This MIGHT be happening for real now

[MichealKnight]

Greetings and Salutations all..... I'd like to give some background on myself to start.

I'm 43 now, married with 2 young kids.

My parents were 1st generation immigrants - the classic immigrant story. My Dad started pumping gas, eventually got a corporate job (middle management). My Mom stayed home and in addition to raising her own 2 kids...she ran a full time home day care with 6 additional kids. Parents worked hard, saved most pennies.....and eventually my Dad bought a small business and most of his business tenure was a struggle - -- yet there were some good years, they put away some net worth, got sis thru law school and parents retired at around age 55.

Since I was a kid....academia/athletics never my thing. At social gatherings I hated playing with the other kids but LOVED sitting with the "adults" and hearing about money, politics, news, etc. I was a terrible student and barely graduated high school.....but all thru High School I loved reading Money and Fortune, and loved the old CNN CrossFire and McLaughlin group. I had jobs since I was 14 (pizza shop, chicken restaurant, etc) and loved earning money. Eventually Dad allowed me to start working at his business - doing menial entry level work to start with and then rising thru a few ranks. He allowed me to make mistakes on his dime....and his ultimate goal was for me to get my own business. NOBODY gave my Dad this sort of training ever.

Anyways, I made decent money and from age 16-24 I lived at home and other than restaurants (i'm a fatty sort of I saved my earnings and at age 24 had a down payment for own business.

Bought an enterprise that lost big money all its life.....and I and my staff turned it around and made it profitable, succeeded wildly. Around 2010 - after the "crash" I had an offer from a wealthy competitor of mine …..so I sold it.

Business #2 - again an eternal loser. My nucleus of employees followed me to a new state -- and we AGAIN turned around a place and added tons of value. Lucky Me, sort of - I got bought out AGAIN at a nice profit. I did the deal because I wanted "sleep at night" money. Money that was mine. Cash. NOT subject to whims of business profits, recessions, internet competition, etc. At this point, Corporate Folk paid me well to take over my ORIGINAL business....which in 5 years had gone straight to hell.

2 years into it - I don't think I can resurrect it, the place is losing money and I don't see improvement in sight. It's a matter of time before I either turn in the keys, or am told to do so.

My kids are 10/6. I NEVER EVER flaunt wealth or show off EVER. My favorite restaurants are Burger King and the local diner quite frankly. But this forum is anonymous so I'd disclose financial details. To some it'll seem like a lot here, but to others it'll seem like pennies and that's all cool it's all relative.

Anyhow....

$3,500,000 liquid cash.
Plus, own a very nice house free and clear. (Would sell for over $1 million today)

1st my personal heartache conflict:

I'm not sure if I should be ashamed or not. I'm so sad that I might have to tell my parents that I finally failed. Could I have worked better or harder? SURE, what businessman or leader can't say that? BUT ….truth is I took over failing places, and did turn them around 2 out of 3 times. Also,...I survived the 2008 crash when around the nation, many of my peers went out of business and finally - - the internet has put tons of competitive pricing and profit pressure on my industry.....and more and more, I'm competing with people who own 5,7,and 10 locations...whereas I own only 1 meaning my pricing power and economies of scale don't match up.

So when my day of official failing comes - part of me feels ashamed.

BUT, part of me is proud not just because most of my life was successful. BUT I also feel that I can tell my parents....that all they did was not in vein. Here I am....43....no college......and I do have 3.5 million plus a nice house paid off and *maybe* I can stop working and live a rather decent lifestyle....and perhaps that can be looked on as an accomplishment.

I've spent many months with calculators, reading, etc. Never was much of an investor but now.....I am actively working on a plan to see of course how I can get the most returns without getting too crazy risky.

Thus far.... my vision is....

30% Commercial Real Estate (leased to corporate tenant)
30% High Quality, dividend paying stocks
30% Municipal Bonds.
10%, higher-interest CDs and MMFs.

This mix legally would make my Federal Tax Bill negligible which is beneficial. My hope is....that the stocks and real estate *somewhat* keep up with inflation.

*OK* *GO EASY ON ME* I respect everyone's opinions. However.....over the last year even after reducing some lifestyle expenses.....my living expenses I know will be deemed "too high" by everyone here and I respect that.....but for now, I'm pondering if I can pull this off and retire early.

Bottom line, if I can average 5% returns yearly...……..and keep up somewhat with inflation.....then I would be just fine.

Yes, if there's depression, and localities can't pay their bills.....then I'm totally scr*wed. But then again if things got that bad....and I had money vested in businesses that depend on consumer spending - I think i'd be scre*wed even worse.

