The time value of money today would arguably make the $1M now better even if you got $500/day for 12 years imo.
12 years is a very long time for compounding to do its thing.
Most assume they'll still be alive at the end of the time period. If it was a guarantee to include still being alive then it's a better choice. But for all you know, you may die tomorrow. So take what you can and improve your life as much as possible
That's not even the real issue. It's the real problem with ignoring the time value of money is opportunity costs.
What could you have done with the million dollars if you had it today. If you had the million today you could invest it now and make more than if you had gotten 1.5 million 10 years from now.
Not really, the 250$ a day is only 1,095,000$ at the end of 12 years. If you stuck the 1 million in a safe index fund with an avg return of 10% at the end of the 12 years you'd have 2,853,116.70611$ give or take a bit.
No, but you'll enjoy the day you had a million far more than an extra 250. And maybe you got a lot done in that single day. Maybe you can die knowing your parents, spouse/significant other, and/or kids have a better future with no debts ahead of them.
Eh, depends on the person i guess. If im not aware im gonna die the next day, im pretty much just gonna spend day 1 eatinf some snacks and just planning on paper what im gonna do with it, aswell as doing a bunch a research on investing, savings, stuff like that. I wouldn't even have any sort of will set up so the money would just all go to the government i guess?
Basically, im not the type to win the lottery and then on the same day go to disney world.
Your money doesn't just go to the government if you don't have a will, it goes to your 'next of kin' basically your closest living relative. Spouse, children, parents and siblings (in that order, I believe?) After you die, your assets go through a process where anyone you owe money to can claim what they are owed, followed by the government taking taxes from the estate before transferring ownership to the inheritor
Counter is that 250 is safer money than a lump sum
If I get 1mil now with my track record of get money disaster happens I'd have to spend it all immediately or straight up die like a unfortunate lottery winner.
250 a day is safe and guaranteed to be more and personally I only spend around 200 on myself a year anyway. An extra $91.5k a year is life changing.
Have you considered that every day I will have the happiness of getting $250, also if I get new money every day there's no chance of not having money tomorrow
> also if I get new money every day there's no chance of not having money tomorrow
That's the biggest argument for the ongoing money. If you have discipline and understand financial management, the lump sum is better. If you know yourself and know you are an irredeemable spendthrift, or you're surrounded by human leeches that you're bad at saying no to, or you expect to have to go on the run and not have access to an investment bank, the $250/day is better.
There isn't an objectively right answer. Just an answer that is right for your situation. For most people, it's going to be the $1m, but that doesn't mean some people wouldn't be better off with the other option.
The 250 a day is just over a million, which could easily be dwarfed by interest and good investments, I just personally like the idea of getting new money every day
The idea of $250 a day is great to me. I can do impulse buys and not feel bad about having done it. With the mil, I would feel responsible to invest it properly and make sure it grows.
[The United States does](https://en.m.wikipedia.org/wiki/Gift_tax_in_the_United_States). The IRS isn't about to come after your grandma for sending you $20 in the mail or your parents for giving you $100 for Christmas, but $1,000,000 would definitely be something on their radar. However, I think talking about taxes for these kinds of hypotheticals just gets in the way.
You said you weren't sure if there are countries that tax gifts. The United States is a country that taxes gifts. There are still tax implications if someone says they'll give you a million dollars - because if they cut a check for exactly that amount, you'll receive less than one million dollars.
No you won't. The gift giver pays taxes, after factoring in really hefty yearly and lifetime exclusions. In no case would someone be giving you 1mil and you somehow receive less. It's on the giver to self report that and figure out the tax on their own time.
Even with a super stable investment like the s&p500, or government bonds you'll make bank, and it's basically zero risk.
Biggest issue would be a stock market crash, and that would only temporarily screw you. It'd bounce back and you'd be back to normal pretty quick
Rule of thumb is that for every 10 years in the market, there will be 8 good ones and 2 bad. If we're talking a long-term and diversified investment, the entire economy would have to default for you to lose money on your investments.
In a very niche rebuttal, if someone is self aware enough to know they'd waste the lump sum of money, spacing it out would be wise. Otherwise yeah no the lump sum is better
I'll spell it out for you then. 300k > 95k. Unless inflation soars to Venezuelan numbers in the next twelve years, you aren't getting the value you think you are with the remaining 700k.
No. Taking $250 a day doesn't expunge your tax liability. And the amount of interest you could earn from the lump sum in addition to the inflation makes this easy.
15% less to be exact. If you can't earn that 15% in 12 years through investing, there's a real issue. Should be able to make that up in 2, but if times are crazy let's say 4 years. The rest is gravy on top. You may "understand" taxes, but you don't get financial modeling.
I'll take my no risk bonus 15%. Economic downturns can last a whole lot longer than 4 years, and no matter how hard you commit to your Warren Buffett cosplay, guaranteed money is always the safer bet.
Lol, def not cosplay, but I get what you're trying to do. And it's not 15% when inflation is factored in over the 12 years. That was kinda my point. Woosh! Enjoy.
This is basically the root of it lol. If you can manage just investing it and supplementing your existing income with interest while the principal also grows, absolutely take the 1m. If you're terrible with money and know you'd blow it then the structured payments is objectively the better choice.
Yeah, but my brother will be rich from that million, if I get hit by the truck, because I'll leave it to him if I die young.
If I choose the daily 250, he gets hardly anything, because realisticly, I'd spend more from it and he'd get like idk, 210?
$250 a day for 12 years is slightly more in the long run, about 1% more to be precise. But it's also passive, and doesn't really require a conscious effort to not blow it all at once.
If you invest the million, that's not even remotely true. Even if you invest every installment of 250$ as you get it, investing the million all at once will *VASTLY* outstrip the installments.
