[Request] Aside the absurdity of having 3 millions easily at your disposal, is it possible to live like this?
Wednesday, 12 Mar 2025
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![[Request] Aside the absurdity of having 3 millions easily at your disposal, is it possible to live like this?](https://meta.cdns.win/en/2024/12/Request-Aside-the-absurdity-of-having-3-millions-easily-at.png)
The current highest yielding treasury bond is a bit over 4.75%
So in terms of exact numbers, no. Is it possible to live off the interest of treasury bonds? Sure – provided you have enough invested in them and spend less than the interest they pay out
The structure is accurate, the details are wrong. Treasury bonds don’t literally pay you monthly. I think those pay twice a year. And the current yields are 4-5% not 8%.
But that means you can buy $3 M in T-Bonds and then twice a year, you’ll get about 67,000 to spend.
ETA: most people with $3M+ portfolios would consider this an unwise use of it, though it is very low risk.
In principle yes. This is what passive income *is* – return on investments. All other forms of passive income are scams. And this is how *most* well to do retired people operate – get a big base, invest it, live off returns.
However, there hasn’t been an 8% treasury bond since 1990. They hit a 10 year high of 4.76%. So Eddy is really not making himself sound like a credible source.Â
8% is extremely high rate currently from bonds. Mostly would get 4 of 5% which is “only” 11k per month.
Also it’s important to talk about inflation. If you use all 11k to live, you’re $3m isn’t growing and in 20 years that $11k/month won’t go as far.
Typically we assume a 3% inflation growth which means in 20 years your $11k would only buy $6k worth of things. You want to be saving about 3% of your returns to combat inflation.
Yes. No math needed. In nearly all places in the United States, $20,000 is more than enough to live.
However, an 8% treasury bond is not available, so this is impossible at current.
The 30 year Treasury rate is ~4.75%. Therefore, with 3,000,000 invested in that instrument, you would yield nearly $12,000 pre-tax a month. Still more than enough to live on in most of the US.
Lets say you’re 25, you won the lottery and after taxes you wound up with exactly $3 million.
You take $80K to live on for the next year leaving you with $2.92M to invest and you get a 6% rate of returnAfter the first year you will have earned $175,200 in interest. So you take out $$87,600 and leave the other $87,600 in the investment. You’ll pay taxes, but if you consistently take out just 50% of the interest your investment will continue to grow and you’ll never run out of money.
Each year you’ll be able to take out more and keep up with inflation and still live a decent life without working.
However, if you continue working until retirement and leave the $3M alone, after 40 years it would be worth $30,857,153.81
I wouldn’t put money in to T-Bills as a primary income generating mechanism, but that’s just me… and I’m not doing it with $3 million either. However, having an investment portfolio that generates returns I can live on is exactly how I’m going to retire… well, they and a robust pension ;-).
“If Only You do X, then Y….”
If wishes were fishes.
“In the space of one hundred and seventy-six years the Lower Mississippi has shortened itself two hundred and forty-two miles. That is an average of a trifle over one mile and a third per year. Therefore, any calm person, who is not blind or idiotic, can see that in the old Oolitic Silurian Period, must a million years ago next November, the Lower Mississippi River was upward of one million three hundred thousand miles long, and stuck out over the Gulf of Mexico like a fishing-rod. And by the same token any person can see that seven hundred and forty-two years from now the Lower Mississippi will be only a mile and three-quarters long, and Cairo and New Orleans will have their streets joined together, and be plodding comfortably along under a single mayor and a mutual board of aldermen. There is something fascinating about science. One gets such wholesale returns of conjecture out of such a trifling investment of fact.” — Mark Twain
Alright, give me six million bucks, but only hand over three million. That way, I’ll owe you three million, you’ll owe me three million, and we’ll call it even.
It is*, I am in finance and have lots of elderly clients who take advantage of bonds. But something left out is that the interest on a bond is typically paid semi-annually as a “coupon payment,” so you would only receive 120k twice yearly. Then (at least in Canada) with interest, you are paying taxes at your highest tax bracket. So that 120k is now somewhere between 60-100k, depending on where you fall on the ladder… It is very misleading, to say the least. But for sure possible.
Edit: Plus, the 8% is crazy. You are looking between 4-5% in Canada for bonds currently.
The numbers aren’t right, but you can live like this, and most rich people do. There’s really three ways to do this:
Real estate:
You buy up rental properties and have a rental management company lease them out, do repairs, etc. You occasionally have people you have to evict and all that, so there’s risk, but this pays out pretty good.