Of course if this all works.... I will certainly have regrets and some sadness that I didn't have more success. BUT, I'm thinking there can be positives too:

*HEALTH. Perhaps focus on homemade healthier diet, and exercise. Finally get weight/blood pressure under control.

*FAMILY: DW like most moms is exhausted most nights after kid antics and activities. I'm *hoping* that if I helped more with some of that, her quality of life might be better.

10 YO DD. 6 YO DS. DS is bright but has ADHD/Mild Autism. I'm wondering....would it be a "plus" if I could spend more time on him...watching him, making sure he doesn't go the wrong way, spending more time with BOTH of them on school work, activities, fun stuff, etc knowing full well that in teen years they will want less with me.

Again I'm trying to show myself that while I didn't get "richer"(hate that word)…..I was able to deliver for myself and my family in other ways not available to be bought at the mall.

I'd first like to congratulate you ALL on your amazing successes, and I'd welcome any thoughts, opinions, comments on anything I've said here.

Happily and Sadly....I have a feeling that as days and months go by I'll be spending more time here.

Thanks for readin.

 

[bigcmagor]

I don't know anyone who would consider you a failure, so I would put that tidbit aside. Paradigms change and business models that used to work cease to be viable. It happens. At least the current gig isn't going to ruin you personally, thankfully.


With your history, I'd be surprised if you were done owning businesses. In the meantime, it seems some reflection on lifestyle is in order, especially if you are considering an extended or permanent sabbatical.


It's a great story and congratulations for your success.

 

[WestUniversity]

Thanks for your story. I agree with bigcmajor. You’ve taken a lot of risks and they’ve paid off. And as for the word “rich”, why don’t you replace that with “successful” or “financially successful”. Rich as you infer can have a negative connotation, but “successful” shows you’ve worked hard and earned it. Congratulations!

 

[cnocmmz]

Greetings and Salutations all..... I'd like to give some background on myself to start.

I'm 43 now, married with 2 young kids.

My parents were 1st generation immigrants - the classic immigrant story. My Dad started pumping gas, eventually got a corporate job (middle management). My Mom stayed home and in addition to raising her own 2 kids...she ran a full time home day care with 6 additional kids. Parents worked hard, saved most pennies.....and eventually my Dad bought a small business and most of his business tenure was a struggle - -- yet there were some good years, they put away some net worth, got sis thru law school and parents retired at around age 55.

Since I was a kid....academia/athletics never my thing. At social gatherings I hated playing with the other kids but LOVED sitting with the "adults" and hearing about money, politics, news, etc. I was a terrible student and barely graduated high school.....but all thru High School I loved reading Money and Fortune, and loved the old CNN CrossFire and McLaughlin group. I had jobs since I was 14 (pizza shop, chicken restaurant, etc) and loved earning money. Eventually Dad allowed me to start working at his business - doing menial entry level work to start with and then rising thru a few ranks. He allowed me to make mistakes on his dime....and his ultimate goal was for me to get my own business. NOBODY gave my Dad this sort of training ever.

Anyways, I made decent money and from age 16-24 I lived at home and other than restaurants (i'm a fatty sort of I saved my earnings and at age 24 had a down payment for own business.

Bought an enterprise that lost big money all its life.....and I and my staff turned it around and made it profitable, succeeded wildly. Around 2010 - after the "crash" I had an offer from a wealthy competitor of mine …..so I sold it.

Business #2 - again an eternal loser. My nucleus of employees followed me to a new state -- and we AGAIN turned around a place and added tons of value. Lucky Me, sort of - I got bought out AGAIN at a nice profit. I did the deal because I wanted "sleep at night" money. Money that was mine. Cash. NOT subject to whims of business profits, recessions, internet competition, etc. At this point, Corporate Folk paid me well to take over my ORIGINAL business....which in 5 years had gone straight to hell.

2 years into it - I don't think I can resurrect it, the place is losing money and I don't see improvement in sight. It's a matter of time before I either turn in the keys, or am told to do so.

My kids are 10/6. I NEVER EVER flaunt wealth or show off EVER. My favorite restaurants are Burger King and the local diner quite frankly. But this forum is anonymous so I'd disclose financial details. To some it'll seem like a lot here, but to others it'll seem like pennies and that's all cool it's all relative.

Anyhow....

