This is a 7% annual return. Furthermore, it's a real asset, and thus on average should keep up with inflation. This seems too good to be true. Aside from the obvious factors like maintenance, having to find tenants, vacancies, etc.... what's the catch? Something seems fishy about this argument but I can't put my finger on it.In the past 6 months I received $430,000 (won lawsuit).
I had $5,000 before I won this lawsuit.
When I won the lawsuit and collected the money, it did not make me any happier. In fact, it had 0 change in my life.
About me: I'm 24 years old, a single founder entrepreneur, YC-funded. I've never had a job in my life, and no company has ever wanted to hire me in Silicon Valley.
This is what happened:
I invested it in real estate. I collect rent, and I make $30,000 a year, pure profit. I hire people to take care of my houses.
I convinced myself that I didn't have to work for the rest of my life. My annual expense is exactly $30,000. I'll never need to get a job again. I can focus on my startup.
Because I put myself on this mindset, I am now frugal as hell. I do not over-spend, and I try to maintain my $30,000. This money has made me much more frugal than I was before. Now, I am scared to spend every dollar because I'm afraid I'll lose my money.
I moved to a shared-house in the ghetto. I pay $500 for one room rent. It's the cheapest in the entire San Francisco area. I only eat $20 a day. That is my budget.
Summary: I don't have to worry about working ever again, in my entire life. But this has made me very frugal in order to keep this in check.
What you should do: Invest it. Don't leave it in the bank. Buy real estate and collect rent. There is no better investment out there.
If you're trying to live off a perpetual portfolio, why doesn't everyone do this instead of investing in stocks that only pay out a 2-3% perpetual inflation-adjusted return?