The Dot Com Millionaire Life

So you want to be a millionaire and think the Internet is the way to get there. The dot com world has certainly made a lot of millionaires over the previous years. But rather than focus on what it takes to get there, let’s look at the end result. What will your lifestyle be if you do make it? I can’t say for sure, but I have made millions and I can let you know what it’s like for me.

Lifestyles of the Rich and Famous

photo credit: EuroMagicIt’s nothing like “Lifestyles of the Rich and Famous”. First of all I have almost no fame associated with my site. There were probably a couple hundred people who knew my name at one point (heavy users of the site) but I suspect most have forgotten me over the last few years. And while it may surprise you, being a millionaire doesn’t make you rich. Externally I look like any moderately successful businessman - I live in a nice house, own two nice cars but don’t take extravagant vacations or spend lavishly. My kids do go to a fairly expensive private school but we don’t belong to a country club or any of that. Partially that’s because it’s not who we are (and the money thankfully, hasn’t changed us) and partially it’s because a couple million dollars just doesn’t go as far as it used to. You’d probably be surprised to find that you very likely know some millionaires and would never be able to tell it from how they live - that’s part of how the get to have and keep their money.

Investment Income

The vast majority of our household income for the past few years has come from investing the money I made from selling the business. The money is invested somewhat conservatively and managed by a financial planner. It’s a bit odd not having a regular paycheck. When we need money we just write a check out of our investment accounts. It also takes a bit of getting used to when on an average day you can make or lose $100,000. You pretty quickly learn that it’s pretty meaningless though and watching daily fluctuations in your investment portfolio gets pretty boring.

The 5% Rule

If you want to get a feel for how you can live when you make your millions consider the 5% rule of thumb. I think the historic average gains of the stock market are something like 10% but of course there are fluctuations. So as a conservative approach and if you want your wealth to continue to grow you can plan to draw 5% of your money for spending. If you make $2 million from your business and live off of your investment income you’d have a lifestyle equivalent to someone earning $100,000 a year. While that’s certainly a nice income you can see that you’re not exactly flying first class to Paris for the weekend.

Don’t Forget The Taxman

photo credit: numberstumperYour tax burden will vary based on how your business is structured and how aggressive your account is but you can expect to lose at least 20% of what you make in selling your business. It’s actually sort of amusing at first to write a six figure check to the Treasury but trust me that amusement goes away quickly.

What Do You Miss

As an entrepreneur and later if you’re living off of your investments you miss out on some of the benefits of being an employee. The biggest is of course health insurance. I won’t get into a political debate but suffice it to say that obtaining decent health insurance (even if you’re willing and able to pay) is not easy. There are other less tangible things that you’ll miss too - things like co-workers to go out to lunch with and chat with around the water cooler.

What Do You Gain

In a word the biggest thing you gain as a millionaire is freedom. Freedom in its many forms - I can vacation when I want, work on what I want and (within reason) buy what I want. There’s also a certain freedom from the stress of “making ends meet”. While there are the occasional concerns about stock market crashes for the most part we’re very financially secure and free from money worries. That freedom does have a downside though. Oddly enough one of the things I miss most is having a full ToDo list. While it’s often nice to have the freedom to work on whatever you want that wide open freedom means it’s hard to figure out what to work on. And without the pressure of needing to make money it can become far too easy to be non-productive for long periods.

Do I Recommend It?

Certainly. Building something into a success by yourself (or with a small team) is one of the greatest feelings you can have. And the financial windfall is great. Unless you happen upon the right startup it’s unlikely that you’ll become a millionaire working for someone else. And while a few million dollars won’t have you living like a rock star it’s certainly a nice place to be and I’m extremely grateful for the life I have.