The Financial Freedom Trap: Why You Do Not Need 48 Million, and Why 14.4 Million Is Your Retirement Code
James explains that someone spending 80,000 per month can retire at 15 times annual expenses, and does not need 50 times expenses.
Comment from @ChrisLu-eg6yc, 7 minutes ago:
Hello James. Because I have listened to your course, I understand that first reaching 15 times annual expenses means one can consider retirement. Then the next goal is to save 50 times annual expenses and withdraw 2% per year.
So what I have been thinking is that I need to reach at least 48 million. That would give me 80,000 per month for living expenses. Please help me understand where I am wrong.
Comment reply:
8 x 12 x 15 = 14.4 million.
You only need 14.4 million to retire. You do not need to reach 50 times annual expenses in this lifetime. You do not need 48 million. It has no meaning for you.
The portion of liquid stock assets that exceeds 15 years of annual expenses has no importance or necessity for life.
If you have 14.4 million:
- 8 x 12 x 10 = 9.6 million through sub-brokerage into QQQI.
- 8 x 12 x 5 x 70% = 3.36 million invested in 00662.
- 8 x 12 x 5 x 30% = 1.44 million invested in 00865B.
You can spend money without worry for the rest of your life. The extra is only inheritance.
In China or other regions, it depends on the high-dividend yield of the products you invest in.
If calculated with a 6% high-dividend yield:
- Annual expenses of 100,000 RMB.
- 10 / 6% = 1.66667 million placed in high-dividend assets.
- 10 x 5 = 500,000 in a 70/30 or 80/20 allocation.
- Required retirement assets: 166.67 + 50 = 2.1667 million.
- 216.67 / 10 = 21.667 times annual expenses.
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