Can you live off the interest of 1 million dollars? For the rest of your life.Weegy:
Probably not. Interest rates are very low right now. The highest guaranteed interest you can get is with a Certificate of Deposit, which only pays about 2%-2.5% at present. That translates to, at most, $25,000 per year before taxes, which is not much, but you might get by on it if you're single and don't have children (or health insurance).
The problem is inflation. Inflation rises about 3% per year, which means that $25,000 stays the same every year, while prices go up. Twenty-five years from now, everything from rent to food to insurance is likely to be twice as expensive, but you'll be pulling in the same amount of money. Eventually you just can't make ends meet, and you start to eat into the original million, so your interest gets smaller, so you eat into it more, until you have nothing left.
The twist here is that you can make more than 2%, but it's not guaranteed. A saavy stock-market investor can expect to make around 10% every year on his money. That would be $100,000 a year (again before taxes) which is enough to live on, and save some to protect against inflation. Unfortunately, that's not guaranteed, and you could end up losing money instead of making it.
Most financial experts set $5 million as the amount you'd currently need to be set for life. At that point, assuming you handle your money wisely, you'd probably never run out.Auto Answered|Score 1Weegy:
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