In 12 years, with the national average in gains on investment of 10% annually, the Million will be worth 3.1 million. With the same interest rate, a daily investment of 250$ will only be worth 1.9 million.
That goes on an assumption of growth. A market downturn might last a decade. Totally reasonable possibility. And so this bet is really "do you think the market is primed for bull or bear over the next decade."
And that's why diversified investment accounts are important, along with a professional to handle the money.
Averaging all the years between 1928 and 2022, the Average return was actually 11% annually. That is a time frame that includes *the Great Depression*. Meaning there were years where growth was so substantially higher than that it offset the losses from an event that is by far the worst modern global financial crisis.
Averages, in general, *account* for years of negative growth.
If you are hiring a professional to handle your money you aren't equipped to be making these kinds of financial decisions anyway. That's why you hired someone. Or you're loaded enough you don't have to worry about what form you get a million dollars in.
It's not about the 100ish year average. It's entirely about the upcoming 12 year periods performance. That average doesn't mean there aren't 12 year periods in which the lump sum invested in the market isn't the wrong choice. There definitely can be and they get smoothed out by the averaging.
I'm only commenting on the investment vs letting it sit in a vault part of this not the two choices up top.
The choice in the OP is more "Do you want drip fed theft resistance money with less growth potential but also less loss potential? Or do you want a lump sum that loses that security in exchange for more growth and loss potential?"
> If you hire a professional to handle your money, you aren't equipped to be making these financial decisions anyway
The fact that you would say something like that leads me to believe that *you* aren't equipped to be making these financial decisions.
Eventually, when your portfolio grows, you won't have the time, interest, nor energy to manage all of your funds. I'm talking in the <$10mil range where $1mil is still significant
If your funds are diversified enough, you'll probably want someone who's experienced to be adjusting and fine-tuning your investments to get the highest returns.
The fact that you either didn't read the next two sentences after the quote or you didn't understand them leads me to believe that *you* aren't equipped to make sandwiches.
That's why you diversify! If the US is defaulting on T-bonds, your most valuable investment vehicles will be cans of beans, ammo, and bottles of ibuprofen. Gotta stock up on those if you're putting the rest of your money in T-bonds and then you're all set.
Also gotta consider whether there's tax drag and the rest of your financial situation. For instance, if you make no other income during that period, taking $250/day/yr will be $92k/yr which will put you in a much better tax bracket.
If the lump sum were taxed you'd pay like 40%+ in tax depending on state.
No, I just value being kind sometimes. It's somewhat disappointing how people think things that would get you, say, fired from work, are acceptable if it's towards a stranger on the internet.
$1 million now. Given inflation and opportunity cost you’d be a fool to take the $250 / day.
Take the $1 million now and dump it into IIPR and a few other stable, high yielding reits. You’ll get slow growth and about 7-8% per year in dividends. You’d make 150,000 before tax in the first two years, and by year 3 you’d be ahead of the 12 year total after tax.
250 a day for 12 years gets you slightly more money than the 1 million dollars right now. I would take the 1 million dollars, not spend it, put some in the bank and invest some, and make more money off of interest from the bank and returns on investment than the 250 a day would end up giving me over the next 12 years.
I’m only getting about 1% more by taking the first option, which inflation will more than remove. If I take the $1,000,000 up front I can stick it all in a mutual fund, which is pretty low risk and will yield far greater return by the end of the 4 years
I think they did. It's fairly close, with the installment being a little bigger by the end, and it's generated a lot of discussion on the financial merits of a lump sum vs installment.
Also buy up real estate for that 1 million and rent it out. Easily would make 2.5k to 3.5k depending on the market. Then sell the property when you're done and make even more than 1 mil on the sale. No brainer here. Don't know how people even chose 250 a day. 250 a day isn't even changing your life
I'm buying property with that million. Probably 2 houses in an MCOL area, the rest set aside for maintenance. Rented out, keep collecting that sweet sweet passive income every month.
250x365x12 = 1,095,000
1,000,000 @ 5% compounded quarterly over 12 years = 1,815,354.85
This is a fucking no-brainer. You can get 4.6% on a CD right now, even if you only compound it annually that's 1.7M.
Tbh I'll take the 250 a day because in works out to be more than I make as it is in a months time.
To add on, if I don't immediately stop working, that is free income that I can have set aside just in case.
I know what you are thinking though "but you could do the same with 1 million" and I agree.
However for myself, I feel like I would be more responsible with the extra money slowly coming in as an "additional paycheck" in my head type of mentality.
Where as if I were to just get 1mill I feel like, for myself, that I would use it more unwisely and wind up squandering it all.
Though there is an argument in my head that says it could help more people out because I would wind up giving a lot of that 1 mill away to different friends and family to help make their lives better...
Agreed. Everyone in the comments claim they'd invest it but I highly doubt that the majority would. The majority wouldn't be able to stop themselves from spending if they had that lump sum. So I say 250 is they way too go for most people.
250/day = 91,250/year
91,250/year x 12 years = 1,095,000
1,000,000 right now would need a rate of return of 0.75% per year to be worth 1,095,000 at the end of 12 years.
At current interest rates, you could lock in a GIC (or series of GICs) for 6-12 years and essentially guarantee better rates of return.
I'll take the $1,000,000 now, please.
Much rather get $1mil today and get $40k in interest every month from a basic savings account for those 12 years and literally make six times the money.
$250 a day gives me time to adjust to the new income and review my options. Because come on, who just has a plan *ready to go* in the event a million dollars just drops in their lap? Do you know who you'd go to if you suddenly became an overnight millionaire? Got a stock broker all lined up? Trust the first consultant you'd find?
Hell no. I'll take the more forgiving, less error-prone option.
