Half of my $5,000,000 will go into an investment fund. I don’t have the money to buy rental properties, so living in my house, and earning from the investment fund will have to do, and it would do nicely. I probably could have gone lower, and acquire a rental property, but I wouldn’t want to deal with tenants at this level of a windfall. Simply put, I won’t be making enough to where my investment fund will supplement my rental income.
To figure out how much I will receive monthly, we must identify a few things. First, is how much will go into the investment account. Next, is the ROI (Return On Investment), and the last will be the taxes involved. The information below will go into all of those things.
First, I will have $5,000,000 with my windfall. I will devote half of that money to the investment account. This will mean the investment account is $2,500,000. Next is the ROI. I will want average risk which will be 9%. This is annually, so there will be an extra step to determine monthly income. There is also taxes. Capital gains is 25%. This will mean my net income will be 75% of gross. Therefore, the following formulas will be defined
$5,000,000 (windfall) ÷ 2 = $2,500,000
$2,500,000 (investment account) × .09 (Annual ROI) = $225,000
$225,000 (Annual ROI) ÷ 12 (months) = $18,750
$18,750 (gross) × .25 (tax) = $4,687.50
$18,750 (gross) × .75 (net) = $14,062.50