Stocks:
Some stocks are known as “royalty”. This means they pay out dividends (the company gives every shareholder a portion of profits from that year per stock you have) extremely reliably. Your money grows as the stock grows, and you cash regular dividends checks. Most stock royalty only pays out dividends once a year though.
Interest:
This is the lowest risk option, and requires the most money. You basically just store your money in extremely high interest formats, like IRA’s CD’s, Treasury Bonds, etc, and live off the interest.
I just took 450 million dollars and bought 8% Treasury bonds. Now I make 3 million per month doing nothing. This guy sucks. Follow me for better financial advice.
This is why ordinary people will never be allowed to have £3 million. You can’t have a world where everyone is totally reliant on passive income. The majority have to be kept relatively poor so that the investments of the rich pay off.
Money makes Money, if you’re smart.
Ask yourself, if 1M dropped into your lap now, gratis. What would you do? The majority of people think of the 1st thing they can buy, lambo, new house, iPhones for all on me! Whatever material thing they can now buy.
Smart people don’t do that.
Your 1st million is the hardest to get. After that if you’re smart it’s not difficult to get another million, and so on.
Well, treasurydirect investments are pretty automatic on the dividends, and they won’t do dividend reinvestment, so yeah, you’re going to get the promised money, even it it’s just a few cents on a rolling $100 t-bill . Whether or not you actually can get the principle to amass fuck you money as a return is another problem entirely
As other people mentioned – you won’t get more than 4.75%. However there are two more things to think about:
– taxes – it seems that you have to pay 24% federal tax (quick googling – I don’t live in the USA)
– inflation- target inflation rate is 2% in the USA, so let’s take this as a medium value.
I quickly did the math. After taxes you get about 3.61% of return per year. If you want your income to increase proportionally to inflation – you are left with 1.61% returns that you can spend (you need to reinvest the remaining 2%).
With 3 milions invested – you will be left with $48.3k. Seems like enough for a single person to live outside big cities in the US, especially if you have your own property to live in. Probably not enough for a comfortable life of a family.
The real return of S&P over inflation is ~Â 6% since the 50s.
6% of $3mil is $180k. That leaves you with $15k without diminishing your capital (we took out the inflation part earlier on, the nominal return you got from the 3 mil was more than 180k).
So yes, with $3 mil, you can live comfortably “forever”. But not by investing in treasury bonds, their real return is much less.
8% of 3 million is indeed 240k which divided by 12 comes out to 20k. So technically that is correct. In practice though I’m not sure where he’s finding treasury bonds with that high interest but they’re currently not available.
But in general it is absolutely possible to generate passive income through investments and treasury bonds are generally considered to be a safe bet because you’re essentially lending your money to the US government and they’re paying you back with interest across 20-30 years. You receive two payments per year and after 20-30 years (usually maturity date) you’re also paid back the full amount you initially invested on top of the interest you were gobbling up for these past 20-30 years. But it’s never that simple. Some people live off of less but it’s more involved and more risky and involves a lot of active management and discretion. Some investments are safer and offer less risk but also offer less returns.
Generally speaking considering that current interest rates are almost half what this guy is describing you’d make the average US salary passively from that 3 million invested. There are better ways with not that much more risk to invest that kind of money and see better returns.
“TheyDidTheEconomics”.
The main reason that this plan is unsustainable is that Treasury bonds haven’t paid 8% for at least 20 years now. He is relying on being able to invest in something at a price that doesn’t exist.
So Elfenbein’s comment is basically like saying “Well, you can get rich easily by buying a house for $30,000, and a new car for $2,500.”
Why not just put half your $3M into a treasury bond that makes 16%? Then you have the remaining $1.5M to spend on other expenses like butter, candles, lawn care, and so on.
I’m not sure about US Treasury bills, but UK Gilts are non-compounding, so you get your flat interest every year until maturity. Most recent was 4.125% expiring in 2029.
With £3m assuming inflation at normal target BoE rate of 2% for the life of the gilt (4 years) you’d end up with (rough estimate):
£3,000,000 principal repaid
£123,750 total interest accumulated (£3m @ 4.125% x4)
Apply inflation: £3,123,750 x 0.98^4 = £2,881,247 Net Present Value
So on the face of things you’d lose money on the investment if bought at issue and left to maturity, but then on secondary markets the prices fluctuate based on macroeconomic conditions. So you could pick up existing bills cheaper which repay more principal (i.e. 30,000 bills currently trading at £90 rather than £100, you’d spend £2.7m and make a £300k capital gain at maturity). But as with markets becoming more efficient, everything is priced in.