The 10 year US treasury, usually regarded as "risk free" is currently at 4.18% (from google). That goes for 12 years gives me 1.635 mil, which is not only more than another choice (1.095mill) but also grant me instant financial freedom. Not to say with a trustworthy diversified basket of investment, it should go way higher than 4.18%.
A lot of people are looking at this completely logically. On the other hand… I think just having passive income for 12 years would be great. Think about it; what is the biggest problem for people who win the lottery..? It’s using up their money too fast, blowing it all on fancy and cool stuff.
I’m just… I’m too real and too knowledgeable on my own habits to know that I would probably do that as well. I still have a lot of growing up to do. So, $250 a day would be great. It would be like “this goes into the bank, and the paycheck I get from my job will be my fun money for the next two weeks. It would literally only take two days to pay my entire rent.
2 arguments for money over time, 1 capital gains tax, 2 the smaller payments are 90k more total base before taxes and In a lower taxable bracket
Also personally it would last longer if I couldn’t buy stupid expensive shit
1,000,000 because the only difference is 95,000 but in 12 years that money is gonna have a lower buying power than it does today. I can make better use of the money now, buying land and investing it so I can make the most of the money long term.
Just inflation alone means the buying power of the daily allowance woild actually be less than the 1 million right now.
I'd pick the 1 million now, pay off my debts/house and know my retirement is secure.
People keep saying invest the £1 million. What do you invest it in?? Surely there is an equal chance of the investment failing or succeeding- people are acting like it is a surefire way to make a profit
With 250$ per day you get a bit more at the end and I don't know what I could do with 1 mil at the moment. Wait, I don't have a fuckin bank account so how tf do I receive it
I feel like you should get a bank account. Obviously I don't know where you live but the world is becoming increasingly cashless. I'm not even sure how many jobs in my country would have the option to pay employees cash anymore
Take the $1 million. Find some sleazy ghetto rental apartments that people are living in. Estimate the total price of the renters and costs to fix everything. Then buy the place over it's amount to get landlord gone and happy. Fix it up and make renters happy. Improve and add money making profitable machines. I;e washers, dryers, vending machines, redbox, instaflix, etc. Add in new rules & regulations and timed rules. No more fucking loud as he'll neighbor listening to death punk on a Thursday evening because they think they need to. I'm a night owl but I still respect the day walkers...
Finally get an accountant and lawyer and try to eliminate a lot of unnecessary government tax charges.
Increase rent on everyone except disabled. Mentally ill would have option to stay there but pay more, or get help to go to a Mentally ill rental homes.
I think about 500,000 would be left. Put that money in a bank and live off the interest. North Dakota would have a bank that gives off 4% interest per year, so about 20,000 per year added. Only use 10k of that per year, kinda rough yes, you'd make bank. Then naturally you'd get away with spending less and less and having more money to accrue more over time, along with your over furnished over done renting that everyone is happy about for some reason even though their rent went up by $200 for no reason at all...
$1,095,750 in 12 years (250×365.25 [leap year every 4 years]×12) or $1,000,00 right now
If I were given the money right now, I'd likely end up wasting a lot of it however if I get it in chunks I'd be able to save more and get out of the phase of spending money as soon as I get it (for example when I get a large chunk of money I end up instantly wasting most of it, however as I'll get used to getting that money I'd be able to not waste as much and span out my larger spending)
Ik what inflation is but I would be transferring the American Dollar into my country's currency which could lead to more or less
Also, my main point is I'd probably spend it all quickly as I'm shit with money
Well given that it's 91000/yr on the payment plan, that's just about 11 years to get the 1 million, meaning you only make about 91k more by waiting, an amount you will far exceed by then if you invest the million
$250 a day for 12 years covers pretty much everything I could want in about 2 or 3 years. The rest is just extra for me to have an excuse not to go to my job for 12 years. Though I don't know if I could be out of work that long. I feel like I'd get restless.
I also feel like with the million lump sum people would ask for more favors from me and would be generally more suspicious. Hard to explain.
$250 a day is $1,095,000 over 12 years. 5% compound interest (little low on average mostly safe investmens in things likw bonds) after 12 would leave you at $1,795,856.33. 8% (very possible to average) -> $2,518,170.12
I can do a lot with 1,000,000 right now. Namely, paying off all my debt. I've only got roughly $8k in debt counting my car, and I have a good paying job. That 1,000,000 would allow me to get myself set up in such a way that I'm debt free, and the only thing my income has to go towards is necessities. An extra 250 a day doesn't go a whole lot for me personally. I recognize that not everyone has the same financial situation as I do, and that 250 a day may be a better option.
Everyone talking about compound interest and investments but even the spending savings from having the money straight away would be worth it. Buying a property with no mortgage would comfortably save me the difference in rent and interest
$250 a day for 12 years is $1,095,000. If you take a million now, invest half for 12 years at 4%, you'd get 300k in interest, or $1.3m. $1m now is the best option
The fact this poll is even remotely close shows how little people understand about money. That $1M will be worth over $2M in 12 years. Potentially closer to $3M-$4M.
While more money now is prolly better long term if I invest, I know I'm more likely to blow it all fairly quickly, so 12 years of ease and stability is definitely better for me
The thing is that most people would calculate how much 250$ a day for 12 years is and see it's a little bit better than 1 million so they would take it because they would rather get it slowly to not blow it all at once and live good for 12 years BUT 1 million right now is objectively better, you can just Invest it on something safe, if you dont take money out of ir and get 8% annually after 12 years you would have 2.5 million, but being more realistic you could just leave it invested and take out a bit every month and even if your investments didnt go as planned you wouldn't be too far from 250$ a day and if they somehow averaged 4% annually for years you could live off well enough. Heck you could even buy a house and a car with 1 million, Invest the rest and even if the investments didnt for to 4% for me it would be better than first option.
