Quora Answer: How Much Money Would You Need in the Bank to Live Comfortably Off the Interest?

The following is my answer to a Quora question: “How much money would you need to have in the bank to live comfortably off the interest?”

What is your idea of comfort?  How much does your ideal lifestyle cost?  Only you can answer that.  Interest on deposits scales with the value of the deposit, the type of deposit, and the liquidity of it.  You must also consider that depending on where you are, that wealth is taxable . Is the deposit held in your name, or in the name of an entity you own?  That affects your earnings as well.

If you have anything from $100,000, you have preferential rates in fixed deposits.  If you have anything from $300,000, you are mass affluent, and you may have a personal investment banker to suggest alternatives that earn more than a fixed deposit.  If you have $1 million, you are high net worth, and you have further, high net worth options that perform even better.  If you have $5 million, you are very high net worth, which opens further portfolio options and grants you access to bank instruments normal people have never heard of.  If you have $30 million, you are able to move your funds in hedge fund territory, with its attendant risks, because you are now ultra-high net worth.  If you have anything from $100 million ad above, you now have money for private placement funds that returns double digit, or more percentage points in a period of months.  You will never be able to spend the return on investment to fund your personal lifestyle even if you flew from London to New York every weekend for a burger on a suite with your entire family, and the neighbours, let alone the principal sum.

How comfortable do you want to be?  That is entirely relative, but above certain sums, we are no longer talking about mere fixed deposits, and interest rates.