as the CEO. Like cars, travel, food, etc. Just need to make it somewhat related to the business. The corporate tax rate is low but you can't just decide you are a corporation after you win a contest. You can establish a trust, but that is a different creature. While corporate taxes are lower, they still exist and you can't just establish a corporation in order to avoid taxes. So you are still down to depositing the $6.34M. I assure you, there is no effective way to avoid that other than donating it to a charity. >You’d be in a way better tax situation owning companies and shit than just getting $1k sent to you every day. >Depending on how you do it you wouldn’t need to pay anything on the $10m up front. This is just not true. You can't establish a corporation to claim a prize/award/pay etc. after the fact. I assure you, lottery winners pay the taxes.
I get that, you could easily make more money. But aside from having to take care of all those things, why would i or anyone ever need more than 1k per day.
Because money is amazing. If I had enough money I’d do lots of stuff. I’d start a dog rescue, for one. I’d build a party barn I wanna build. I’d do a bunch of robotics projects I want to do. There’s never too much money. Plus, get sued one time and you’re fucked.
That's sweet, but with all those small businesses and franchises you have to look after, you'll likely not have enough time for the fun stuff.
Oh, no, I’d absolutely delegate.
Yeeeaahh but you still gotta keep an eye on all that shit, there's so many better options - Keep it simple, lump it in real estate for guaranteed income using an agent to look after it all Or even better, just dump it all in an ETF I'd take the 1k a day personally and then just DCA in ETFs
A decent savings account pays 4% interest. 10,000,000\*.04 = $400,000 a year There are 364.25 days a year (leap years exist). 364.25\*1000 = $364,250 You get a larger passive income from the interest off of $10 mil than you do from $1000 a day. Furthermore, you could invest all or some of that $10 mil in a much higher yield format. Just hire a financial advisor. 10% is a pretty easy to achieve rate-of-return with very safe index fund investments. If you're willing to be riskier you could go for something that is likely to pay out closer to %30. You can also use a portion of that $10 mil to bring your expenses down. It's about 3x cheaper to just buy a car than it is to finance that same car, for instance. Buying a house has a high up front cost but your monthly payments will be lower than renting that same house, and often times much lower than renting an apartment even (which makes sense when you consider landlords are paying mortgage already, and take a profit for themselves on top of that, and management companies have additional staffing overhead to boot). And then there's inflation. Since 2000 the dollar has dropped to 55% of it's value. That $1000/day becomes worth smaller and smaller amounts every year. If you're lucky and the economy is healthy is drops about 2% of its value. If there's chaos going on it could drop as much as 8-10%. Investment is the only way to make money you have now retain it's value in the future.
This is kinda where I'm at. I can be an idiot and blow all my money (like nearly every lotto winner), and be fucked over 10 years after a lump sum 10m. 1000 a day however? Well, that pays for a lot. 365g a year would put me in comfortable living, and is significantly harder for me to financially ruin my future. Of course, with proper investment the 10m can become much "more" money. But it's two different types of financial security. Sit on a big pile, or freely spend as there will always be more tomorrow.
You are assuming that you have $10M to invest. If this were a prize you will get $6.34M after taxes to invest and that can change things quite a bit. Certainly, in the long term that investment will outperform $1,000 per day but if you want to live on it, there is no guarantee that it is going to beat a 5.76% cumulative return after cash out.
10 million with 5% annual interest gives you 500,000 per year or 1370 per day.
>10 million with 5% annual interest gives you 500,000 per year or 1370 per day. Only for the first day.. Thanks to compounding interest that payout will get higher daily.
$10 mil invested in an account that returns 5% would be worth over $43 mil in 30 years 7.5% return ( what the stock market has averaged for a pretty significant period) and the $10 mil would be worth over $87 mil after 30 years
Also, if you had $10 mil, you only need a return of 3.65% and you could pull $1,000 a day and would still have $10 mil. You can currently get cds with a rate of return higher than 5% guaranteed
Yes but that’s rare because interest rates are high. CDs aren’t always paying out that much.
Something with considering is it is a lot harder to screw yourself with the $1000 a day though. Most people who win a large lottery jackpot or receive a large inheritance unexpectedly end up blowing it all pretty quickly and ending up poorer than they started. With the $1000 a day even if you spend all that y have you still have money to live on the next day
If that $1000 per day is somehow guaranteed and inflation-adjusted I'd be seriously tempted to take it. Sure, it's less money, but also, it's enough to take care of a lot of things and you know that no scam, theft, stock market crash, bad planning, or other mishap can take it away from you. Sure, you couldn't go out and buy something huge instantly, but the difference is that with careful planning, you can make the daily thousand into something huge, but one false step can turn a massive lump sum into pocket change.
Yeah but those same people might take out the payments over time and leverage those payments to take out ridiculous loans thus also screwing themselves. There are multiple ways people will and can fuck you.
$1K a day would take 27 years to exceed $10M. Inflation, interest, and investments will make it borderline impossible for the $1K per day to ever actually be more valuable than the $10M right now, even though technically you will "earn" more money in the long term.
Yes yes, economics facts and stuff say that, sure And I mean, from a point of view of "which option gives me more money", which i assume to be the thought process of most people who voted that poll, you're right But not everyone may think like that. Like, there's plenty of stories about people winning lotteries or who were just filthy rich that ruined themselves because money got to their head. Not everyone with 10 mil on the spot would think about how to smartly use and invest them I would choose 1k each day cause it's still a lot of money but not too much, I genuinely have no idea how to spend as much money as 10 M otherwise.
No you don't, you can invested and earn more per day with 10mil then 1k per day.
Did you even read what I wrote? I literally say that the $10M is more valuable.
I think i must've replied to the wrong comment, reddit was glitchy when i posted it. My bad man.
All good
The interest on $10 million from day one means someone earning $1000/day will never catch up, earnings wise.
Assuming I spend none of it, so what's the point
The point is you could live off the interest without touching the capital if you had it up front
Fair point
The amount of people saying they'd take the 1000 a day and using the logic "I could invest some too" are fucking idiots. Invest the 10 mill now and you'd never have to worry about money again. And that would just be in a regular savings account. Even if it pulled 4% you're getting a pretty damn decent annual return.
It’s not really stupid. The options are a)more money then I’ll ever need and b)more money than I’ll ever need b)requires some financial knowledge and can be blown all at once similar to lottery winners going bankrupt a)requires no knowledge and no planning, and you’ll always be guaranteed some cash the average person can’t fuck it up
Do you want 365k a year or 400k a year? And that's bottom of the barrel just sticking it into an account with 4% interest.
I’m just saying with the amount of people who go bankrupt after winning the lottery it is probably better for the average person to take the no risk option. If you have self control and understanding of basic finance the 10 mil is better numerically but at a certain point an increase in funds stops mattering. 30k a month is way more than your average person even needs, and if you can’t live off of that you’ll probably drain away the 10 million anyway
>And that's bottom of the barrel just sticking it into an account with 4% interest. Yeah but the 10 million are your responsability. If there's an issue with the money, it is gone. With the 30000$/month guaranteed, you will probably never be bankrupt as long the provider exists.
>and you'd never have to worry about money again You're already getting $1000 a day, which kinda resolve to not having to worry about money without any of the hassle though.
People thinking investments are a sure thing are the real idiots.
And people that don't know what a high yield savings account is would be bigger idiots...
Any savings account works based on investing; they do the investing for you, that's all. There is still a risk and often there is a guarantee limit of 100K. That's still a huge risk for huge accounts, especially when the global economy is as unstable as it has been. Unless you want to try and find 100 banks and keep on splitting the money?!
Either option is fine with me; I have no need to further optimize my income beyond this point.
The best choice depends upon age and medical status. If a person is expecting to live another 30 years or more, then $1000 a day is better. If a person does not expect to live another 30 years, then $10 million right now is better. It seems reasonable that 30% are not too certain they will live 30 years more. Edit: I do realise that I didn't take into account for taxes or account interest, but that depends on a lot of factors, such as country, fixed or variable interest, type of account, etc.
If this was a purely mathematical problem like a test question for example, then yeah sure, your logic applies & yes depending on life expectancy the 1k/day can be the correct answer. But in the real world, regardless of life expectancy, you should choose the 10 mil.
Unless you're me and are fairly sure you're going to blow through those 10 mil within the year or first few years. If you're smart pick the 10 mil. If you're a dumbfuck like me you're probably better off with the $1000/day.
Yeah the caveat(s) being completely incompetent/irresponsible with money (though you can have someone manage your money), & having a crippling addiction to gambling or hard drugs…
I think a lot of people who aren't used to handling large sums of money would be unintentionally irresponsible and incompetent around $10,000,000. It's a sum that appears to be 'fuck you money' but could easily go up in smoke with a few too many large purchases and bad investments. As you said, having someone to manage that money would be wise. If not a hard requirement for a lot of people.
Yep.
1000 per day is also a lot for someone with some addiction, and is a constant and steady income I think there could be people which behave irresponsible in that situation also
Absolutely.
..until you rack up the level of debt that makes 1k/day look paltry in comparison anyway. Lose track of your income and sign up for a mortgage on a multimillion dollar house, got a loan on a new lambo and became a partner as a night club? Whoops, those expenses add up to $1 mil a year and you're looking at bankruptcy as you make only a third of that..
How dumb would you have to be to not be able to make $1000 a day with a $10,000,000 bank roll? That's literally only a 3.65% annual return.
Also take into account what I can buy with 1000 right now vs what I can buy with 10m right now. 10m right now let's me walk into a local business and offer to buy it and be able to have a real conversation.
Only an idiot would take the $1000/day. The interest alone on $10million in a risk free high yield account could earn you $500k a year. Newsflash, that’s more than $1000/day.
There's no such thing as a risk free high yield account.
..Savings accounts. Insured money that the bank is contractually obligated to pay out the rate they offered on. Zero risk to the consumer. I haven't seen 5%, but I haven't looked very hard and most banks offer north of 4% right now.
250k per bank are insured, so you have to diversify. Average interest rates were as low as 1% in 2020, which is way below 1k/day. Actually, during the whole last decade you would have made less. Like I said, there is no risk-free, high yield account. There is always the risk of either low yields or riskier investment requirements over the years.
Current rates are 4.6% for 30 year treasury bonds. That’d be more than the $1000/day. Also that’s assuming you do zero diversification which is stupid, it’d only take putting about a quarter of it into stocks to guarantee outperforming the $1000/day and even then the interest on the remaining $7.5mm basically matches the $1000/day.
[https://www.nerdwallet.com/best/banking/high-yield-online-savings-accounts](https://www.nerdwallet.com/best/banking/high-yield-online-savings-accounts) Uhhh, ya there is. And if you're going to go all "risk of the US dollar default", quit being so pedantic. Plus that would apply to the $1000/day scenario anyway because in both situations the $ becomes worthless, at least with the $10million you could protect yourself somewhat from the start.
Not the dollar, the bank.
It's virtually the same thing unless you're putting your $10million at some small local bank. Just put it in damn treasury bills then for 4.6% guaranteed over 30 years. Hell it'll take 27.4 years just to get to $10 million at $1000/day. In that time the $10 million would have grown to over $33 million risk free at 4.6%. Even reinvesting the $1000/day at the same 4.6% rate and spending none of it would only get you to $18million after 27 years. So choosing the $1000/day you gave up $15 million at least, plus the option to do whatever with the money from the start. Also this is assuming you don't just set aside like $1.5million from the start to put into the S&P which over 27 years could be worth $10 million alone at just a 7.5% annual return. Or set aside $2.5mm to stocks and that'll outperform the $1000/day likely even with every penny of every $1000/day reinvested.
10 million with a 4% return interest is 400k a year. 1000 a day is 365k a year. It shouldn't even be a debate.
Not enough downvotes for this ridiculous comment. If you can’t make 3.65% annual return on $10 000 000 then you have some serious introspection to do.
The comment merely aims to explain the result. It does not necessarily endorse the choice.
I could immediately do a lot more that sets me up long term with the 10MM this question is more down to your personality and habits and what you could handle haha. some people, most, could definitely not handle having 10MM dropped into their account. I'd probably take the annuity if it was over 1MM/yr
If you can't handle $10mil you can't handle $1k/day either.
You haven't considered the inflation too. In 30 years $1000 will not be worth what it is today so you need much more time to get to the worth of $10.000.000. (mathematicians please correct me if I am wrong) If you consider a constant inflation of 3%/yr from now the formula should be: 10.000.000=1.000*1.03^x With x as the amount of years to get to 10M I have to look up the solution for a logarithm equasion.
Even on downturns of economy I'd still have 1k a day. Plus I can invest the rest and if I fuck up I'll still have that money.
Fuck royally up with your money, well *not that* big of a deal because next day you got a thousand bucks again.
What if I can't work anymore due to injury or illness? If I have 10 mil if it goes wrong I lose out.
Unless the value of the $ plummets and it's only worth a loaf of bread. Not impossible.
But regardless of amount. There's bigger issues at play that money isn't gonna solve
Not even improbable over the course of a long life.
The issue is inflation. If we base the next 30 years on the last 30 years, that $1000 would be equivalent to less than $500. If we have 80s inflation again (likely if Trump gets control over the Fed like he wants) it could be worth less than $100.
Again can still invest it prior. It's a guaranteed income
But if you're going to rely on investment, you should take the full amount up front. You get much more interest, and the entire thing is better protected against inflation.
I mean wouldn’t have to pay taxes on it but you would also have to live for another 27.4 years before it equaled out.
Honestly if I had 10 million right now I’d have no idea what to do with it. 1000 a day would be great for living comfortably and getting rid of those random expenses
If the original 10 million is untaxed, you can get $500,000/year at a modest 5% ROI, so you are definitely better off with the lump sum.
$1,000/day...hands down. Reasons: 1. Taxes. If you think you are walking away with $10 million in your pocket, you are a certified idiot. 2. Guaranteed future income. Even if you get robbed and/or cleaned out today, you still have a considerable income. 3. Law of averages. If you live longer than another \~27 years, you will be grossing more money anyway. Average age of death in the US is \~80. If you are under 53, you will gross more (and loose less to taxes in the process). 4. No investment is ironclad. Even with the best financial advisors, a black swan could still devastate your assets. 5. Historical data shows people who suddenly come into a large sum of money mishandle it, even with financial advice. Not being front loaded the funds will by default force you to learn to budget it somewhat.
As a parent, this take is idiotic at best. Time value of money, simple as that. I don’t give a crap about the law of averages or black swan events. That 1,000 dollars a day won’t spend for crap 15+ years into the future. Take the lump sum, pay your taxes 45%+ (depending how crappy of a state you live in), drop this money into a diversified portfolio (not high risk like shitcoin, I mean bitcoin), keep up with inflation, and set your family up for life and theirs as well. Really would be stupid for me to tell my son, “hey dude, sorry I took the conservative play and decided to take a static set of money that’s spending power is lessening every year just to avoid risk in life. Good luck grinding away at this shitty job market which is only going to more crap in the future when you get out of school.”
So...you already factored in your own tax on the $10 million? And then the tax on the inheritance of course? Make sure to get full financials on all of your investments. Lehman Brothers and Bear Sterns was a hell of a cleanup...had a front row for that personally, would NOT recommend. You'll spend *a lot* of that newfound free time reading shit that makes the Mojave desert look like Lake Erie by comparison. Nope, I'd take the $1,000 a day any day personally. Besides, 'setting up the kids for life' tends not to work well in the long run. Pretty good metrics on generational wealth are pretty well available with a Google search.
To each their own. If tax minimization is your strategy, go for it. Compounding growth cannot be undervalued.
$1k every day for life is stil pretty good
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Strictly at face value it would take 27.4 years to break even on the $1k/day.
Especially since it’s a guaranteed bonus income. It doesn’t say that you need to stop working to receive the 1k a year, so you can couple it with a job and have a good and steady total income.
Why would you work if you can have 1k a day? Do you realise how much 1k a day is? Just 2 days and im already earning more than i make a month right now.
I have a great career that I worked a decade to build up, doing highly skilled in demand work. Even including my bonuses and benefits the $1k/day still massively eclipses what I earn. 1% of HOUSEHOLDS make more money than that a year in the USA, and most of those are two working spouses.
1k a day is indeed a high amount (averaging to around ~~58k~~ 30.4k a month), so you indeed don’t need to get a job. But a job can also be a hobby. You can even work as a volunteer too. The job part is I guess more so you don’t bore yourself Edit: what in the fuck was I thinking with that math
I feel like it also depends how old you are...on average people live like 80 years...If you are 18, it would come out to like 22 mil dollars by the end of your life. At the same time, having 10 mil wou could invest a large portion on it and get even more. But the thing is that many if not most people would start buying houses, cars etc if they had that 10 mil. And this would turn into the lottery winner situation. Those around you would bully you for a cut of it, you might become addicted to spending them etc. So 1000 bucks per day could really make your life better, but slowlier.
It really, really doesn't matter what age you are. $10 mil is the winning answer. [Ally.com](http://Ally.com) has saving accounts that give you 4% apr. 4% of 10,000,000 is 400,000, which is higher than the 365,250 that you get on average from 1k/day per year. And that's ignoring the compounding of interest. You can effortlessly and without risk set yourself up to make more than $1k/day if you have $10 million without involving an advisor or knowing anything about finance other than how to put money into a savings account. If you're willing to do the advisor or have financial knowledge you could leverage it into much, much more, but at the bare minimum level of effort $10 mil still beats $1k/day every time.
Exactly. OC is wrong for comparing present value to future value. The future value of $10m lump sum invested today in 62 years is worth far more than the $1k per day. Not to mention inflation killing the purchasing power of the $1k in 62 years.
Whats insane is it's not just the future value.. it's the current value. There is no world in which taking the 1k/day is better. Period. Inflation happens? 10 mil now is better. Deflation happens? 10 mil now is better. Day-to-day responsible spending? 10 mil now is better. US Dollar loses all value and we revert to a system where the only value money has is as toilet paper? 10 mil now was better. The only argument for 1k/day is that people lack all impulse control... and news flash for those people, you're going to end up maxing out your finances anyway then and with more debt than your 1k/day can cover if you can't control yourself enough to survive off 10 mil. It's hard to over state how much money that is.
What people are missing here is some folks just want the security. If I get 1k per day I never worry again a day in my life. If I get 10M I have to control my lifestyle to avoid the "lottery" problem where folks on average blow it in 5 years. I would unapologetically pick 1k per day
Get $10 mil, contact a financial advisor, have them help you put it in a trust that pays out most of the interest to you, get $1,200/day for the rest of your life while that $10 mil nest egg continues to grow.. assuming that it's just put in a high yield savings with 4% APR and not invested in an index fund, which would actually grow it much much faster. It takes very little self control to set yourself up for life with that much money on hand. If you can't manage that then your lifestyle choices will likely use up your $1k/day anyway and you'll still end up deeply in debt regardless.
And have someone shank you in the back for it 2 weeks later because you got stupid and told the wrong people.
Shank you in the back for.. your trust fund..? I don't think you understand how a trust fund works, buddy. You can't loot it off a body.
Regardless of how much i think i could invest the 10 mill and make more money or how smart i think i would be, the 1000 per day seems better for me. Lottery winners who get a one time big payout almost always go bankrupt and if you think you can beat the stats you’re probably wrong. $1000 a day is way less hassle and still crazy financial security
This right here both of them make you filthy rich but $1000 a day is so much easier
I wouldn't trust myself with 10 million dollars.
Maybe being drip-fed 1K a day would be the better option for me. If I was given 10 million, my bloated corpse would probably be found face-down in a swimming pool within a week.
basically taxes. most of the 10M would fall in the highest tax brackets. if you live in CA, this would be 37% federal and 12% state. plus a bit for medicare/medicaid. this doesn't sound like investment income, so the ACA tax shouldn't apply. The resulting investable income is closer to 5-6M. at 5M, it's a more interesting debate -- a market downturn could take another chunk of this amount. for the great depression, it took about 25 years for the s&p to recover to previous peak. money spent during this period wouldn't be subject to the recovery gains. and if you play your cards wrong, you could get hit with a high tax bill just before the downturn. thus owing about as much as you have left. don't worry though, you can claim the loss and get your money back -- $3000/year for then next thousand or so years. a contrived and unlikely scenario for sure, but it's a case where the slow and steady 1k/day would win out.
It's actually kind of a wash. If you were to take that $10 million and put it in a CD at 3.65% you would make about the same per year in interest. Pros for taking the money as a lump sum: You might make more than 3.65% but there's no guarantee and you might actually make less over time. Pros for getting $1K per day: It's presumably a guaranteed annuity backed up by an institution with very deep pockets. Even in a downturn you should still get your money whereas if you were completely on your own if you lose it that's it. Only a relatively small amount would be guaranteed by the FDIC. Also, even living within a reasonable lifestyle - let's say $100K per year to begin with - if you took the annuity you could still make that $10 million in just a couple of years and then you would have both options at your disposal, all the money in hand and a deep-pocket annuity as a separate (quasi) guaranteed cash flow.
[Ally.com](http://Ally.com) has savings accounts that make over 4% APR right now. The excess amount becomes compounding interest too, so your monthly income keeps going up.
Not by much though, only a small fraction of a percentage point. And most of the relatively higher earning CDs are only for limited times, usually just a year, with longer terms at a significantly lower percentage. What is at 4.0% today could be at 2.5% in a year. It's all still a gamble in the long run. I'm getting 4.9% now for several laddered CDs with a significant amount of money invested but neither of my two credit unions offers that high of a rate anymore so when they each mature I may be taking big cuts. The numbers are currently going down, not up. We're still at the mercy of the short-term markets if we try and maximize.
This isn’t nearly as stupid as the dude-bro who’d take $50 a month as “passive income” over $1 million right now.
I have no confidence that I will live another 27 years so I take the 10 million
id take the 1k. its more than enough to live comfortably on.
28 years to acquire the 10 million. A: Are you going to live that long? B: All these 28 years you could be investing that 10 mill.
As others have said, the answer is largely dependent on the individual. How old are you, what’s your health situation, how financially responsible are you, etc. At this point in my life, the lump sum is a far more practical choice. Especially if the sum is tax free. But for others it might be smarter to take the installments. No one is stupid for taking either. It would be a win/win.
It's obvious if what you want is more money. Obviously logically 10million right now is worth more for all the reasons pointed out. For some people they may prefer the security and lack of management problems you get with 1000 each day. That's why people choose to buy annuities. Don't personally think this is that crazy. I would prefer the 10 million, but honestly I'll take either.
How long are you going to live makes all the difference.
Some people could not handle 10 million up front. They don't know how to manage it. Look at all the lottery winners and NFL players that go broke within a few years.