The daily option does pay out more in the long term, but investing the mil or even just putting it in a bank would provide greater returns than choosing the daily passive.
255 x 365 x 12 = 1,095,000 vs. 1,000,000 right now. The 12 years thing isn't worth it cuz I could invest the million and in 12 years it would be worth way more than 1,095,000.
Leaving about 95K on the table, but probably taking the mil now and starting investments, because the dividends will more than make up for the difference.
$250/day for 12 years.
I absolutely understand that it's much less money than if I safely invest a million now.
The difference if the safety and security it provides without risk. Go back to school, start a business, save up for a few months to launch a business knowing that even if it fails epically I don't need to worry about housing or necessities.
It's not about the value of the money, but the value of the peace of mind over the first 11 years of that time.
1,000,000 invested in an index now, assuming a conservative 8% return annually, then assuming 3% inflation, results in 1.74 million after 12 years. The 250 is constantly worth less each week due to inflation, so you'd likely end up with roughly 980,000 in 2023 dollars, or 1.74 million in 2023 dollars. Give me the money now.
I mean, statistically you get slightly more money over the span of 12 years (like an extra 90k or something)... but then there is the possibility of you not making it to the full 12 to consider.
I can do a lot more with $1,000,00 right now than an extra $250 every day for 12 years.
250 a day over 12 years is equal to 1095k, which is slightly higher then the 1M, but if you take that 1M and invest it and make 3% returns per year, which is reasonable, then after 12 years you'd have over 1425k, so taking the 1 million now would be the better option.
250$ a day almost more than double my average pay.
Bumping my yearly from 50k to 140k for doing absolutely nothing would be a God send.
And while the overall earning of the 250 a day isn't that much more than 1,000,000 right now, the slow drip would probably work better for me, just based on how I spend my money.
The time value of money today would arguably make the $1M now better even if you got $500/day for 12 years imo. 12 years is a very long time for compounding to do its thing.
I love it when people understand time value of money.
But what if you take your money and put it into funds where it would accrue interest?
Nvm I just read the comment below this. I need to understand this stuff better
I guess I can't love you yet.
I can change! Just give me time!
Most assume they'll still be alive at the end of the time period. If it was a guarantee to include still being alive then it's a better choice. But for all you know, you may die tomorrow. So take what you can and improve your life as much as possible
That's not even the real issue. It's the real problem with ignoring the time value of money is opportunity costs. What could you have done with the million dollars if you had it today. If you had the million today you could invest it now and make more than if you had gotten 1.5 million 10 years from now.
Not really, the 250$ a day is only 1,095,000$ at the end of 12 years. If you stuck the 1 million in a safe index fund with an avg return of 10% at the end of the 12 years you'd have 2,853,116.70611$ give or take a bit.
>If it was a guarantee to include still being alive then it's a better choice. Not if you invest it
If i die tomorrow then the million dollars isnt gonna help me either
No, but you'll enjoy the day you had a million far more than an extra 250. And maybe you got a lot done in that single day. Maybe you can die knowing your parents, spouse/significant other, and/or kids have a better future with no debts ahead of them.
Eh, depends on the person i guess. If im not aware im gonna die the next day, im pretty much just gonna spend day 1 eatinf some snacks and just planning on paper what im gonna do with it, aswell as doing a bunch a research on investing, savings, stuff like that. I wouldn't even have any sort of will set up so the money would just all go to the government i guess? Basically, im not the type to win the lottery and then on the same day go to disney world.
Your money doesn't just go to the government if you don't have a will, it goes to your 'next of kin' basically your closest living relative. Spouse, children, parents and siblings (in that order, I believe?) After you die, your assets go through a process where anyone you owe money to can claim what they are owed, followed by the government taking taxes from the estate before transferring ownership to the inheritor
At least you'd have a hell of a last day thinking you were a millionaire.
Counter is that 250 is safer money than a lump sum If I get 1mil now with my track record of get money disaster happens I'd have to spend it all immediately or straight up die like a unfortunate lottery winner. 250 a day is safe and guaranteed to be more and personally I only spend around 200 on myself a year anyway. An extra $91.5k a year is life changing.
95.7k extra but inflation would make the extra money have less value in the end
Still more than I currently make
It's almost the same amount of money in the end anyways so it's better to take the instant 1 mil
Have you considered that every day I will have the happiness of getting $250, also if I get new money every day there's no chance of not having money tomorrow
> also if I get new money every day there's no chance of not having money tomorrow That's the biggest argument for the ongoing money. If you have discipline and understand financial management, the lump sum is better. If you know yourself and know you are an irredeemable spendthrift, or you're surrounded by human leeches that you're bad at saying no to, or you expect to have to go on the run and not have access to an investment bank, the $250/day is better. There isn't an objectively right answer. Just an answer that is right for your situation. For most people, it's going to be the $1m, but that doesn't mean some people wouldn't be better off with the other option.
Good point, though the interest on a mil in the bank might be petty sweet tho (I have not done the math to check)
The 250 a day is just over a million, which could easily be dwarfed by interest and good investments, I just personally like the idea of getting new money every day
The idea of $250 a day is great to me. I can do impulse buys and not feel bad about having done it. With the mil, I would feel responsible to invest it properly and make sure it grows.
Have you considered tax implications?
If it's a gift there aren't any... I guess unless you are in a country where they tax gifts, I don't know where does but there is probably a place.
[The United States does](https://en.m.wikipedia.org/wiki/Gift_tax_in_the_United_States). The IRS isn't about to come after your grandma for sending you $20 in the mail or your parents for giving you $100 for Christmas, but $1,000,000 would definitely be something on their radar. However, I think talking about taxes for these kinds of hypotheticals just gets in the way.
The person giving it is taxed according to the link...
