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I would like to semi-retire on my hunting land and open a perennial nursery, as I enjoy plants. Taxes and insurance are about 1k each a year for the property. I have a 350k mortgage for 68 acres agricultural and wetland. I use the land for perennials, timber, and hunting.

FlySpaceAge
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    Well, a safeish withdrawal rate is 4%. That gives $22,000 per year in spendable money. Can you live on that? If not, you will need a larger amount. To get a rough idea, figure out how much you need and then multiply that by 25 to give you the size of the investments you need. – zeta-band Jun 26 '18 at 19:53
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    "can I expect to live off the proceeds of the fund one day?" Sure, you can probably even get a few days out of it :-D – Kevin Jun 26 '18 at 20:18
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    Related, but not duplicate: https://money.stackexchange.com/a/86017/44232 The key is that the more you leave it alone for now [and support yourself through other means, like regular employment], the more your trust has a chance to grow. – Grade 'Eh' Bacon Jun 26 '18 at 20:44
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    This would depend on lifestyle, i.e. the amount of money you would need to spend every year after 10 / 20 years. It would also depend on your risk ability; whether the 550K is parked in savings accounts or in stocks or elsewhere – Dheer Jun 27 '18 at 04:18
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    @FlySpaceAge I highly suggest you revert your changes, or at least put the starting amount back in. Without knowing where you're starting at or how much you're contributing there's no way to answer the question. – D Stanley Oct 25 '18 at 14:39
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    You need to provide a lot more details. What did you invest in? How much do you expect to spend each year? Otherwise, it becomes a "how far can a dog run into the woods" question. – Zesty Jun 14 '19 at 16:17
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    Do you get any income from the land, or is it just for your personal use? – Acccumulation Jun 14 '19 at 16:30
  • The subject (about retirement) no longer matches the body (about opening a garden nursery). – RonJohn Jun 14 '19 at 16:32
  • I earn 5k a year on the hunting lease. – FlySpaceAge Jun 14 '19 at 16:50
  • Count inflation too - in case you do not get yields over inflation, you will have less and less or imagine how long you want to spend 'em and how much more you can afford similar time back if you have this amount yet... – Jan Jun 15 '19 at 02:29

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At an average 10% return, in 10 years the expected value of the fund will somewhere around $1.4 Million. In 20 years the expected value will be somewhere around $3.7 Million. From there, you could get to a safer return of 5%, which would give you an income of $185,000 per year. I would hope you could live off of that for the rest of your life.

Other than that, what do you want to do? Do you want to get a master's degree and improve your knowledge and income? Great! you have more than enough money to afford to get a degree, and with a higher income you could probably even contribute MORE to your "retirement" fund.

You can do whatever you want at this point. The only risk is that you do something foolish (like blow it on cars and boats, or use it ALL to start a new business that then fails), but you certainly have the ability to do whatever you want.

D Stanley
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  • @FlySpaceAge Using the fund as collateral could go poorly if the business goes belly up. If this is your main retirement fund I would not advise using the fund as collateral against a loan. Of course, to get any kind of loan that size from a bank you would need to post something as collateral (like a paid-off home, etc.) – HK47 Jun 26 '18 at 21:08
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    "Would you suggest leveraging the fund to take out a loan? " Absolutely not. You're multiplying the risk by using it for leverage and spending money on interest unnecessarily. You should never need to borrow money again for the rest of your life. If you do, then you're getting in over your head. – D Stanley Jun 26 '18 at 21:14
  • Leveraging the money to take out a loan allows the bank to provide a lower interest rate. – FlySpaceAge Oct 25 '18 at 16:29
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    @FlySpaceAge taking a loan, even with your retirement money as collateral, will cost you money. The loan interest rate will not be lower than the expected returns adjusted for risk, so in the longer term it's costing you money, and in the short term it's gambling at best, with the odds against you. – GOATNine Oct 25 '18 at 16:34
  • @GOATNine The loan interest rate will be higher than the expected returns adjusted for risk? The answer states that an "average 10% return" could be expected. These statements seem contradictory. – FlySpaceAge Oct 25 '18 at 18:29
  • @FlySpaceAge take the principle, multiply it by 0.8 (20% loss), then multiply that by 1.3 (30% gain). If you have a correction followed by a banner year, you make 4% between the 2 years, or less than the inflationary value. An average of 10% a year only means something if the standard deviation is small. Over even a 10 year period, the volatility of the market poses a significant risk. Meanwhile, the bank is making a low-risk steady 8% on you, putting your average year at 2% growth. – GOATNine Oct 26 '18 at 11:52
  • @FlySpaceAge in terms of common sense, look at it this way. Banks are staffed with remarkably intelligent people who's entire careers come from working with the market. If they could invest capital and then use a loan to cover expenses, and make a reliable profit doing so, they would. Any money they're willing to loan to you will reliably beat low-risk investments. – GOATNine Oct 26 '18 at 11:55
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    @GOATNine The 10% average I use is a geometric average, not an arithmetic average. And over longer periods (e.g. 10 years), the variance of market returns is much smaller. – D Stanley Oct 26 '18 at 13:39
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    @DStanley My point was that the geometric average only mitigates risk properly over a longer timeframe. In the short term, the swing of the market is much more important to your financial health, which is why a correction first causes such issues. An arithmetic mean would be much more forgiving for short term investment (which is what the banks use, interest is nothing but an arithmetic mean in this case with a variance of 0). Any non-infinite term loan will suffer from this discrepancy. – GOATNine Oct 26 '18 at 14:07
  • @GOATNine I understand why it would make sense to assume annual return of closer to 4% given market fluctuations. Why do you conclude that "the bank is making a low-risk steady 8% on you, putting your average year at 2% growth." – FlySpaceAge Oct 29 '18 at 16:28
  • @GOATNine For a dataset with zero variance, the arithmetic mean, geometric mean, median, mode, etc. are all the same. – Acccumulation Jun 14 '19 at 16:29
  • ""Would you suggest leveraging the fund to take out a loan? " Absolutely not." They are already highly leveraged: they have $500k, but a $350k mortgage. – Acccumulation Jun 14 '19 at 16:33
  • @Acccumulation I would hardly consider the market a 0 variance vessel for your money. My point was (8 months necro'd I might add.....) that the interest a bank offers you is effectively a 0 variance vessel (in actuality the interest rate changes, but it never goes negative). – GOATNine Jun 14 '19 at 16:34