Mathis_InfinityInvestment_ebook by Mathis Toby

Author:Mathis, Toby
Language: eng
Format: epub
Publisher: ForbesBooks
Published: 2021-04-12T16:00:00+00:00

If the Joneses were unable to work, their daily burn would be the shortfall amount of $167.67, based on the way they are living right now. This shortfall number allows them to calculate a total number of days that they could survive without working.

Assume they have total assets of $500,000 and total liabilities of $250,000. Their net worth then is $250,000 (assets minus liabilities equals net worth). They would take $250,000 (their net worth) and divide that by their shortfall amount of $167.67. The result tells them that if they used up their entire net worth by spending every penny of it, it would last 1,491 days without them working.

Let’s use a different example. Let’s say you’re a millionaire with exactly $1 million in assets. Congratulations! According to the world, you are rich. But are you?

Unfortunately, you have no Infinity Income and you have daily expenses of $400. You can reverse engineer this one pretty quickly. You multiply $400 per day times 365 days and end up with $146,000 per year. Divide that by twelve months to calculate monthly expenses of $12,000. Monthly expenses with zero Infinity Income equals a shortfall of $400 per day. How many days could you survive, Mr. or Ms. Millionaire? Divide your million by the shortfall amount of $400. You could last 2,500 days, or 6.8 years. After that you are flat busted. You have had to sell everything you owned, and you haven’t a penny to your name. But wait, you thought you were rich! This happens repeatedly for people in retirement; only it isn’t so clean.

The problem with selling off assets is that it’s never that easy. There are market fluctuations, broker fees, Realtor fees, taxes, and other expenses that can substantially reduce the amount you receive. If you haven’t worked for years and your money is gone, you would have to sell everything in a fire sale just to eat. And if that’s real estate or a house full of furniture, you’re going to have to settle for fire sale prices—usually just pennies on the dollar.

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