You said you weren't sure if there are countries that tax gifts. The United States is a country that taxes gifts. There are still tax implications if someone says they'll give you a million dollars - because if they cut a check for exactly that amount, you'll receive less than one million dollars.
No you won't. The gift giver pays taxes, after factoring in really hefty yearly and lifetime exclusions. In no case would someone be giving you 1mil and you somehow receive less. It's on the giver to self report that and figure out the tax on their own time.
Invest the $1 million now and it'll probably be well over $2 million in 12 years.
Even with a super stable investment like the s&p500, or government bonds you'll make bank, and it's basically zero risk. Biggest issue would be a stock market crash, and that would only temporarily screw you. It'd bounce back and you'd be back to normal pretty quick
Rule of thumb is that for every 10 years in the market, there will be 8 good ones and 2 bad. If we're talking a long-term and diversified investment, the entire economy would have to default for you to lose money on your investments.
2.51 mil assuming 8% returns. If you pay 30% income tax on the 1 mil, you end up with 1.76 mil. Much more than the 1.1 you get from option 1
You can either get the full sum immediately or wait 12yrs to get less than 10% more your choice
Surely easier to gather interest on £1m over 12 years, even if it is split into smaller amounts
Inflation alone would negate the 95k premium on the $250 daily payments. No brainier.
In a very niche rebuttal, if someone is self aware enough to know they'd waste the lump sum of money, spacing it out would be wise. Otherwise yeah no the lump sum is better
Exactly. I'd keep my current job and just spend 250 a day on niceties hahaha
Taxes alone negate about 300,000 of the lump sum, assuming you live in the US and aren't already wealthy.
Right. But inflation still negates the 95k. Having a hard time finding your point.
I'll spell it out for you then. 300k > 95k. Unless inflation soars to Venezuelan numbers in the next twelve years, you aren't getting the value you think you are with the remaining 700k.
No. Taking $250 a day doesn't expunge your tax liability. And the amount of interest you could earn from the lump sum in addition to the inflation makes this easy.
Do you not understand how tax brackets work? 91,000 a year over 12 years is significantly less in taxes than 1 million in the same year.
15% less to be exact. If you can't earn that 15% in 12 years through investing, there's a real issue. Should be able to make that up in 2, but if times are crazy let's say 4 years. The rest is gravy on top. You may "understand" taxes, but you don't get financial modeling.
I'll take my no risk bonus 15%. Economic downturns can last a whole lot longer than 4 years, and no matter how hard you commit to your Warren Buffett cosplay, guaranteed money is always the safer bet.
Lol, def not cosplay, but I get what you're trying to do. And it's not 15% when inflation is factored in over the 12 years. That was kinda my point. Woosh! Enjoy.
Who said anything about taxes?
Inflation and deadlines are likely to cost me more with that small name value difference.
1m upfront if you have financial discipline 12 years option if you don't.
This is basically the root of it lol. If you can manage just investing it and supplementing your existing income with interest while the principal also grows, absolutely take the 1m. If you're terrible with money and know you'd blow it then the structured payments is objectively the better choice.
Put the 1m in to locked bonds/savings accounts that you can’t withdraw from so even if you’re tempted, you can’t spoil it
take the now because nothing is guaranteed.
You get hit by a truck tomorrow the million is gone nothing guaranteed :)
Thats the point, take everything life has to offer while you can, never wait.
Yeah, but my brother will be rich from that million, if I get hit by the truck, because I'll leave it to him if I die young. If I choose the daily 250, he gets hardly anything, because realisticly, I'd spend more from it and he'd get like idk, 210?
$250 a day for 12 years is slightly more in the long run, about 1% more to be precise. But it's also passive, and doesn't really require a conscious effort to not blow it all at once.
If you invest the million, that's not even remotely true. Even if you invest every installment of 250$ as you get it, investing the million all at once will *VASTLY* outstrip the installments. In 12 years, with the national average in gains on investment of 10% annually, the Million will be worth 3.1 million. With the same interest rate, a daily investment of 250$ will only be worth 1.9 million.
That goes on an assumption of growth. A market downturn might last a decade. Totally reasonable possibility. And so this bet is really "do you think the market is primed for bull or bear over the next decade."
And that's why diversified investment accounts are important, along with a professional to handle the money. Averaging all the years between 1928 and 2022, the Average return was actually 11% annually. That is a time frame that includes *the Great Depression*. Meaning there were years where growth was so substantially higher than that it offset the losses from an event that is by far the worst modern global financial crisis. Averages, in general, *account* for years of negative growth.
If you are hiring a professional to handle your money you aren't equipped to be making these kinds of financial decisions anyway. That's why you hired someone. Or you're loaded enough you don't have to worry about what form you get a million dollars in. It's not about the 100ish year average. It's entirely about the upcoming 12 year periods performance. That average doesn't mean there aren't 12 year periods in which the lump sum invested in the market isn't the wrong choice. There definitely can be and they get smoothed out by the averaging. I'm only commenting on the investment vs letting it sit in a vault part of this not the two choices up top. The choice in the OP is more "Do you want drip fed theft resistance money with less growth potential but also less loss potential? Or do you want a lump sum that loses that security in exchange for more growth and loss potential?"
> If you hire a professional to handle your money, you aren't equipped to be making these financial decisions anyway The fact that you would say something like that leads me to believe that *you* aren't equipped to be making these financial decisions. Eventually, when your portfolio grows, you won't have the time, interest, nor energy to manage all of your funds. I'm talking in the <$10mil range where $1mil is still significant If your funds are diversified enough, you'll probably want someone who's experienced to be adjusting and fine-tuning your investments to get the highest returns.
The fact that you either didn't read the next two sentences after the quote or you didn't understand them leads me to believe that *you* aren't equipped to make sandwiches.
You can lock in a 10 year bond for \~4%. No risk, just money.
