> You could get up to 10% on 1M investment annually (that is what my friend has)

We have a hundred years of investment data in the United States that says this isn’t true.

A 10% withdrawal rate will lead to portfolio failure 50% of the time after about 14 years. You can calculate using historical data here: https://engaging-data.com/will-money-last-retire-early/

There are mountains of research showing the safe withdrawal rate for retirement is around 3.5-4%. A million dollars gets you $40K per year at most, not $100K per year.

Anyone expecting to live off of $100K/year with only $1m invested is in trouble in about a decade, even if they could get a mythical reliable 10% return.

Note that due to inflation and downturns, you cannot withdraw an amount equal to the interest you earn. You have to withdraw significantly less than the interest you accumulate.

>"We have a hundred years of investment data in the United States that says this isn’t true."

An average over extended period of time. Maybe my fried is lucky and it's only been 3-4 years of such return for him

The last 4 years have been outliers, and lucky for everyone (except those folks who sold at the bottom and moved to bonds in 2020.)

On average. But if you are lucky enough to invest your first few years with extraordinary returns (say the past two years with 40%+ in index funds) that can greatly skew the outcome due to compounding.

If your friend can reliably generate 10% (not just in the current insane bull market) he should open a hedge fund.

I think that if you tracked S&P 500 since inception years you made about 10-11% year on average.

https://www.investopedia.com/ask/answers/042415/what-average...

He had it for about 4 years I think. Also he does not manage the money. Somebody else does it for him.

Markets have been amazing the last 4 years. You can't use that short of a timeline to predict the next 40.

If your friend gave someone a million dollars and they promised to deliver $100K per year indefinitely, your friend is the victim of financial fraud.

Who said they've promised anything? He said that he was able go get about 10% in a last 3-4 years and that is all.

Returns for the past decade have been quite good even if you're just investing in a diversified equity portfolio. Drop 10% to 4%, which is the rate that most planners use, and you're down to $40K/year. Which isn't that below median US income but many people working in tech in the US would probably consider it fairly bare bones even for a single person.

Let me guess: your friend has only been investing for the past 10 to 12 years. The past 10 years were very good times. Yes, there were a couple rough patches (March 2020, anyone?), and years where things went nowhere (2014-2016?) but if you stayed the course, you were more than fine. If you literally did nothing except put your money in an S&P fund, reinvested all dividends, and waited, you'd be up 15% annually. It won't be like this forever...