How people manage to go broke from having 5M+ net worth?

$200,000. That is approximately how much income you can have from a $5M portfolio, if you decide to quit work.

Or put it another way, if you win the lottery, or have quietly amassed that fortune, you can live off $200,000 provided you are invested right.

$200,000 before tax. About $140,000 after tax in most countries. Sounds like a lot for most people. And it is, but that is:

• $11,666 a month
• $2,692 a week
• $383 a day
• $15.95 an hour based on a 24 hour day. Closer to $20 if you factor in sleep

Why do I mention this? I am sure we can all see how it is possible to spend $20 an hour, if we are bored.

$383 a day? There are many distractions in many cities. Now let’s imagine that person has $70,000 of costs.

They have a big mortgage or some other costs. Now they have $141 a day.

So most people struggle to control their spending. That is especially a problem for people who used to earn a lot of money.

Imagine a person who used to be a CEO, or footballer. Had huge spending habits.

Now has retired. Despite their bad spending habits, they still managed to have 5M of wealth.

Do you really think they will be able to live off 140k net per year, after getting used to spending $1M plus?

That isn’t to mention that some people aren’t invested right.