Latest / The Curve / SpaceX Is Set to Be the Biggest IPO in History.

Transcript

SpaceX Is Set to Be the Biggest IPO in History. · The Curve

0:00
So basically it has officially filed its paperwork to go public on the US stock market and this
0:05
is going to be the biggest IPO in history.
0:08
It's going to be a two trillion dollar company but with five billion in losses.
0:13
We're going to break down what an IPO actually is, what you'd be buying and more crucially
0:17
how you can invest if you want to.
0:19
We're also going to be covering Elon Musk and his lawsuit on OpenAI which did not go
0:23
this way.
0:24
She carried just one a 55 million euro tax battle with the Spanish government and surprisingly
0:29
there are some genuinely useful takeaways that could apply to you.
0:32
And finally, the impact of AI on the jobs market, there is much more to this than makes
0:36
the AI.
0:37
We discuss what industries are going to stand the test of time and how you can position
0:40
yourself well.
0:41
This is the Curb Weekly where we read the finance news that you don't have to, I'm Vic
0:44
Harris, a finance professional who's had a career making money for other people and my
0:49
co-founder Sophie is on holiday with her boyfriend so I am flying solo today.
0:53
Huge thanks to Emily Rigby, our producer and Lucy Monroe, our fab social media manager and
0:58
the rest of the Curb team behind the scenes.
1:00
But before we dive into the headlines, here is a word from today's sponsor.
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1:36
So we have some very exciting news.
1:37
SpaceX has officially filed for IPO.
1:40
Now IPO, remember, is the first time that a company has its shares available to the public.
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So it goes from bring a private company to a public company where you and I can buy shares,
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which is awesome.
1:50
It is going to list on the NASDAQ and the NASDAQ is one of the US stock exchanges.
1:56
So we've got the NASDAQ, we've got the New York Stock Exchange, they're kind of like competitors.
2:00
On the NASDAQ, we've got, it's mainly more tech companies.
2:03
So it's Amazon, Apple, Google, Meta, it's got all the big names we know.
2:09
So yeah, SpaceX is kind of following certain going on that exchange.
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This is going to be the biggest IPO ever.
2:18
The company is going to be valued at $2 trillion.
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So we have never ever seen a company come to market that is that big.
2:27
And just to put that in context, when Facebook first went public in 2012,
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it was valued at $100 billion in SpaceX is coming at $2 trillion.
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Amazon is a $3 trillion company, Microsoft is a $3 trillion company.
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So just to put that in perspective, they've been public companies for like so long now.
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Not only that, they're highly profitable, they've got a proven track record.
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And you now have a company coming to market for the first time, and it's got none of that.
2:55
It hasn't got a track record.
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It hasn't got like the history, hasn't been traded on the stock exchange for years.
3:00
Yet it's somehow thinks that it should be like at the same level as all these other companies.
3:04
So anyway, this is why it's got so much interest.
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I mean, it's revenue is $20 billion last year, but it lost $5 billion.
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So it is lost making.
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I mean, Uber was lost making when IPO'd for the first time.
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It was absolutely heavily criticized for it.
3:19
But for some reason, people are giving SpaceX a lot of time.
3:23
There's a lot of excitement and a lot of you for around it.
3:25
But those of you who don't know what SpaceX is, it's not just a rocket company.
3:31
So SpaceX owns Starlink.
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Starlink is the kind of satellite company that has about 10 million subscribers globally.
3:41
It also includes XAI, which is Elon Musk AI company.
3:45
So you've got a satellite company, you've got an AI company.
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And also in there is X, which used to be Twitter.
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So you've got kind of three, I guess, three businesses.
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One in kind of satellites, one in AI, one in media.
3:59
Like all of those combined together is what has created that value of $2 trillion.
4:06
So it's really a company that investors are betting on the future,
4:11
particularly with AI satellites, all that.
4:13
But this is where it gets interesting.
4:14
So Elon Musk, he is going to control 85% of this company.
4:20
If you are not in alignment with what he wants to do,
4:23
then I guess you shouldn't be buying this company.
4:25
But it also goes to show that she is going to have very, very little say
4:29
in how this company is run.
4:31
It is very much going to be the Musk show.
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I guess it is similar to how Mark Zuckerberg ran meta.
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He was very much a dominant force, very much the leader.
