Current Events: Investing

When Senator Charles Grassley argued for moving the estate-tax-free-floor from $5.1 million per person to about $11.2 million per person, he argued that he wanted to reward people who saved money instead of "spending every darn penny" on "booze or women or movies."

Uhhhh, what?

So spend money on "booze or women or movies" or have $11.2 million? Sounds more like investing advice from Steve Brule:  

Now, if you're 75 and you've already spent your $11.2 million on "booze or women or movies," we're afraid Charles' sound advice has come too late for you. You're going to have to pay the estate tax on all money or gains over $11.2 million (per person). Sorry, bro. 

But, if you're, say, 25 years old, THERE'S STILL TIME! 

Here's all you have to do: 

1) Get a job that pays you $300,000
2) That's about $220k after taxes
3) Use $70k per year on expenses
(per month: $900 mortgage, taxes; $1,400 child care, $1,000 food; $200 utilities; $400 cars; $1,900 misc) 
4) Save the other $150k in index funds, etc

Easy-peasy!

By the time you're 75, you'll have saved $7,500,000 in cash. But, with interest, you should be just under or a little over that $11,500,000 threshold. If you're over, in 2067, you can probably have still-Senator-Charles-Grassley move the floor up again for you. 

But, say you're some typical American jag-off. Wasting your money on "booze or women or movies," here is what you're budget looks like:

1) Get a job that pays you $300,000
2) That's about $220k after taxes
3) Use $70k per year on expenses
4) $150k on booze or women or movies

The average person says to themselves: $150,000 a year on "booze or women or movies" seems like a lot! Not if you're a big-ballin'-average-American-worker! 

Here's what most Americans buy:

Booze: 2007 Louis Roederer Cristal: $499.97 per bottle (let's say you drink 2)
Women: Really Nice Prostitute: $500 per hour (we're guessing ... Chuck? Is that right?)
Movies: Movie Ticket: $15
TOTAL: $1,513

At the end of a year, you've you've blown your $150k pretty easily on: 198 bottles of Cristal, 99 $500-per-hour-prostitutes, and 99 movies. 

That's 2 bottles of Cristal, a prostitute, and a movie every 3.6 days every year for 50 years.  

Just a typical Tuesday in America.

You could say, "What about ice cream." Chuck says, "Leave ICE CREAM OUT OF THIS!!!!!!!"

And, then, at age 75, you wanna gripe about how some hard-working folks don't have to pay the estate tax on their $11.5 million? 

Pretty gol-dang stupid, dummy. 

But, the silver lining: the massive public companies that make booze and movies got a tax break. So, hey, maybe something will trickle down.