Either way, you need a compounding or index linked investment to combat inflation, but then as to how much you can live off of and still maintain the same level of real-term wealth is down to the individual and lifestyle choices. If it were as easy as simply getting a load of cash and buying government backed securities, everybody would do it and nothing else.
It is “possible”, but (1) the numbers are wrong and (2) it is still a foolish thing to do.
Treasury bonds don’t pay 8%, but closer to 4.5%. And the rate is variable. It could be 2% a couple years from now, and 6% the year after. The return will also never be greater than inflation. So if you decide to use this strategy over the long term your investment will slowly lose value (the opposite of what an investment should do), because it will stay the same while everything gets more expensive.
$3 million today sounds great, but will you be able to retire on the same $3 million 40 years from now? This is why people invest in stocks, real estate and everything else.
I worked for a multi millionaire back on 1996 , his daughter told me that his money generated $325,000 per month. He told me himself that his accountant called to tell him he was dipping into the principle. Yup he was spending $325,000 every month
Others have already pointed out that there aren’t t-bills yielding 8% which underscores the problem with this strategy: interest rate risk. When your bonds mature, you’d have to buy new bonds at 8%. If you can’t find anything with that high of a coupon, you’re going to have to scale back your lifestyle of canabalize your principle. This is why equities are an important part of a portfolio.Â
Real world, start at 18 and push as much into a Roth IRA as you can. The first 20 years will feel like it’s nothing. Then after 20 years you start to make money. The last 10~20 years from there you are a quiet millionaire. You pull a % that is less than the growth so it doesn’t shrink. Transfer to a trust when you’re dead with trustees.
Market is always worth investing in. Historically it just goes up. Yes you get losses here and there. But the you get rebounds and up it goes again.
The people who have millions of dollars they can afford to spend on treasury bonds don’t generally have a cost of living low enough that the passive income they’d generate from those bonds would pay their expenses.
If you win the lottery or get a massive inheritance though, you could definitely do it, though the payout is much less than the stock market.
Sort of the idea yeah… Say you retire with 1 million, and that 1 million is making 5% / year. That’s 50k / year to live on from the interest alone. This is a super simple example obviously because you have taxes and what not.
Being rich by default will net you more by doing nothing in a month than working a year at minimum wage. After taxes. Which will be at a higher rate.
Look into the FIRE movement and Dividend Investors. The concept is simply living off of capital gains alone, and plenty of people do this and/or strive to do this. This is a concept that many retirees use to retire with.
The internet says that treasury bonds pay out the interest every 6mo ([source](https://www.investopedia.com/ask/answers/033115/what-are-differences-between-treasury-bond-and-treasury-note-and-treasury-bill-tbill.asp))… so…
$3m * 8% = $240000
$240,000 / 6 = $40,000 / mo
Am I missing something? Sounds like there’s $20k missing from this equation…
So… here is reality. During ZIRP you could buy a jet and use it to offset taxes. If run a business that has a decent payroll base your bank will give you a zero interest mortgage as a perk.
If you stop being negative and just learn how the economy works for you, you will end up doing pretty well. Anyone in the US can get to 3M in assets before they are 45 no matter where you start out. Anyone. Thats reality.Â
I mean a functionally retarded Polish guy, who sold yoyos, was able to afford 6 million to make his own movie. Surely, you arent functionally retarded?Â
That’s not at all how it works and that’s not before getting into the fact there are no more 8% rate bonds and just so you all know, the stronger the credit worthiness of the country, the lower the interest rates are because your money is “safer”…
Anyways, Treasury Bonds don’t pay out monthly, so get that our of your heads right now. They pay 2 times yearly.
And at a rate of around 4% (can be 5% if you find a lesser rated bond), you’re barely above inflation.
But wait, there’s more!
Unless you have the sheer volume (meaning millions of dollars) to buy, then you’re really talking about making peanuts “monthly” (aka semi-annually) because whatever you put in, multiply that by 4% and you’ll see that you’ll likely make tens of dollars, MAYBE hundreds of dollars every 6+ months.
So no, you can’t live like this and you can’t live with this spending philosophy. Treasury Bonds aren’t there to make you live comfy, they’re there to invest your money into as a retirement fund (hence 20-30 year bonds).
So sorry OP, but this isn’t a game you can play and win. Not at your level and the reason I know that is because if you had millions to invest, you wouldn’t be asking Reddit, you’d be asking your financial advisor/accountant.
Source: I’m a CFO and deal with this constantly.
Only 3 mil. Fuck yea man im in but right now all my money is liquid, like liquid debt or whatever but I can afford about .000002312 percent. Im bout to be rich and if u don’t join in ur a sucker!