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It's how Google has actually structured it.
4:43
So the two Google founders have structured Google and Alphabet shares.
4:46
So it's kind of, there's a lot of protections in it to protect the founder.
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But personally, I like investing alongside founders,
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not necessarily Elon Musk, but there are some,
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some I like investing alongside more than others.
4:58
Founders are very visionary, they're very driven,
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they're very long-term thinking.
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And that's what I like when I look for an investment.
5:07
But this IPO in SpaceX could make Elon Musk the first trillionaire,
5:13
the first person to have a trillion dollars in wealth.
5:18
I can't even believe that we're speaking about trillion dollar companies,
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a trillion dollar IPO.
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If you kind of mentioned that to me 10 years ago even,
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when we didn't even have a trillion dollar sized business,
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and now we've got so many, and now I've got an IPO coming in,
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it's wild, wild, wild.
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Now there's actually a part of this IPO,
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which I don't know if it's crazy, I don't know if it's amazing.
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There is kind of, I guess a pay package or a bonus structure
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that has been created for Elon Musk that's tied to this IPO
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on top of his existing stake of around five billion shares.
5:52
So that's around $700 billion that he will have
5:57
created in value when he IPOs this business.
5:59
On top of that, the board of SpaceX has granted him
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an additional billion shares if he hits certain targets.
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And one of those targets, I'm laughing because it is so crazy,
6:14
is tied to colonizing Mars, putting people on Mars,
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and also building data centers in space.
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The Mars bonus is he will be awarded 200 million shares
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if SpaceX hits a valuation of seven and a half trillion.
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So remember, it's IPOing it two trillion.
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So if it hits seven and a half trillion in size,
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which is bigger than any existing company ever,
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and he successfully establishes a colony on Mars
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of at least one million people, he gets this bonus.
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So it's not just one person on Mars.
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There's to be a million people living on Mars,
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but he long must to get this bonus of a billion shares.
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There is no time frame on this.
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So if he does this in, I don't know, in 50 years time,
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when he's old and decrepit and I'm, you know,
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100 or 120 years old, he'll get paid this.
7:08
But he has had some pretty impressive bonus structures
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that have been tied to Tesla and he's hit them
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and he's got these incredible payouts.
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When I read this, I was like, that's absolutely crazy.
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But now I'm actually like, you know what?
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If there's any person that could do it on this planet,
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and could actually create a new planet that we civilise,
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is probably Elon Musk.
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Nothing would be more motivating
7:33
than a billion shares in SpaceX.
7:36
So anyway, we'll see how it plays out.
7:39
But even if he got the valuation of SpaceX
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to seven and a half trillion,
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and he only had 900,000 people living on Mars,
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he wouldn't get a payout.
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He has to reach both of those milestones,
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but no time frame.
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So he just has to be employed still by SpaceX.
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So very, very interesting bonus structure,
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something I've never ever seen before.
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If it comes to fruition, I think our world is going to look so weird
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and so different and the fact that we're going to have
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all humans running around on Mars,
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yeah, it's kind of absolutely crazy.
8:07
But this will be probably one of the most
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hotly debated IPOs, I think, in a generation.
8:13
I think there's anything that I've seen.
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The ambition is just insane from Elon Musk
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and what the companies are going to achieve.
8:20
People that are really positive on it are like,
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you know what, they're styling,
8:22
which is hugely profitable.
8:24
SpaceX is dominating and rocket launching.
8:26
And there is kind of this generational infrastructure
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they're trying to create with data centers on Mars.
8:32
It'd be like buying Amazon, you know, 25 years ago.
8:35
Nobody believed what they were going to do.
8:37
And they've absolutely transformed that business
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from selling books online to having one of the world's
8:43
biggest logistics networks in the world.
8:45
Being one of the largest cloud providers,
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all of that is like, never ever in a world of strings.
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We've seen that 25 years ago.
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So we could be sitting here,
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maybe listen to this podcast in 25 years.
8:57
And we've got people walking around on Mars
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and Elon Musk is walking away with a billion in shares.
9:02
I guess the negative side of this,
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people are like the valuation.
9:06
So what this company is being priced at,
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which is the two trillion,
9:09
is 100 times is annual revenue.
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So you are paying 100 times the revenue
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that this business is creating
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to come up with that value for the whole business.
