posted on Jul, 26 2011 @ 06:54 PM
How much money does anybody actually need?
I have thought about this for quite a while, usually when pondering what I would do if I won the lottery. Obviously, I would go crazy with some of
the money, buying things I don't need, but I would also spend it on my family. Buy my parents, brother and myself new cars and houses. Give to some
local charities. But after the cash “high” (spending binge), what do you do?
Put it in the bank! I know, some people are going to call me crazy but hear me out.
Wells Fargo Savings
I looked up the savings rates for Minnesota branches of Wells Fargo as an example. The best APY I found on their site was the High Interest Savings
Account which is currently 0.15%. Compared to the basic savings APY of just .03% it sounds great. Ok, so I won the lottery and put $25 million in
the high interest savings account. That money earns me $37,500 per year just from interest. That's over $3,000 per month for doing absolutely
nothing! That's almost a grand more than I was making at $14.40/hour for 40 hours/week.
And that's at today's piddly almost nothing interest rate thanks to the Feds. Just think back in the day when savings accounts earned 2-5%
interest! Just $1 million at 2% APY is $20,000 per year in interest.
Historical Savings Rates
Now lets look at the super rich. Warren Buffet is worth $50 billion according to Wiki. Now I'm not naive enough to think that's all cash but he
must have some money in the bank. Let's say $1 billion. At that same 0.15% interest rate he would earn $1.5 million per year in interest. I don't
think I would know what to do with all that money.
On top of all this, I'm sure people with lots of money get special rates and accounts not available to every day people. I have no idea how to
verify this but I'm sure it happens. Obviously this isn't the way to maximize profits on your money but is mainly just a thought exercise. How
much money can someone possibly need to maintain their lifestyle? I know I could easily live off $36,000 per year and a lot of people in the US
Please refrain from turning this into a political debate. All thoughts, comments, and suggestions are welcome.