Half of my $5,000,000 will be set aside for investments. This is pretty risky, but living a comfortable life is unfortunately expensive. I could probably go lower, but 50% of my windfall will be a good point of risks. If I should go belly up, then I will still have the rental to live off of, but it will be much harder to do. The investment account is the biggest generator of my income, but it will also be the riskiest. I can afford to go with average risk, and while high risk is more profitable, it is also a higher risk. Low risk will likely bring me down below $10,000 per month. And again, I could probably live off of that, I would rather have an income that is more than $10,000 per month – especially if I am investing half of my income in the fund.
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) – $4,687.50 = $14,062.50