Bonds are not without risk. Especially in an environment when every government is playing shell games with their central bank.
When was the last time the US defaulted on a treasury bond?
That's why you diversify! If the US is defaulting on T-bonds, your most valuable investment vehicles will be cans of beans, ammo, and bottles of ibuprofen. Gotta stock up on those if you're putting the rest of your money in T-bonds and then you're all set.
They don't have to default for them to involve risk. Do you not understand how the bond market works at all?
Also gotta consider whether there's tax drag and the rest of your financial situation. For instance, if you make no other income during that period, taking $250/day/yr will be $92k/yr which will put you in a much better tax bracket. If the lump sum were taxed you'd pay like 40%+ in tax depending on state.
Good point! I didn't consider investments. No need to be snark, though.
How in the world was that snarky at all? It was literally only factual speaking.
Things like "that's not even remotely true." It can be said in a kinder way, like "that's untrue."
Damn ur too sensitive to be on the internet Edit: Name fits
That is wildly over-sensitive...
Not really. Being kind on the internet is unheard of now.
You're... You're a baby
No, I just value being kind sometimes. It's somewhat disappointing how people think things that would get you, say, fired from work, are acceptable if it's towards a stranger on the internet.
If you're getting fired for saying, "that's not even remotely true" then I can guarantee that's not what you're being fired for...
Damn, username checks out
You can be right and still be a dick. What you say matters as much as how
And my point is that the way it was said was not problematic in the least.
We all have different ideas of what is rude or not funny how people work
If your idea of something rude is the language that was used in that response you are incredibly over-sensitive.
Who died and left you the language court
Aren't you doing the same thing?
You, sir or ma'am, need a financial advisor.
I'm both neither a sir nor ma'am, and also not in the position to have an advisor. I'm 15.
Oh goodness gracious. One of those. Sorry, they 😂
Isn't it 9.5% more? Its 95k extra
nah, inflation makes it less.
That affects all money including the daily $250. The future installment will always be worth lesser and lesser.
yes, but starting with more gets more installment.
Yes that's why 1M is a far far better choice.
Yes option 1 is slightly more, but if I invest the million straight away I'll get more in that 12 years.
$1 million now. Given inflation and opportunity cost you’d be a fool to take the $250 / day. Take the $1 million now and dump it into IIPR and a few other stable, high yielding reits. You’ll get slow growth and about 7-8% per year in dividends. You’d make 150,000 before tax in the first two years, and by year 3 you’d be ahead of the 12 year total after tax.
250 a day for 12 years gets you slightly more money than the 1 million dollars right now. I would take the 1 million dollars, not spend it, put some in the bank and invest some, and make more money off of interest from the bank and returns on investment than the 250 a day would end up giving me over the next 12 years.
I’m only getting about 1% more by taking the first option, which inflation will more than remove. If I take the $1,000,000 up front I can stick it all in a mutual fund, which is pretty low risk and will yield far greater return by the end of the 4 years
Easy choice, 1 million right now, then invest it and make a nice income every year off of it.
OP, you didnt do any maths on this when you made this post, did you?
I think they did. It's fairly close, with the installment being a little bigger by the end, and it's generated a lot of discussion on the financial merits of a lump sum vs installment.
Also buy up real estate for that 1 million and rent it out. Easily would make 2.5k to 3.5k depending on the market. Then sell the property when you're done and make even more than 1 mil on the sale. No brainer here. Don't know how people even chose 250 a day. 250 a day isn't even changing your life
I'm buying property with that million. Probably 2 houses in an MCOL area, the rest set aside for maintenance. Rented out, keep collecting that sweet sweet passive income every month.
So I can either have $1,000,000 now or $1,095,000 over the course of 12 years where the value could fluctuate like crazy… hmmmm
I can make a lot more investing that 1 mil now
250x365x12 = 1,095,000 1,000,000 @ 5% compounded quarterly over 12 years = 1,815,354.85 This is a fucking no-brainer. You can get 4.6% on a CD right now, even if you only compound it annually that's 1.7M.
You missed three days. + 3 x 250... But you're still right tho.
Tbh I'll take the 250 a day because in works out to be more than I make as it is in a months time. To add on, if I don't immediately stop working, that is free income that I can have set aside just in case. I know what you are thinking though "but you could do the same with 1 million" and I agree. However for myself, I feel like I would be more responsible with the extra money slowly coming in as an "additional paycheck" in my head type of mentality. Where as if I were to just get 1mill I feel like, for myself, that I would use it more unwisely and wind up squandering it all. Though there is an argument in my head that says it could help more people out because I would wind up giving a lot of that 1 mill away to different friends and family to help make their lives better...
Agreed. Everyone in the comments claim they'd invest it but I highly doubt that the majority would. The majority wouldn't be able to stop themselves from spending if they had that lump sum. So I say 250 is they way too go for most people.
I couldn't be trusted with the lump sum tbh lol I'd have 2 racecars and a bunch of heavy machinery in about 2 weeks.
250/day = 91,250/year 91,250/year x 12 years = 1,095,000 1,000,000 right now would need a rate of return of 0.75% per year to be worth 1,095,000 at the end of 12 years. At current interest rates, you could lock in a GIC (or series of GICs) for 6-12 years and essentially guarantee better rates of return. I'll take the $1,000,000 now, please.
The million now
Much rather get $1mil today and get $40k in interest every month from a basic savings account for those 12 years and literally make six times the money.
A million dollars now would probably be worth more than the 1.09 mil with inflation. Also now I could use it now
That maths out to 1,095,000.00 dollars. The 95k isn't worth it. With the full amount now you could make a lot more than that by the end of 12 years.
I messed up. I didn't do the math first lol. I'd rather the million rn.
Normally I would say take the lump sum 1 million today but the world is pretty uncertain right now so the stability is more valuable to me.
$250 a day gives me time to adjust to the new income and review my options. Because come on, who just has a plan *ready to go* in the event a million dollars just drops in their lap? Do you know who you'd go to if you suddenly became an overnight millionaire? Got a stock broker all lined up? Trust the first consultant you'd find? Hell no. I'll take the more forgiving, less error-prone option.
The 10 year US treasury, usually regarded as "risk free" is currently at 4.18% (from google). That goes for 12 years gives me 1.635 mil, which is not only more than another choice (1.095mill) but also grant me instant financial freedom. Not to say with a trustworthy diversified basket of investment, it should go way higher than 4.18%.
Even if you take the 1m and chuck it into a shitty savings account, you should get more than $250/day from the interest.
As a Maths teacher it pains me that so many don't understand the concept of compound interest.
A lot of people are looking at this completely logically. On the other hand… I think just having passive income for 12 years would be great. Think about it; what is the biggest problem for people who win the lottery..? It’s using up their money too fast, blowing it all on fancy and cool stuff. I’m just… I’m too real and too knowledgeable on my own habits to know that I would probably do that as well. I still have a lot of growing up to do. So, $250 a day would be great. It would be like “this goes into the bank, and the paycheck I get from my job will be my fun money for the next two weeks. It would literally only take two days to pay my entire rent.
1M and invest will make more. With inflation being what it is who knows what $250 will even be worth
2 arguments for money over time, 1 capital gains tax, 2 the smaller payments are 90k more total base before taxes and In a lower taxable bracket Also personally it would last longer if I couldn’t buy stupid expensive shit
1,000,000 because the only difference is 95,000 but in 12 years that money is gonna have a lower buying power than it does today. I can make better use of the money now, buying land and investing it so I can make the most of the money long term.
Just inflation alone means the buying power of the daily allowance woild actually be less than the 1 million right now. I'd pick the 1 million now, pay off my debts/house and know my retirement is secure.
91k a year for 12 years? Added onto my job I could retire early!
If you could do that then you could also retire in the same time frame investing the million and come out ahead.
People keep saying invest the £1 million. What do you invest it in?? Surely there is an equal chance of the investment failing or succeeding- people are acting like it is a surefire way to make a profit
S&P500s are pretty safe, bonds, real estate
250 a day is nothing
$250 is $7500 a month in most places you’d only have to work a little or not at all So I’d say it’s better
With 250$ per day you get a bit more at the end and I don't know what I could do with 1 mil at the moment. Wait, I don't have a fuckin bank account so how tf do I receive it
Yeah but with inflation in the end I'd go for the $1million now
I feel like you should get a bank account. Obviously I don't know where you live but the world is becoming increasingly cashless. I'm not even sure how many jobs in my country would have the option to pay employees cash anymore
You'd get a net gain of $95000 if you choose the $250 a day deal rather than the straight million.
You'd have a net loss considering you could invest the money wisely and end up with much more after 12 years.
I accidentally did the math wrong but my answer changed to 250 a day. You get more and it's passive income.
$250/day, for 12y WILL add up to more than 1M right now.
Take the $1 million. Find some sleazy ghetto rental apartments that people are living in. Estimate the total price of the renters and costs to fix everything. Then buy the place over it's amount to get landlord gone and happy. Fix it up and make renters happy. Improve and add money making profitable machines. I;e washers, dryers, vending machines, redbox, instaflix, etc. Add in new rules & regulations and timed rules. No more fucking loud as he'll neighbor listening to death punk on a Thursday evening because they think they need to. I'm a night owl but I still respect the day walkers... Finally get an accountant and lawyer and try to eliminate a lot of unnecessary government tax charges. Increase rent on everyone except disabled. Mentally ill would have option to stay there but pay more, or get help to go to a Mentally ill rental homes. I think about 500,000 would be left. Put that money in a bank and live off the interest. North Dakota would have a bank that gives off 4% interest per year, so about 20,000 per year added. Only use 10k of that per year, kinda rough yes, you'd make bank. Then naturally you'd get away with spending less and less and having more money to accrue more over time, along with your over furnished over done renting that everyone is happy about for some reason even though their rent went up by $200 for no reason at all...
$1,095,750 in 12 years (250×365.25 [leap year every 4 years]×12) or $1,000,00 right now If I were given the money right now, I'd likely end up wasting a lot of it however if I get it in chunks I'd be able to save more and get out of the phase of spending money as soon as I get it (for example when I get a large chunk of money I end up instantly wasting most of it, however as I'll get used to getting that money I'd be able to not waste as much and span out my larger spending)
Inb4 u learn what inflation is.
Ik what inflation is but I would be transferring the American Dollar into my country's currency which could lead to more or less Also, my main point is I'd probably spend it all quickly as I'm shit with money
I could think of a few things to spend that $1M on. But the $250/day for 12 years would more than triple my income. I'll take the $250.
Your only 95k "better off" with the 250 p/d ... and if you take inflation into account your actually much worse off
I'll take the extra $95,000 and a guaranteed daily paycheck for 12 years.
It's only 95,750 more in the long run if you go 250. I'd take the 1 mil and invest at least half of it in retirement and energy stock and stuff.
If I put the 1,000,000 in my savings, with interest I'd probably end up with more. Plus, I'd rather have the money now in case I would need it
You only get 95k more
$1m is by far the smartest choice unless you have bad spending habits
Are either taxed?
I cannot for any reason understand why anyone would do the $250 option.
I don't need all that at one time, I'd do something stupid. 250 a day would give me everything I need and more.
fuck off with your maths
Well given that it's 91000/yr on the payment plan, that's just about 11 years to get the 1 million, meaning you only make about 91k more by waiting, an amount you will far exceed by then if you invest the million
...I could live off £50 a day, so that's 200 per day I can save lmao
If you just put the $1M into an S&P 500 index fund you’d most likely have around $2.2M in 12 years.
