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Re:Ask HN: Just cashed out for 2M. What now? by jrockway on Thursday February 19, 2009 @07:30AM (#487180)
Keep in mind that $2M will generate over $100,000 a year in interest. So it is definitely possible to retire forever on this amount of money.
Re:Ask HN: Just cashed out for 2M. What now? by ggruschow on Thursday February 19, 2009 @08:12AM (#487217)
Uh, how? That's a 5% rate of interest.

The only way to get that is by taking significant principal risk ("junk" bonds or equity investments). 30 year US treasury bonds are only yielding 3.54%, and everything less than 3 years is <1% [1]. The highest yielding US$ CD I could find [2] was 4.3%, and the highest CDN$ GIC looks to be 4.3% [3].

Also, remember inflation - it really eats into it.. Let's say you're 30 and expect to live to 75. Even with a modest 2.5% inflation rate, your effective income will be <1/3 of what you started with by the end.

[1]http://www.ustreas.gov/offices/domestic-finance/debt-managem... [2]http://beta.bankrate.com/funnel/cd-investments/cd-investment... [3]http://money.canoe.ca/rates/gics_5.html

Re:Ask HN: Just cashed out for 2M. What now? by mynameishere on Thursday February 19, 2009 @12:30PM (#487535)
Junk bonds are yielding about 13 percent right now, but there's a huge default risk:

http://finance.yahoo.com/q?s=jnk

Muni bonds are at about 7 with much less risk:

http://finance.yahoo.com/q?s=CEV

Re:Ask HN: Just cashed out for 2M. What now? by delano on Thursday February 19, 2009 @10:10AM (#487320)
You can negotiate your own rate when you have a large sum.
Re:Ask HN: Just cashed out for 2M. What now? by diego on Thursday February 19, 2009 @08:02AM (#487214)
Right now it's more like 2.5%, or $50,000 a year before taxes.

http://www.bankrate.com/brm/rate/mmmf_home.asp

Also, in the long run money market accounts and CDs tend to not even make up for inflation.

That doesn't mean it's not possible to retire on $2M, especially if you are middle-aged and don't have dependents. If you are young, live in a relatively affluent area in North America and are yet to start a family, forget about it.

Re:Ask HN: Just cashed out for 2M. What now? by jon_dahl on Thursday February 19, 2009 @02:26PM (#487693)
Running Monte Carlo simulations with typical stock/bond returns and volatility, the max safe withdrawal rate is usually put at 2%-4%. This really depends on how you factor in inflation.

(Of course, what is "typical"? In 2007, what we saw in 2008 certainly wouldn't have been seen as typical.)