$3,500,000 liquid cash.
Plus, own a very nice house free and clear. (Would sell for over $1 million today)

1st my personal heartache conflict:

I'm not sure if I should be ashamed or not. I'm so sad that I might have to tell my parents that I finally failed. Could I have worked better or harder? SURE, what businessman or leader can't say that? BUT ….truth is I took over failing places, and did turn them around 2 out of 3 times. Also,...I survived the 2008 crash when around the nation, many of my peers went out of business and finally - - the internet has put tons of competitive pricing and profit pressure on my industry.....and more and more, I'm competing with people who own 5,7,and 10 locations...whereas I own only 1 meaning my pricing power and economies of scale don't match up.

So when my day of official failing comes - part of me feels ashamed.

BUT, part of me is proud not just because most of my life was successful. BUT I also feel that I can tell my parents....that all they did was not in vein. Here I am....43....no college......and I do have 3.5 million plus a nice house paid off and *maybe* I can stop working and live a rather decent lifestyle....and perhaps that can be looked on as an accomplishment.

I've spent many months with calculators, reading, etc. Never was much of an investor but now.....I am actively working on a plan to see of course how I can get the most returns without getting too crazy risky.

Thus far.... my vision is....

30% Commercial Real Estate (leased to corporate tenant)
30% High Quality, dividend paying stocks
30% Municipal Bonds.
10%, higher-interest CDs and MMFs.

This mix legally would make my Federal Tax Bill negligible which is beneficial. My hope is....that the stocks and real estate *somewhat* keep up with inflation.

*OK* *GO EASY ON ME* I respect everyone's opinions. However.....over the last year even after reducing some lifestyle expenses.....my living expenses I know will be deemed "too high" by everyone here and I respect that.....but for now, I'm pondering if I can pull this off and retire early.

Bottom line, if I can average 5% returns yearly...……..and keep up somewhat with inflation.....then I would be just fine.

Yes, if there's depression, and localities can't pay their bills.....then I'm totally scr*wed. But then again if things got that bad....and I had money vested in businesses that depend on consumer spending - I think i'd be scre*wed even worse.

Of course if this all works.... I will certainly have regrets and some sadness that I didn't have more success. BUT, I'm thinking there can be positives too:

*HEALTH. Perhaps focus on homemade healthier diet, and exercise. Finally get weight/blood pressure under control.

*FAMILY: DW like most moms is exhausted most nights after kid antics and activities. I'm *hoping* that if I helped more with some of that, her quality of life might be better.

10 YO DD. 6 YO DS. DS is bright but has ADHD/Mild Autism. I'm wondering....would it be a "plus" if I could spend more time on him...watching him, making sure he doesn't go the wrong way, spending more time with BOTH of them on school work, activities, fun stuff, etc knowing full well that in teen years they will want less with me.

Again I'm trying to show myself that while I didn't get "richer"(hate that word)…..I was able to deliver for myself and my family in other ways not available to be bought at the mall.

I'd first like to congratulate you ALL on your amazing successes, and I'd welcome any thoughts, opinions, comments on anything I've said here.

Happily and Sadly....I have a feeling that as days and months go by I'll be spending more time here.

Thanks for readin.

Very impressive indeed. With that kind of liquidity at such a young age.... you should be be fine with a few tweaks. I would recommend moving some of that hard earned cash in some money making avenues so you will have more growth than safety at this point. Congrats on your success

 

[MichealKnight]

Thanks, keep it coming

Thank you ladies and gents for the replies and thoughts, I really appreciate it.

Now my biggest concern is.....

Can I realistically get a 5% investment return over the long term?

I'm hoping that this AA allocation means not all my eggs in one basket:

30% commercial real estate. (rent income)
30% munis
30% dividend blue chips
10% CD-MMF

I look at something like Vanguard Wellsley...and see that since inception they've made around 9.7%. Yes, that has many "booms" in it be it the 80s, the 90s, and this most recent 10 year run. BUT it also has the 80's recession, the dot-com bust, and 2008 crash included and with all that combined it still returned 9.7%.

I'm looking for 5%. That means that i'm looking for about HALF the returns in the future.

Do y'all think that's realistic?

 

[Dtail]

Thank you ladies and gents for the replies and thoughts, I really appreciate it.

Now my biggest concern is.....

Can I realistically get a 5% investment return over the long term?

I'm hoping that this AA allocation means not all my eggs in one basket:

30% commercial real estate. (rent income)
30% munis
30% dividend blue chips
10% CD-MMF

I look at something like Vanguard Wellsley...and see that since inception they've made around 9.7%. Yes, that has many "booms" in it be it the 80s, the 90s, and this most recent 10 year run. BUT it also has the 80's recession, the dot-com bust, and 2008 crash included and with all that combined it still returned 9.7%.

I'm looking for 5%. That means that i'm looking for about HALF the returns in the future.

Do y'all think that's realistic?

