Money: how much is enough?

How much money would make you happy? I’ve got an exact figure: £3-5m. But why?

First, it’s realistically achievable. A salary beyond two but within three SDs from the mean, some investment and tax planning savvy, and long-term property and equity markets that regress over time to a steady 3-5% or so make it do-able for any intelligent individual. Hitting your mid-30s – and the midrange of the upper tax bracket – means that with discipline you can save £10-20k a year into tax-free pension plans and newbuild rental properties. With property especially, a yield-financed mortgage gives you capital growth with the cost of capital covered, leaving you ready to make the next investment two years later. A few such ratchetings over a decade or so, and you’ve got a portfolio the right size, albeit at 3:1 debt-to-equity. Some years later, as rents repay capital, the job is done.

Second, it doesn’t make you play the wrong game. Quite deliberately. The “game” – in which everyone with real money, the £20m-and-up folk, is a participant – is nothing more than one-upmanship, and as an ultra-minimalist I have no interest in yachts or Lears or mansions. That’s good, because £5m isn’t enough to buy them. (An ex-private banker once told me what really unites the ultra-rich is that they never have enough cash; it’s all leveraged into keeping up with the Joneses.) Keeping to single-digit millions lets you live your life in the world that matters, not the one that ends at a certain postcode boundary.

Third, you can still stay anonymous. Once you get above £5m in assets you start popping up on various radars: the likelihood of being sued, for example, goes up exponentially. I like to stay in the shadows, just another face in the crowd. Because that’s a freedom no ultra-high-net-worth individual has: your anonymity, once lost, can never be recovered.

Fourth, it’s a proper capital sum. It’ll keep you going forever without ever having to eat into the capital. Just 4% growth a year covers longterm average inflation plus a six-figure annual income; your total wealth keeps pace with price increases while giving you an incentive not to munch the seed corn. And if anyone in the world says they can’t live on a hundred grand, I pity them for the tremendous complexity they must have in their lives. (How many alimony cheques was that sir?)

Fifth, it’s small enough to manage yourself. It’s a property portfolio of a dozen decent London flats that deliver a six-figure income in addition to capital growth. It’s a book of equities that grow at 3% in the long term. Or, if you like risk, it’s a spread-betting account where a disciplined set of strategies can hedge each other and never result in a margin call. Big enough to take advantage of any opportunity.

Note the theme here? It treats wealth not as a figure, but an attitude. It’s about knowing how much is enough, and when it’s ok to stop.

Perhaps that’s the secret to life.

3 thoughts on “Money: how much is enough?

  1. Good luck Chris on your journey to the £3-5m (if you haven’t already achieved it).

    With your skills though there is a significant danger of you exceeding it this and losing your anonymity. You might however enjoy that level too, I for one would like to find out!

  2. Pingback: £100k to £10m: a ten-year project | Chris does Content
  3. Chris, have you read the 4 Hour Work Week? It’s a great book about how you probably don’t need the £3-5m that you’re talking about, to live as you please! If nothing else it’ll make you think.

    I love your blog and your thoughts here and I’ve subscribed to your email list!

    You can get the book below. I think the first section will stand out for you a lot.

    P.S. I also liked your article on the PPC advertising. Ironically, that’s how I arrived at your site, through an ad in the sidebar of my Gmail.

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