I admit, that a long time ago I wondered how much money do I need to be a rentier. I assume, that you also asked yourself this question. Being financially free, independent, without hard working hours, vacation scuffles, etc. It would be something. Imagine you are the master of your time, you do what you want, you go where and when you want, depending on amount of money you have. How much money is needed to be a rentier.
Rentier means who?
The term rentier covers several more or less common definitions.
Some people assume, that rentier is just a very rich person. Others call rentiers peopl,e who own and rent their own apartments (could be).
It also happens that someone, who lives on a pension paid by Social Assistance is considered as rentier. It’s kind of a joke and not a joke 🙂
In summary, a rentier can be defined with the following words:
“A person who subsists on income from capital, real estate, interest of securities (stocks, bonds, etc.) or bank deposits”
Rentier is a person, who does not work. Rentiers I know usually run a business, but in this post, let’s assume, that they do not work like a typical Smith. Summarizing – to be a rentier you must have such wealth, thanks which you can live from the interest, pensions and profits obtained from it, without doing “normal” work.
How to become a rentier?
We’ve already know, who the rentier is. Becoming rentie rone is simple, but not easy. There are several basic ways to become one.
- You should have the right origin, i.e. come from a rich family and, for example, inherit property, that allows you to be a rentier.
- Luck to win money. I mean winning in games of chance where money is to win.
- Have a flair in business. It is obvious.
- Save money.
Being born into the right (I mean wealthy) family really solve problem of money. Researches (unfortunately I do not remember which one) shows, that it is enough to be born in a wealth or powerfull family, to have no worry about problems and difficulties typical for “ordinary” people anymore. Although the above observation does not often appear in the media, it is becoming widely known and, above all, accepted by the society. Nowadays no one is shocked by such facts anymore.
Lucky in winning money is a question for me personally, if it comes to becoming a rentier. The reason is simple. Someone who suddenly becomes the owner of big amount of money may not be able to deal with this burden. Apart from a number of examples. There are athletes, who have gone bankrupt. I believe, that one that owns large amount of money, must have investment knowledge or money experience. Possibly this knowledge should be obtained.
Undoubtedly, earning money by running a business is what seems to be the most appropriate path for becoming a rentier. The point is, that successful business people can or should be able to manage money. That’s easy.
Another option is saving money. At current interest rates, this is perhaps the longest way to become a rentier.
How much money you must have to be a rentier
This question can be answered by variables show in several points:
- how big capital do you own?
- what rate of return will you get annually on your capital?
- if you want to “eat” your capital or save?
Let’s think first: how much time do you need to become a rentier? Theoretically, the easiest way is to save and invest the earned money in this way. Then reinvesting the money you earned from the investment, and so on, you repeat the process. Using the included calculator (actually two) you can count:
- How much capital do you need to be a rentier (assuming annual return)
- How much to save annually to achieve the desired amount (assumed annual return). The calculator will show you how much you will have at your disposal at the beginning of the year.
Note: to calculator work properly, fill in only blue fields
How much money is needed to be a rentier. It’s up to you what amount of capital you need and what annual return on capital you need per year. However, taking into account the current economic conditions, it seems, that with an annual rate of return of 2%, you need 1 million EUR to get 20 000 EUR per year (equivalent of monthly earnings on level 1667 EUR per month). It is not a monthly amount, that is shocking, but it reflects a certain average. Use the calculator to decide which level suits you best – capital level and level of monthly pension to receive.
Being a rentier has another aspect as well. The ignorant, they often dream, that if they became rentier then they would start to do … what would they do? They would start with a long rest, like in front of the TV? How long? For the rest of life? This is an aspect that should definitely be taken into account.
I do not believe, that if someone earned the amount, that made him or her rentier on their own, they would decide to remain lazy for the rest of their lives. It is rather impossible. I have never met a person, who would arrange his life in this way. Although I have to tell you a story. I once had a colleague, who was successful in business. He had a huge money. Once he sold his business, at the best possible moment and started traveling. It looked like a form of rest and a way of life. Of course, his traveling was different, from these we know from our own experience, that is, we go on a 2-week holiday, we come back, spend 1 day at home and…. we start work. Traveling in his version was as follow. He was going to Egypt for 1 week, then returned, in the next 3 days he was going skiing in the Alps, then he was coming back, he was going to Bali, he was coming back, in the following days he was going to Mexico, etc. His wife said that she had enough of this never-ending rest. And you know how it ended? He started a new business and … everything went back to normality. How much money is needed to be a rentier – now you know.
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Below there are some my other posts, that I invite you to read: