If someone offered your a choice between 200K for the next 40 yrs or 3 Million right now (no taxes), what would you choose?

Poll result (48 votes) 200k for the next 40 years. Why? (31 votes) Vote 3 Million in hand right now. Why? (17 votes) Vote

Can still invest with 200k
And it will still be there for my fam
in the event that something happens to me

....or that 3 mil lol

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I'd see a standard of living increase with 200K anyway, and I could still just invest what's left from that.

Even if I improved my life a little (new clothes, better car, vacation), etc. I still wouldn't be using up all of that 200K.

Seems like the more reasonable thing to do.

Save up cause there's no way I could spend 200K a year.

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I understand the argument of living off the interest, but I also know me. I'm not comfortable betting that I'd just sit on the 3 million if I had it right off.

200k a year, every year -- I pretty much live the way I want to already, so I'd live roughly where I live and do the stuff I do, just drive a nicer car.

and not have to work unless I wanted to.

www.engadgethd.com - the other stuff i'm looking at

shucks a 5M loan with money to spare after making payments on the loan.

End Post.


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will make up for inflation cost over the 40 yrs i think
don't have the link to my fave monte carlo sim handy tho so iono for sure
i'd probably take the 200k

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*depending on the rate of return you could expect to earn over 40 years.

If you could put the money in a risk free investment (I think 4% is a reasonable estimate), that 200K per year would be worth more than $4 million

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I assumed a 6% interest rate below and the PV came to 3MM.

Just take the info given and roll with that.


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"Today is your day to have a better life -- it's your right."

A really high interest rate means you should probably choose the lump sum, a really low interest rate means you should probably choose the annuity, and about 6% is the break point.

>A really high interest rate means you should probably choose
>the lump sum, a really low interest rate means you should
>probably choose the annuity, and about 6% is the break point.







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"Today is your day to have a better life -- it's your right."

don't.

Or did we read something different?

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"Today is your day to have a better life -- it's your right."

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"Today is your day to have a better life -- it's your right."

Taxes taking around half that $3 mill so we talking about taxes on $8 mill spread out over 40 years versus one big tax hit on $3 million.

Give me 200K a year for 40 years. All my items today will be worth billions in 40 years so that's more paper. It's easy to blow $1.5 mill on some bullshit with vultures and taxes anyway. 200K forces fiscal responsibility.

I can't buy a railgun with 200K anyways. *sad face*

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"Today is your day to have a better life -- it's your right."

Why would someone chose the 3 mill option instead?

>Why would someone chose the 3 mill option instead?

Some people may feel that they won't live that long or that they want to live all out now.

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"Today is your day to have a better life -- it's your right."

Cot dang.


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"Today is your day to have a better life -- it's your right."

being conservative


while your 200k checks that are still coming in at year 35 and 40, are only worth an actual 50k by then, due to inflation

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bunda
<-.-> ^_^ \^0^/
get busy living, or get busy dying.

You say the 3 mill can grow to 8 mill, but that 8 mil won't be worth 8 million in today's dollars

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Which gets me in the room with city/state politicians
Wholesaling a fleet of subway franchises & beauty supply stores
Exec producing 'empire- the musical'
Or Building a weed bacon startup


The 200k is letting ppl pay their student loans early
That's not lifestyle/legacy changing

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bunda
<-.-> ^_^ \^0^/
get busy living, or get busy dying.

Let's say you dumped 50k a year into savings for thirty years. That's 1.5 million, worth 375k based on your inflation projections.

That's not exactly an amazing nest egg, but it's not bad when you're 70-80 years old. You're 80, all you're paying is property taxes, you've already got all the shit you really want to buy, and you've still got other assets acquired during those thirty years such as a home, other investments, etc... You'd be solid.

At the end of the day, it's all about whether or not one was able to create stability, at a minimum. You project our 3 million being worth 8 million, but that seems to require you going all in with your 3 million and investing conservatively.

That 200K could be used to live on while you quietly build a solid nest egg for yourself, not to mention whatever you earned through increasing your education, work, business ventures, etc.

That 200k can easily be put to use in practical ways. It's less of a "swing for the fences" move than a "get on base" move, and the better move really depends on the person. 3 million would be disastrous for some people despite being a goldmine for you.

They both have a 3MM present value.

But I'd still take the lump sum now because there might be some funny business if I die and they don't want to give the annuity to my next of kin.

the 200k x 40 year option is more.

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"Today is your day to have a better life -- it's your right."

What else would there be to do but just vote?
He should be thanking us

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>What else would there be to do but just vote?
>He should be thanking us


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"Today is your day to have a better life -- it's your right."

>What else would there be to do but just vote?
>He should be thanking us

No, actually, he shouldn't.

Why is it so difficult to actually think about how you would approach your choice? There's plenty of conversation to be had with such a hypothetical. If you can't think of anything more to add than a simple vote, that's on you.

>>What else would there be to do but just vote?
>>He should be thanking us
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>No, actually, he shouldn't.
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>Why is it so difficult to actually think about how you would
>approach your choice? There's plenty of conversation to be had
>with such a hypothetical. If you can't think of anything more
>to add than a simple vote, that's on you.

Ain't that what I just said, but with less words

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At least not the way I read it. I could be wrong there, but I read "extra" as overcomplicating/snarking/etc.

3 mil, 30's is a harder decision

i'd somehow f*ck up the 3 million

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3 mil right today is the better get if I were a savvy investor, but I'm not. I suppose I could buckle down and figure things out, and that's something to consider.

As it stands, we live on roughly 40k with raises that won't keep up with inflation, so one year of the 200k is two and a half years of income. One of the perks of our job is that we can take a years leave of absence and return in a year, so that's a nice safety net.

So I'd take the 200k X 40 years, take the year leave and use the time we'd spend working our jobs working toward our side projects (she's finishing school, I'm working on a website), keep 100k for the year, put 20k into savings, put about 15 k into improvements on our home, and put 65k into our mortgage.

In year two, we'd finish paying off our house and put 30k into savings. As it stands, homes in our area currently list at about 90k higher than what we currently owe and that's at 200k.

Year three, we trade in our car for a new model, pay cash on the remainder (maybe even add a second car) add the works for maintenance, put 40k into savings, 30k into college funds for the kids, and 30k into investments, and live on the remainder for the year.

Year four, we list the house and see what's what. If we can net 200k, we'd flip that into somewhere we want to settle and set a plan to pay that off within two years, which is doable if we stayed in the 400k range.

By the end of year 6, we'd be settled with a new home and vehicles that have been paid off, roughly 250k in savings, no debt, and 33 more years of that 200k coming in. Yes, the value would diminish with inflation, but it would still be far ahead of what our current jobs would earn. Once everything is paid off, it's basically house money coming in and 100k without a mortgage and car payment would be easy to do while we split the remaining 100k between savings and investments.

That also doesn't account for any money earned through our other endeavors during this time. Obviously it would be possible to achieve the same results with the three million option, but I'd rather manage the recurring income and build over time.

What's 10% of 3 million ( which is the avg return of the stock market over the long term)

Even on the low (conservative) end of that you're getting a good return over the long haul

You can even leverage the. 3 million to get a low cost secured loan and invest that amount for more money

dude

I can invest 2.5 mill and live off the interest.

If i was 20 i would do the 40 year deal but at 40ish... nah

...accrue dividends and interest off that 3 million to bolster whatever your current income is, without ever touching the principle.

Off $2 million, you can probably scrape about 45-50K off top without touching your principle very much.

Figure 53-57K if you have that 3.

If you're a home owner, that's you paying off your home early.

If you have children in college, that's most of their education covered.

Without ever touching your salary or the 3 million, which you could effectively retire off of one day if marshaled correctly.

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Stoicism and chill.
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I hear about TOO MANY businesses failing, and I wouldn't wanna invest 1-2 Mil just to gamble and possibly lose it.

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Lock in the current value of the currency, have more options to invest immediately, guarantee the ability to enjoy my windfall, etc. Just a no-brainer. Anyone taking the 200K annually is either on some smart-dumb shit, doesn't trust him/herself or both.

And you will know MY JACKET IS GOLD when I lay my vengeance upon thee.

>Lock in the current value of the currency, have more options
>to invest immediately, guarantee the ability to enjoy my
>windfall, etc. Just a no-brainer. Anyone taking the 200K
>annually is either on some smart-dumb shit, doesn't trust
>him/herself or both.

Plus if you were to die unexpectedly the next day, your fam/legacy gets the full 3. Since Case didn't state if the 200 was to be legally paid in the event of death, 3 mil now is the better option.

Cholly thinking like a grown man! lol

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The 200K for 40 years, easily. I could pay off everything in a couple years and be financially independent. I could set aside a lot for my munchkin's college fund and put away money in a trust for her. And my hubby would have the seed money to start his business. The 200K is definitely the better option.

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fuck a couple years..

debt gone TODAY
college funds and trust set up and gaining that compound interest TODAY
seed money TODAY

Gimme the 3 mill and if I invest 2 mill conservatively I'm making 60K to 100K on interest alone every year.

there is no wrong answer but I'll be damned if I pay off debt over a few years and wait to invest in a biz when I can do it all right now.

like, how is this even a debate? you take the $3 million now.

in 6 years, at a conservative 5% interest rate, your $3 million is now $4 million, and you're making $200,000 a year just off the INTEREST. not for the next 40 years, but forever.

you guys can't seriously be this bad with money.

"i smack clowns with nouns, punch herbs with verbs..."

>like, how is this even a debate? you take the $3 million
>now.
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>in 6 years, at a conservative 5% interest rate, your $3
>million is now $4 million, and you're making $200,000 a year
>just off the INTEREST. not for the next 40 years, but
>forever.
>
>you guys can't seriously be this bad with money.

>you guys can't seriously be this bad with money.

You seriously can't be this surprised that many of us aren't this savvy when it comes to finances. Frankly, that attitude reeks of arrogance and privilege.

For you it's probably basic, 101 level stuff. Awesome. I can pull twenty people I know at random and maybe three would think of that. Fifteen wouldn't be able to explain compound interest at all. I know people who would definitely understand it, but by and large most people I know wouldn't.

If you see that people are this uneducated on something as vital as money, perhaps you could take the opportunity to educate people in a productive way instead of this smug bullshit.

my off-the-top calculation is correct, but doing the actual math...

at the 25 year point, the $200k option catches up to and passes the $3 mil option. after 40 years, the $200k option gets you $25.5 mil, while the $3 mil option gets you $21.1 mil. that's a substantial difference.

so the question is more about delayed gratification and quality of life than compounding interest, because for the first 25 years, you're doing better-- usually much better-- with the $3 mil option.

so if you're 25 years old, you have to decide whether it's worth having $4 mil less at age 65 (you'll still be filthy rich though with $21 mil) in order to live better-- much better-- in your youth. keeping in mind that there's zero guarantee you live another 40 years. or another 5 years. also keeping in mind that 100% of 65-year-olds with $25 mil would give up $4 mil of that to significantly improve their quality of life in their youth.

in conclusion, you're right, my smug tone wasn't warranted 'cause the question is more complex than my off-the-top analysis indicated. however, that doesn't change the fact that most people in here are bad with money and giving dumb reasons for taking the $200k.

and for the record, i'd still take the $3 mil and i don't think it's a paricularly close decision. but it is a decision.

"i smack clowns with nouns, punch herbs with verbs..."

Loud and wrong all up in here. Compound interest works on the yearly deal too.

We can do comparisons here since we have an interest rate.

Let's assume no consumption (i.e. we invest every dollar given to us).
If the interest rate is a constant 5%, we would have the following in an account at the end of the 40 years:

If you took 200K per year => $24 million
If you took 3 mil today => $21 million


At an interest rate of about 6%, they would be pretty much equivalent choices, value wise.

The higher the interest rate, the better the $3 million upfront is.



>like, how is this even a debate? you take the $3 million
>now.
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>in 6 years, at a conservative 5% interest rate, your $3
>million is now $4 million, and you're making $200,000 a year
>just off the INTEREST. not for the next 40 years, but
>forever.
>
>you guys can't seriously be this bad with money.

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and you're right, it also depends on how high the interest rate is.

at a conservative 5%, the 200k option catches up to and passes the $3 mil option after 25 years. at 10%, the $200k option never catches up, and the $3 mil is a substantially better option ($38 mil more after 40 years). the break-even number where both options are equal after 40 years is about 7%.

still, i think even at 5%, the $3 mil is easily the way to go. you end up with less after 40 years, but there's no guarantee you live that long anyway, plus you live much better in your youth. at 7%, no question you take the $3 mil. any interest rate higher than that, and picking the $200k option is just burning money, now and in the future.

"i smack clowns with nouns, punch herbs with verbs..."

shit man you coulda bought 20% of the clippers 30 years ago for that money and turned it into $400M.

an outlier of sorts, sure, but there is a lot of room between that and dicking around with single-digit interest.

And you will know MY JACKET IS GOLD when I lay my vengeance upon thee.

More $$ = bigger return on the same investment.

Being smart with it now, is always better than being conservative/smart over the long haul.

If you did the exact same things with the money, the $3mil yield is sooooooooo much higher.

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Just depends on what sort of return you believe you can get and how much risk you are willing to take.

I'm up to the challenge of trying to maximize a windfall

But a lot of lottery winners end up broke, nothing is guaranteed

If you are happy with a 5 or 6 percent return it's probably best to take the annuity

Especially if you are younger

dude

Present value of money is important

but a person can live off 200K annual easy and that can be put into a trust and left as a asset if anything happens

Really depends on what you plan doing with money.

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huh

i'm a working stiff. i'm on some office space typa shit.

so if the difference between the options at the end of the deal is a few million?

to a middle class worker-dude like me, it ain't no big deal. it's splitting hairs. i live off what i make now so to me, $3 millon aint that much different than $5 million. to me anyway...

that said

give me the upfront cash and i'm good. i'm 40+ years old right now so if you not giving me an option of leaving a yearly payment to my kids, i'm taking the cash. i'm not making a deal that extends 40 years into the future.

also

i'm a simple dude. give me $3 million and i can invest 2 off top. i don't want a million dollars worth of shit. so give me 3 and i can buy what i need off 1 and bank the other 2.

and i'm not financial wizard like some of y'all but i worked at an investment company for a few years and i have the internet so i'm pretty confident that i can figure out a way to get at least 5% interest on that 2 million. and since i already bought all the shit i wanted with the 1 million i took off top, i'm good.

the straight cash option is fine by me & mine...

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I'm tryna be better off, not better than...

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"Today is your day to have a better life -- it's your right."

bitches like the fast money.

grown women like the stability.

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shit man with $300,000 liquid you're looking aightttttt

And you will know MY JACKET IS GOLD when I lay my vengeance upon thee.

The remaining 2.5 mill gets invested.

6 months a year up here in the States, 6 months in Africa or Bahia managing whatever I set up.

5 year plan to take 50k a year and then have a 250k fund to help my friends children with college or starting a business.

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One Hundred.

future value = present value * (1+ rate of return)^number of years

8,000,000 = 3,000,000 * (1+r)^40

i forgot how to solve for the interest rate, but as long as the interest rate is less than 5 or 6%, i'm taking the 3M cash up front.

tl;dr, time value of money is VERY important.

Getting 5%+ right now requires assuming some investment risk because interest rates are so low, in general.

But should rates increase (and they likely will for various reasons), the scale will shift more and more towards taking the lump sum.

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Like ideally the 200k is great but I don't know what's gonna happen in the future.,Ionno its a hard choice
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if u die do u your survivors keep getting paid? I was never sure about this part about lotto winnings or whatever but I'm assuming no
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"Today is your day to have a better life -- it's your right."

also remember we are eating A LOT more chemically enhanced/sprayed food than our elders.

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"Everyone has a plan until you punch them in the face. Then they don't have a plan anymore." (c) Mike Tyson

"One of the most important things in life is what Judge Learned Hand described as 'that ever-gnawing inner doubt as to whether you're r

how long he will live.

so I'll roll with the 3 million. Not that I need 3 million dollars, considering I live well below my means and I like the quality of life it provides me.

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everything i want to do can be done for that or less.

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versus something happening to me and somehow I don't get all of that 200K for 40 years.

the math most likely makes more sense with 200k anyway since we likely are in a bubble right now
but even if it didn't the larger pay out has more splurge risk
not to mention the added risk of lump sum investment (even if you are disciplined)

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>the math most likely makes more sense with 200k anyway since
>we likely are in a bubble right now

You don't have kids do you? Because I'd want my 3 mil for them if I got hit by a bus tomorrow. That 200K leaves them kinda short. Granted a smart person might take out a nice life insurance policy once the 200K kicked in but that same person would have an even bigger one with 3Mil cash on deck.

>but even if it didn't the larger pay out has more splurge
>risk
>not to mention the added risk of lump sum investment (even if
>you are disciplined)

There's no added risk, you invest some of that 200K, it's the same thing. My plan...off top would be, $2Mil stashed/invested. Most of it to low risk, decent yield investments, a small portion to moderate/high risk, high yield investments. Half a mil to clear all my debt, half a mil to live off of/play with. Even on a 3% yield, I get 60K a year (before taxes). I could live off of that and that's being conservative with the return.

Not to mention if I was halfway business savvy and was able to turn the 500K play money into something substantial.

I could do all of this within a year or 2. After 2 years with the $200K, I can't make all these moves.

It depends on the person. I got a solid windfall plan fam. lol

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and budget deficits.

I'd take the money now because I expect inflation will increase in the future and so will the tax rate on income.

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the money will be worth whatever it's worth in the future regardless
and the tax rate will be whatever it is when you use the money regardless of which method you pick now
we're several years into a bull market with potential housing, tech and education bubbles existing right now
i prefer the safety of dollar cost avg. over the long haul
a 2008 type event + a correction on the potential bubbles listed above make a lump sum investment hinging everything on historical returns real risky imo

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more than likely if you are undisciplined you will be broke by Sept.

Then you will take out a loan to get through the last 4 months and repeat the cycle.

I'm talking strictly from an undisciplined angle.

Definitely a productive post with good information. We should all strive to better educate ourselves financially.

5 years ago, just got wiped out by the Trump Depression.


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"Everyone has a plan until you punch them in the face. Then they don't have a plan anymore." (c) Mike Tyson

"what's a leader if he isn't reluctant"

... still would now. If you invest in no/low risk options you'd still be fine today. And with that type of money that's exactly what you should do. Maybe take a small chunk of it and take some chances, but invest in all-but-guaranteed free money so you're set forever. After spending some of it of course haha.

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