
Show HN: Simple monthly passive income calculator - ardme
http://www.1000monthly.club/
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nspeller
Nice job! I made some interactive visualizations to calculate something very
similar:

[https://www.workfortime.com/investment-
calculator/](https://www.workfortime.com/investment-calculator/)

[https://www.workfortime.com/retirement-
calculator/](https://www.workfortime.com/retirement-calculator/)

I tried to show how age and length of investment really impact how much wealth
you can create.

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hughperkins
Note that looks like you are assuming 4% investments after retirement. Per the
passive investment chart, this implies a fairly high level of risk? I'm
unclear if you're also assuming we will live forever?

~~~
JoshTriplett
4% returns are a very cautious estimate, one that would have worked even for a
period spanning the Great Depression, or any other stock market crash.

~~~
froindt
I agree, but to add a few more details:

* This is typically cited from the Trinity study ([https://en.m.wikipedia.org/wiki/Trinity](https://en.m.wikipedia.org/wiki/Trinity) study).

* It is looking at a 30 year time horizon. For longer periods you'd need a but more money, but not double. 3% is incredibly safe, and wouldn't take _that_ much longer to acquire once you're at 4%.

* Slight reductions in expenses during down years have a huge effect on the overall success of the portfolio. If you could reduce expenses to 3.5% during severely down years, that would significantly help the success and longevity of your portfolio.

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adjkant
Having hand rolled my own retirement calculator (excel) with a lot of other
variables that seem like overkill at first, I think this is very misleading if
you don't at least account for inflation. It gets complicated real quick when
you start realizing that if you need amount X and it takes Y years to get that
X amount, the goalposts have moved by the time you actually save up to X, and
now may need 1.2X. Not to mention that the passive income buying power will go
down each year, so you actually need to have passive income growing at the
same rate of inflation. Yes, this complicates and it would be nice to have a
simple calculator, but the reality is there is no real utility for this other
than to highlight the principle of "gotta have money to make money".

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froindt
Have you looked into engineering economics? The formulas you'd need are
already developed depending on the scope you're building. Present value
calculations will handle most of the hard work, letting you talk about
everything in "today" dollars.

~~~
adjkant
I've taken a macro course and am more or less using those formulas (and
translating them into basic examples in the grandparent). Present value only
does so much lifting though, as my scope is a lot wider. Life is more
complicated than that. You can't forget about different taxation treatment
when comparing Roth/Traditional savings, savings outside of retirement
accounts when applicable, etc.

Excel also acts as a wrapper to allow for me to change my annual budget
easily, my expected salary over time, expected inflation, etc and see the
results. I'm not reinventing the wheel here, just making my own instance of
the wheel. But the point remains: it's a heck of a lot more complex than this
calculator.

One of my "ideas to do if I had time" it to take that and make it into a
"simpler" service that could actually be useful to people. I know most
retirement helper companies try to do this but wow are they bad in my
experience. The problem they are fighting of course is balancing the
simplicity with the customization though, which I suspect is the crux. Still,
to whoever finds that solution first, a pot of gold will follow.

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atm0sphere
It seems the hardest problem is (always) finding the first million with which
one can invest.

~~~
ryanSrich
And it's not even that "easy". Say you make $1mm from the sale of some stock
in a startup. First off, this is incredibly rare. Second, your take home is
roughly $600k in the U.S. after federal and state taxes. So even $1mm doesn't
get you much. Good luck starting a business with only $600k.

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toomuchtodo
> Good luck starting a business with only $600k.

Some of the most popular, profitable YC startups (even just regular 'ol
startups) were started on a fraction of $600k.

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dekervin
There is a school of thought that argues that too much money at the initial
stage is actually harmful.

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freeloop3
Check out [https://firecalc.com](https://firecalc.com) for a great utility to
estimate what you need to retire on.

~~~
shostack
Firecalc is amazing, but be sure to read all the instructions carefully.

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AznHisoka
I assume this does not take into account taxes?

If not, I would like to see an option to input your tax rate and get a more
accurate number. If I want to get $10,000 in passive income a month, a 12%
return from a $1,000,000 investment per year won't do it because I'll need to
pay taxes on the $120,000.

~~~
nikkwong
It's more for illustrative purposes, not to be used as an actual calculator

