Current Events > $3 million USD or guaranteed 20% returns in the stock market for life?

(+) Yeah! (+)

You are assigned a magical broker who will control your portfolio and use his abilities to guarantee precisely a 20% return every year. This magical broker will only accept money upon which you have already been taxed, and you will be unable to see what he does so you won't be able to use it to help anyone else.

I don't have that much money to invest, I'll take the 3 million.

I'm young, so that 20% guaranteed return would almost certainly end up being more than $3m over my life.

20% return all the time is stupid money. You start small, work and flip and youll hit 3m in no time.

reincarnator07 posted...

I'm young, so that 20% guaranteed return would almost certainly end up being more than $3m over my life.

Yeah, but then you'd have to keep working. With the $3 million, you can just live off $1 million and invest the remaining $2 million and in 15 years at an 8% return, you'd already have $6 million that is continuing to compound.

For the 20%, if I started off with $200,000 to invest, it'd take me 15 years without additional investments to even accrue up to $3 million.

I personally would still take the 20% because I'd just pool my family's money and my own (probably $60,000 - $70,000 a year post tax) as I don't mind working for now.

Could I like take out a loan of a million and use that to invest?

Or does it have to be actual income? If it has to be actual income, then I'll take the 3 million and retire in like 5 years.

chrono625 posted...

20% return all the time is stupid money. You start small, work and flip and youll hit 3m in no time.

3m is a massive start though. If you don't have much to invest, it will take quite a while to pass what you'd get from investing the 3m.

chrono625 posted...

20% return all the time is stupid money. You start small, work and flip and youll hit 3m in no time.

Well, it's 20% per year not 20% on all trades.

Sexypwnstar posted...

I personally would still take the 20% because I'd just pool my family's money and my own (probably $60,000 - $70,000 a year post tax) as I don't mind working for now.

emblem-man posted...

Could I like take out a loan of a million and use that to invest?

Or does it have to be actual income?

Has to be actual income that you personally have been taxed on. No loans or pooling income with other people.

I don't have any liquid assets, so 3m pls.

Anony1125 posted...

This magical broker will only accept money upon which you have already been taxed

So roth ira counts but traditional doesnt?

Either way deffo the guaranteed 20%

It'll take a few years to ramp up to beat out the $2mil but i could probably retire quite comfortably in my mid 30s with guaranteed 20% returns

20% of 0 is 0 lol @ me having extra money to invest.

3 million, though both are similar for me.

5% returns on the 3 million would be better than the 20% on the current money I have for maybe a decade or even two.
I'll likely have more after 15 years or so with the 20% returns, but that's quite a bit of time.

With how much I can afford to invest it would take about 20 years to hit 3 million. Lump sum.

I have plenty to invest and am earning at a rate that would allow me to continue investing heavily.

Plus I live somewhere where living off of the interest would be really easy, so Id take the guaranteed 20%.

1 million would be enough for me to retire right now, give me the 3 mill.

I'm curious what the math would be here.

What would be the optimal start up here that would make the 20% more profitable? How many years would you want to reach the same spot? 10, 20, 30 years? Because 20% forever is kind of nuts when you think about it. You essentially double your money every like 8 years or something. Then if you throw in more money, it bounces even quicker.

In short, I feel like this is a math problem, similar to the lottery debate, lump sum or cash payments for X amount of years.

I'd take the money. I could go ahead and retire (though I'd still want to work in some capacity, like volunteering) and live a great life.

ClayGuida posted...

I'm curious what the math would be here.

What would be the optimal start up here that would make the 20% more profitable? How many years would you want to reach the same spot? 10, 20, 30 years? Because 20% forever is kind of nuts when you think about it. You essentially double your money every like 8 years or something. Then if you throw in more money, it bounces even quicker.

In short, I feel like this is a math problem, similar to the lottery debate, lump sum or cash payments for X amount of years.

You can set up an equation for it (minimizing some assumptions)

You want to find x such that

1.2^x * (initial investment) = 3000000 * 1.04^x (I'm just going to say that with minimal effort you can get 4% if you just took the lump sum)

It'd take 40 years if you start with $10k.
28 years if you start with $50k.
24 years if you start with $100k.

But that's if you never take any money out and you can always lower the amount of time it takes for the original to be better by investing more money.

Taking 3 Million now and living my life

I'll take 3m and quit working now

Nice, close poll.

$3kk for sure

I'd have all my debts gone and enough money to buy a small house for my partner and I.

It would be life changing, 20% of nothing is still nothing.

This is basically a "what is your current net worth" question

3 million and invest most of it normally.

Jeremy517 posted...

This is basically a "what is your current net worth" question

I mean that's a big part of it, but certainly not the only factor. If you had $500,000 you could throw into the stock market right now and the market averages 7% for the future, it would still take you like 17 years for the 20% returns to pass the 3 million. Of course if you're planning on living another 25+ years and your goal is to stockpile as much wealth as possible, the 20% returns offer a higher potential upside. But even for people with what I would consider a pretty high net worth I could understand why they might prefer the security of being able to retire or buy whatever they like right now vs. the potential of having more in like 15-20 years if you never spend any of it.

I'll take the returns. Over time that'll become way more, especially if I can be certian of it so don't have to account for risk.

I'd be able to get $10k into it basically right away, and I'd be a lot more inclined to keep adding under these circumstances.