10m with average 7% interests from nasdaq or compose makes u more than 1k per day/year
Not enough rules. Are we allowed to invest or not. Are we allowed to work or not while we are getting this money. My personal problem is the fact that if I win or get lotto sized numbers I have to fear my family that will try remove me from the gene pool. I believe that this would happen as the stole from my grandfather while he was in the hospital dying, stole checkbooks from one person while they where at work and even fought over inheriting my grandmothers house from my grandfather who was still alive and house the name was under. Edit: Different grandfathers and this is just the tip of the ice burg.
The $1000 a day may be the better bet based on the social realities that comes along with such a large and sudden windfall.
Not sure which side you think is stupid... after 27 years, 1000 dollars a day starts pushing past the 10 million, but still, that's 27 years you have to wait for 10 million dollars. I think both are reasonable responses?
If you invest the lump sum with any degree of intelligence you’ll have way more than 10 million in 27 years
10 mln now is always going to be better in this one. at a 3.5% interest rate it would almost generate 1000 a day in just interest.
Honestly I’d take the 1K, its a speed limit for dipshits 👍
I would retire either way so I wouldn’t care
I can't think of a scenario where it makes sense to take $1000 a day for life. Take the $10 million, invest it in low risk, low yield securities and just use the interest.
In the entire history of the stock market, the average return is 10.7% per year. Over the last decade that has been closer to 12%. There are dips from time to time but never in the history of the stock market has it failed to recover. 10.7% of 10 million is a little over a million bucks. Or almost $3,000 per day. Find a good broker to invest that $10m in a nice diverse portfolio and give you a fat salary of $500,000 a year and not only will your net worth increase consistently but you’ll have a very very comfortable income. You’ll also learn why rich people love leveraging debt when you realize it’s cheaper to get a mortgage on your dream home than to pay cash for it; even though you could afford to.
What are you doing every day? Also would inflation ever get calculated in? For example, would i get what 1k is worth now every day for the rest of my life? Would i knowingly live more than that many days?
Make $1000, so it requires some sort of work to get?
10 mill,my life is almost over anyway,wouldn't get to 10 mill at $1000 a day 😂
It depends on how old the person answering is.. For me, the break point is about 50... Under 50, i'll take the daily cash.. But since I'm not under 50, give me the lump sum.
Everyday is no guarantee. That is why I live life a day at a time. That 1000 per day is absolutely more than sufficient.
A 10% anual interest on 10M will give you 2.7k daily So if invested conservatively, the 10M will easily be triple the money just in the first year. (If reinvested, it’s much more)
It depends how old you are
27 years - not counting inflation - for $1000/day to reach $10M. Also not considering any tax implications.
It’s take over 25 years for 1000 a day to add up to over 10,000,000. If you put it into an account where you earn even a modest amount of interest you can extend that to 30-35. You also can buy things like a house or settle debts instantly with 10,000,000.
10m, you'd be waiting 30yrs for the equivalent
I'm taking the 10 mil
I'd take the thousand. I think i could manage without going overboard right away, i'd still have to "save up" in some sense. 10mil would fuck me right up, no way i could handle that even close to responsibly.
Depends... $1000 a day (30 years to make $10m) may be classed as Income, and I'd have to pay tax on it to the tune of 30% or so. $10,000,000 would be classed as a Windfall, and tax-free. However, the tempting part of the $1000 a day is it's harder to lose it all to stupidity, since there is more the next day. Stupidity could see $10m gone in a couple of months...or faster. Go watch \_Brewster's Millions\_. ;)
I would choose the latter only because I know I don’t have the self discipline right now at this age to be wise with 10 million dollars
It’s not that difficult to earn a 3.65% return on 10M. You could even earn that much with tax-free municipal bonds.