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lurym
I think that comments here are really negative towards capitalism and
generally saving for passive income. I would just like to say that even if
it's difficult to achieve 1000$ passive income it's always good to generate
any passive income at all. Even if it's 5$ it's good once you calculate how
much it will give you in your whole life (if you are young of course). Saving
is like a snowball that accumulates money. I am nowhere close to FIRE or 1000$
passive income but I like to think that I have savings that allow me not to
work for at least X years (mine number is between 3-4 years now). It gives me
some 'fuck you' approach towards my job that helps a lot with the stress and
improves my assertiveness.

~~~
jimmies
>Even if it's 5$ it's good once you calculate how much it will give you in
your whole life (if you are young of course).

Please be extremely careful when you tell young people that.

I am 30 now. I am used to be a person who worked aggressively towards FIRE
philosophy in the last 3 years. I have saved a whooping 30% of my income over
3 years with my meager grad student salary. I think I had seen both the
positive and negative sides of the FIRE philosophy.

Positives:

\- It doesn't matter how much my income is, as long as I'm bothered to do the
calculation and be wise when I spend money, I'd be well off.

\- It reminds me of being creative with my pleasures - many/most good things
in life doesn't cost money.

\- Life is much cheaper when I have spare money. I don't have to sweat for the
bank fucking me over when I receive a paycheck a week late. Or I have a flat
tire. Or I have a tooth acting up. Or I want to invest in that new thing
called buttcoin years ago.

Now negatives:

\- There is an incredibly thin line between being frugal and being cheap. If
saving money causes me inconveniences, strangers stare at me for trying to
save a couple of bucks doing funny stuff, would it be worth it?

\- The perception that I need to retire early someday because all jobs are
boring. I think that's wrong. If I do the right job, I will want to do it
after I retire. If I do the wrong job, three years and it burns me out (which
it does). I can always switch jobs and take a cut in my paycheck. The thing I
can't do is to suffer from a shitty job with a good salary and hope that one
day I will save enough 'fuck you' money to quit. At the point I put in that
'fuck you' note, I will realize that I am a bitter loser who hates everything
all my life.

\- The $5 adds up philosophy. A counterexample for that is Steven Dubner's
philosophy: If it's < $X dollars and I want it, I will get it and not think
about it. My income, in general, will only ever go up. Saving $5 here and
there for that overpriced bottle of water or that sandwich at the airport,
having to fight with my inner self for 10 minutes deciding that is a waste of
time and energy.

\- Everyone I love and I myself won't stay young forever. When I am young,
money buys me a lot of good shit when I can still enjoy it. Plus, people like
surprises, things I would go above and beyond their expectation, money
included. Although my girlfriend appeared to be very frugal, and I myself
might saw no appeal in the latest iPhone X, but my girlfriend would have
appreciated it if I had bought it for her. She also would have deserved and
appreciated that fancy meal on the weekend because she has been cooking for me
a couple of meals during the week when we were both busy. What's the point of
having money when I only have it for myself with no one to share? I am glad
cases I was more generous than I would, and I regret cases where I could have
been more generous to the people I love.

Overall, I am less aggressive now. I keep the FIRE philosophy in mind, but I
don't work aggressively towards it. The present is to enjoy, not to suffer as
to hope for the future that might never come.

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poster123
Focus on total return, not yield. A company that returns money to shareholders
primarily through stock buybacks is not inherently less valuable than a
company that only pays dividends. In a taxable account, capital gains are
usually preferable to dividend income. Read about "shareholder yield".

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everdev
I think the main problem is by the time you've made the $2.5M required to
passively make $5k/month your lifestyle and expenses probably exceed
$60k/year.

It's hard to imagine this reduction in expenses but I guess that's the reality
of retirement.

~~~
froindt
That goes to show how frugality and not allowing lifestyle creep makes all the
difference. At the end of the day, it's not your salary that matters but your
percent of income saved. Two people can follow the same trajectory even when
starting at different salaries and retire at the same time even if one makes
double the other. There are of course some caveats. 40k/year has less room for
cuts if there's a down year than 80k/year.

Also, 2.5 M for 60k/year is not a great strategy (100% CD's). While it's for
all intents and purposes guaranteed, it's incredibly conservative. That's a
2.4% withdrawal rate. That would hardly keep up with inflation. The Trinity
study shows 4% to have not than a 0 balance 95% of the time on a 30 year time
horizon (I believe with an 80/20 split of stocks and bonds, but that's from
memory). Many times you'd end up with far more than you started retirement
with. A 3% withdrawal rate (while invested in stocks and bonds) would almost
guarantee perpetual money on a 50+ year horizon.

To quote one of the top posts on /r/financialindependence, build the life you
want then save for it. Find what makes you happy and spend money on that. Cut
money on things that don't add much marginal happiness.

[http://www.mrmoneymustache.com/2012/01/13/the-shockingly-
sim...](http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-
behind-early-retirement/)

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andrepd
It's sort of like capitalism in a nutshell. Have money? Great, live a grand
old life off the dividends. Don't? Get bent. Work your butt off the the rest
of your life for scraps.

~~~
froindt
There is middle ground though. Yes, if you don't have marketable, non-easily
replaceable skills you'll have a harder time, but many people could make a
median income, live a modest lifestyle, and retire 10+ years before 65.

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pards
>> You are much more likely to accumulate a lot of money by starting a
business and selling it, only then can you expect to reliably live off of
passive income.

Yep. That pretty much sums it up.

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imba404
Great tool, will have to show my family

Did you account for the principal also accruing value while you're saving up?

E.g. In the HY Savings account for a 1K/month passive income, you need
$827,586. If you saved $1K/month, and reinvested that income until you got the
$827K, it should only take you 20 years, not 23.

The error gets bigger when looking at longer time frames and higher returns.

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mrep
It definitely does not.

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ibdf
Great... so you either need a lot of money or a lot of time. It takes money to
make money and it takes a lot of time to make money to make more money.

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sowbug
Typo: "Widthdrawal"