Have you tried using the Firecalc calculator? What is the relation of your expenses to your investments?

 

[gwraigty]

Now my biggest concern is.....

Can I realistically get a 5% investment return over the long term?

...

I'm looking for 5%. That means that i'm looking for about HALF the returns in the future.

Do y'all think that's realistic?

Yes. I've been mainly invested in fixed income securities for the last 15+ Years. Individual corporate bonds/munis, recently moving into ETFs of corporate bonds/preferred stock/high dividend stocks to get comparable results without all the efforts behind picking individual securities.

On average, most of my investments throw off 4.5% to 6% in an income stream, not including fluctuations in value. With your $3.5M, that would be $157,500 to $210,000 per year. Just a ballpark figure. Can you live off that? I'd have no problem.

BTW, my 21 year old son has autism. I know of the struggles. My daughter is 24. I've always been a SAHM. Quality time spent with kids is never wasted.

 

[samclem]

MichaelKnightly,
Welcome to the board! Looks like you've got a great story. Some thoughts:
1) "Failure:" Too tough a word. Everybody who takes risks

eventually has some that don't pan out, that's part of the game. In "try 3" you weren't alone in thinking it was a challenge that could be met--the folks who hired you thought so, too.

2) 5% long-term return: The number you probably should be looking at is >real return< (after inflation). Play around with FIRECalc and see what history says. IMO (and I'm not alone), it is reasonable to expect 2-3% real return over the coming decades. IMO, 5% real return would be unlikely given today's interest rates and stock valuations (i.e. stocks are expensive now relative to the corporate earnings of their companies over the preceding 10 years--that's often a sign that additional upward movement in prices will be limited, and that a downward move is increasingly likely)
3) Other:

a) Do you have an appetite for a small side-business? I ask because you're young and seem to get a lot of satisfaction from building enterprises that have increased value. If this is a significant part of your self image >and< you can keep yourself in check (so it doesn't take over your life), you might want a hobby business to spin off some "fun money" over the next few decades. Obviously, to avoid putting your existing funds at risk, you'd need to start with a biz that had a low requirement for starting capital.


b) Most planners use something between 3% and 4% as their annual "safe withdrawal rate." So, each $1000 in monthly spending ($12,000 in annual spending) requires $300,000 to $400,000 in investments. Take-away: you may find it a lot easier to live a little more modestly than to pile up the money it takes to support a "bigger" lifestyle.

c) FIRECalc can show you projections for withdrawals based on a starting amount adjusted annualy for inflation OR withdrawals based on a fixed percentage "take" from your investments each year. The "% of year end assets" method leads to greater year-to-year volatility in available spending, but also reduces the chance of very severe drawdowns in your assets. If you/your family can accept this volatility (might be possible with your paid-off house and if you have a lot of discretionary spending in your present budget), it can significantly increase your chances of having more to spend each year. Again, play a round with FIRECalc a bit and it will become clear.

Again, welcome!

 

[HI Bill]

Welcome! 5% after inflation is on the high-end of potentially successful withdrawal rates for FIRECALC, it's probably too high for someone who's 43. Especially with your AA of at least 40% low return investments (30% munis, 10% CD-MMF). If you really want to make this work at your age, you either need a more aggressive AA, or for better chances of success, a lowered spend rate or larger starting value.

For the 30% leased commercial real estate, what % are you clearing after expenses, taxes, repairs, and other costs? 5% or greater?

If you're unwilling to lower your spending, I'd consider accepting defeat on the current venture, walk away (know when to fold 'em), and find a way to make money for the next 7 years. Personally, I'd be perfectly happy selling my $1M house, moving to a less expensive dwelling (say, $500K), reducing my spending, and living on 3.5% of $4M, or $140K/year.

 

[cfran]

Welcome! 5% after inflation is on the high-end of potentially successful withdrawal rates for FIRECALC, it's probably too high for someone who's 43. Especially with your AA of at least 40% low return investments (30% munis, 10% CD-MMF). If you really want to make this work at your age, you either need a more aggressive AA, or for better chances of success, a lowered spend rate or larger starting value.

For the 30% leased commercial real estate, what % are you clearing after expenses, taxes, repairs, and other costs? 5% or greater?

If you're unwilling to lower your spending, I'd consider accepting defeat on the current venture, walk away (know when to fold 'em), and find a way to make money for the next 7 years. Personally, I'd be perfectly happy selling my $1M house, moving to a less expensive dwelling (say, $500K), reducing my spending, and living on 3.5% of $4M, or $140K/year.

Exactly what I was going to say, pretty sensible idea.