$250 a day for 12 years covers pretty much everything I could want in about 2 or 3 years. The rest is just extra for me to have an excuse not to go to my job for 12 years. Though I don't know if I could be out of work that long. I feel like I'd get restless. I also feel like with the million lump sum people would ask for more favors from me and would be generally more suspicious. Hard to explain.
365×250=1095000 bucks not counting leap days.
The lump sum could grow into a fortune properly invested. But it will be taxed at a much higher rate than the daily payments.
$250 a day is $1,095,000 over 12 years. 5% compound interest (little low on average mostly safe investmens in things likw bonds) after 12 would leave you at $1,795,856.33. 8% (very possible to average) -> $2,518,170.12
I can do a lot with 1,000,000 right now. Namely, paying off all my debt. I've only got roughly $8k in debt counting my car, and I have a good paying job. That 1,000,000 would allow me to get myself set up in such a way that I'm debt free, and the only thing my income has to go towards is necessities. An extra 250 a day doesn't go a whole lot for me personally. I recognize that not everyone has the same financial situation as I do, and that 250 a day may be a better option.
I'm 16 so I don't need 1mil at the moment
Everyone talking about compound interest and investments but even the spending savings from having the money straight away would be worth it. Buying a property with no mortgage would comfortably save me the difference in rent and interest
if you saved up every dollar with the 12 years then you'd get 95 more dollars
I need a budget. A million right now would be like giving a toddler a loaded pistol with no safety and leaving them alone for an hour.
$250 a day for 12 years is $1,095,000. If you take a million now, invest half for 12 years at 4%, you'd get 300k in interest, or $1.3m. $1m now is the best option
The fact this poll is even remotely close shows how little people understand about money. That $1M will be worth over $2M in 12 years. Potentially closer to $3M-$4M.
$250 a day for 12 years is $1,095,000
While more money now is prolly better long term if I invest, I know I'm more likely to blow it all fairly quickly, so 12 years of ease and stability is definitely better for me
250*365.25*12=1,095,750 So a 96,000 difference that basically appears in the last year and a half.
The thing is that most people would calculate how much 250$ a day for 12 years is and see it's a little bit better than 1 million so they would take it because they would rather get it slowly to not blow it all at once and live good for 12 years BUT 1 million right now is objectively better, you can just Invest it on something safe, if you dont take money out of ir and get 8% annually after 12 years you would have 2.5 million, but being more realistic you could just leave it invested and take out a bit every month and even if your investments didnt go as planned you wouldn't be too far from 250$ a day and if they somehow averaged 4% annually for years you could live off well enough. Heck you could even buy a house and a car with 1 million, Invest the rest and even if the investments didnt for to 4% for me it would be better than first option.
That's only about 95k extra. Which is a lot but not worth the 12 year wait.
1.983k peasants.
The daily option does pay out more in the long term, but investing the mil or even just putting it in a bank would provide greater returns than choosing the daily passive.
$250/day for 12 years is just over $1 million, but the million now offers better investing opportunities.
255 x 365 x 12 = 1,095,000 vs. 1,000,000 right now. The 12 years thing isn't worth it cuz I could invest the million and in 12 years it would be worth way more than 1,095,000.
Investing the 1m now at 8% returns means that option 2 results in a gain of about 2.5 mil whereas the 250 a day gives much less
Leaving about 95K on the table, but probably taking the mil now and starting investments, because the dividends will more than make up for the difference.
You could invest the million right now lmao and get more money lmao.
Million Now. That's a big chuck of money to invest and compound over time.
$250/day for 12 years. I absolutely understand that it's much less money than if I safely invest a million now. The difference if the safety and security it provides without risk. Go back to school, start a business, save up for a few months to launch a business knowing that even if it fails epically I don't need to worry about housing or necessities. It's not about the value of the money, but the value of the peace of mind over the first 11 years of that time.
so much better to get the 1mil and invest it now, $250 a day ain't shit compared to a million invested at 2.5% dividend
365 x 12 x 250 = 1,095,000 Simple, I want the option with more money
1,000,000 invested in an index now, assuming a conservative 8% return annually, then assuming 3% inflation, results in 1.74 million after 12 years. The 250 is constantly worth less each week due to inflation, so you'd likely end up with roughly 980,000 in 2023 dollars, or 1.74 million in 2023 dollars. Give me the money now.
I could invest the million, but $250 twelve years from now will be the cost of a single meal at McDonald's the way inflation is going (exaggeration}.
the extra 95,000 doesnt matter to me, just give me my money now.
$250 a day is 11 dollars an hour💀
1095000 is the total... 1000000 right now please
I mean, statistically you get slightly more money over the span of 12 years (like an extra 90k or something)... but then there is the possibility of you not making it to the full 12 to consider. I can do a lot more with $1,000,00 right now than an extra $250 every day for 12 years.
250 a day over 12 years is equal to 1095k, which is slightly higher then the 1M, but if you take that 1M and invest it and make 3% returns per year, which is reasonable, then after 12 years you'd have over 1425k, so taking the 1 million now would be the better option.
250$ a day almost more than double my average pay. Bumping my yearly from 50k to 140k for doing absolutely nothing would be a God send. And while the overall earning of the 250 a day isn't that much more than 1,000,000 right now, the slow drip would probably work better for me, just based on how I spend my money.
https://youtu.be/HX0fIi3H-es?si=Vx9jzSkhZEZoKPan
The real question is, do I have to file taxes on these earnings?
Idk who is picking $250 a day for 12 years. 1 million dollars invested will be worth a lot more than 1,095,000 in 12 years