$1 million or $5,000 a month for life

[Dan D.]

This is a question that's been bubbling around recently.

My thought is on this form, the majority would take the $1,000,000 to buy multiple homes or multi-family complexes in the hopes of doing better.  Meanwhile, many of us are on here, trying to build the cash flow and security of having $5,000 cash flow a month.

Which would you choose and what factors or lifestyle choices would need to take place for you to choose the other option?

[Frank Jiang]

This is a very simple finance math question.

$5000 per month or 60K per year (essentially a perpetuity) is the same as $1,000,000 right now invested at 6%.

If you can beat 6% with other investments (which I imagine quite a few people here could), take the 1M and invest it.  If you can't beat 6% or can't be bothered to do the work that would be required to beat 6%, take the annuity.  (I would personally take the annuity and become a worthless, noncontributing member of society).

Easy peezy.