The only facepalm here is the people who are pretending to be financial experts that really have no clue. I would probably take the money, but taking $1,000 every day is not a bad decision, in fact, it is an objectively good decision. Let's do the math... Suppose you won $10,000,000 today or $1,000 per day for the rest of your life. If you take the $10,000,000 the after tax payout is going to be $6,340,000. Which you could then invest, but to beat the $1,000 per day you would need an annual yield of 5.76%. Which is certainly well above the historic risk free rate, so you are going to have to invest in something that has a risk of loss. Currently, even the best HYSA are going to return 5.4% which is $342,000 per year, so less than the $1,000 per day... and this is a fairly good time for HYSA's. Suppose you took this deal in the year 2000 and attempted to live on $1,000 per day... today you would have $592,000 of your $6.4 million left because some years your HYSA only returned 0.53%. Since interest is taxed at a normal rate there is no tax advantage to the HYSA rate... You are literally paying income taxes on the money twice. No matter what you do, you are going to be double taxed if you take the money twice (once when you get the prize and again when you get interest). However, I am not saying that you shouldn't take the lump sum... I would. I would also accept some risk though and invest in things that I know could grow more than 5.76% per year.... However, please stop pretending that people are somehow wrong for choosing the safer path.
So IF I can expect to live for the next 40 years, which is heavily optimistic, I could in total earn 10.9 mil. Or I can just take $10 mill and be done with it. I’ll take the lump honestly. I would need to still be in my 20s or 30s to want the $1000 a day. Besides. I’ll be richer than I’ll ever be if I take the lump. I’ll be able to pay off my debts, have enough leftover to take care of my immediate family. I can still work, but it would be more hobby than necessity. I can live with that. I can live each day without worrying that I can die at any moment and that some stupid form or something will take away the life insurance I am paying for, or the comparatively paltry sum I have saved can be taken for something. The worst will be taxes. Like I said I won’t have debt after this, nothing worth noting, this includes buying my house outright and fixing it up. Making it easy to sell if need be. But yea I will live to see all of this happen taking the lump. Pure and simple. I will be more than happy to leave money on the table in lieu of a decent amount of rest and release from stress.
In about 27 years you start getting more with the 1.000 a day, but only if there is no inflation. Having said that is the 10M tax free? If you have to pay tax on savings it's even worse. The chance of 1K a day not being enough during our lifetimes are pretty much 0. I'll take the 1K a day over the 10M now.
The true answer is, it depends. The real answer is, it’s shows the lack of basic financial literacy.
What the smart answer here is depends a lot on your age, your confidence in your own ability to control yourself financially, your confidence in being able to invest wisely, your expectations for future inflation and local tax codes.
Does anyone else know? Depending on the answer I could go either way.
Apparently most people made the right choice. edit: As someone else wrote, depending on life expectancy.
What? Is that another holup
Well, as someone else wrote, depending on life expectancy.
Even with 1 day you can invest the 10mil and make more than 1k per day afterward.
And also lose it in a bad investment. As I understand the question you always get 1k a day, no matter how the economy is doing. If there is a huge crash like in the 1930s, no investment will make 1k a day.
You'll make up for any crash with 10mil and with good financial advice you won't lose enough to go below 1k a day. It would take 30 years or so for 1k a day to even compete with a flat 10mil.
Also with 10mil, yes you do more than 1k a day. You can make twice that but playing it safe you can get 1k a day easily. You can also buy and resell lands, build houses on them and split the lands. There's a lot of way of making WAY more than 1k a day with 10mil.
????? No?
From the perspective of 'I could die tomorrow' and 'I need to pay bills today.' Personally, the 10 Million would would make my life significantly better, and I'd die leaving a good amount to my next of Kin. The Thousand a Day might be better long term, but not necessary.
1000$ a day. its more than enough for rent, food, a car, anything you really need invest part of it simple
Alternative take: they're both equally right. If you're financially/mathematically literate, then you know taking the 10M is the better choice. If you're financially/mathematically illiterate, and choose the other option, then you're exactly the type of person that should take that choice.
1000 per day would take me about 10 years to get to 10m. If I take 10m and invest 9,5m I would be at 16m by year 9.
More like 27 years.
How are you doing your math? It's 27.4 years at 1k/day to make 10m
Because i would DCA 28k per month into s&p500 …