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And this is how most businesses are valued,
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as it's a kind of a multiple of either profit or revenue.
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And so just to kind of put it in perspective,
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like if we think of Apple,
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Apple was trading at 11 times its revenue
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in terms of the size of the business.
9:31
In video, the AI chip company is trading at 25 times
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and we've got this business that has never been public.
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No trade record that's coming at it 100 times.
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So anyway, there's a lot of people on the positive side,
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a lot of people on the negative side,
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it's pretty divisive to be honest.
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If you do want to invest in this IPO,
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the great thing about this IPO is that Elon Musk
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for all his sins, he is actually with this IPO
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carved out a really large chunk for retail investors.
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And retail means just kind of like you and me,
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mum and dad investors.
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And a lot of IPOs go to institutional clients.
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So think like fund managers or KiwiSave
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or pension providers or wealthy clients.
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And Elon Musk has gone, you know what?
10:16
No, I want the everyday investor to get
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to have a large portion of this IPO.
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So 23 billion of the 75 billion
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that they're kind of raising for IPO
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is going to go towards retail investors,
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which is great, it's about 30% of the IPO.
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So if you are on a trading platform,
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like shearsies or trading two, one, two in the UK,
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stake in Australia, like keep an eye out,
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there could be a notification if you want to access this IPO
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and actually buy shares.
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And just remember, IPOs in general are very risky
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that they haven't had a track record.
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They haven't made their finances public.
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They don't have to.
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So and also with this kind of IPO, there's a lot of hype.
10:57
We saw what happened to all birds,
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not saying that this is going to go the same way.
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I have no idea, but just something to be aware of
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is that sometimes there is better opportunities
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to buy shares in a company, not at IPO.
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It might be a year later or once it's kind of got over the hype.
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Personally, I, I really like what is happening
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in the space industry and yet the fact that we're seeing
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data centers in space, like satellites and more,
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even like more commercial trips to space.
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I think there is, it's a huge trend.
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It's going to get more and more interest.
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We've got Rocket Lab, which is done fantastically well.
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I think the big caveat with this one is
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just the kind of ridiculousness associated with it
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in terms of the valuation, in terms of the fact
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that it is just a huge, huge company coming in at such a high price
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and in our musk spawner structure,
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it's kind of taking the person bit, I think.
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But that is my opinion, but the whole space I do love
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and it is, I think, a long-term trend that's going to be here for a while.
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So yeah, I do like this space.
12:04
Just to continue on the theme of Elon Musk.
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So I think it was earlier this year.
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We spoke about Elon Musk suing OpenAI,
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which owns Chatur B.T.
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I remember so I've saying something like,
12:19
I think this is going to be the new Netflix series
12:21
and we're getting all excited that it might be like the Netflix,
12:26
Warner Brothers, Paramount, Drama,
12:28
or something that we talk about in each curve weekly.
12:30
Well, sorry, it's well and truly been shut down.
12:33
A bit of the background.
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So back in 2015, Elon Musk actually co-founded OpenAI,
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so Chatur B.T., it was started as a not-for-profit.
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So it was the idea that something so powerful as AI
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should benefit the whole of humanity, not shareholders.
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And so it was kind of founded on that premise,
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the mission and that's what people got on board with
12:58
and that's what Elon Musk got on board with, which is surprising.
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Anyway, he donated because you can't invest.
13:06
So he essentially donated millions to the company.
13:09
There was a bit of a power struggle between becoming CEOs
13:12
and then all of that.
13:12
Anyway, he left in 2018.
13:15
So started in 2015, he left three years later.
13:18
At that point, OpenAI converted from a not-for-profit
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to become a for-profit company.
13:24
Elon Musk was absolutely furious
13:26
and that's what he is suing for.
13:28
Now, he was suing for, I think it was 134 billion in damages.
13:34
He wanted to remove Sam Altman, who is the CEO and founder of OpenAI.
13:39
And he wanted to reverse the business from a for-profit to a not-for-profit.
13:44
So kind of back to what it originally was.
13:46
There were in court and within two hours,
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the judge was like, this case is kind of dismissed.
13:52
They unanimously decided that the claims that Elon Musk was making
13:56
effectively was beyond the statute of limitations.
14:00
Now, I was like, what is it?
14:01
That just means it took him too long to bring this case to court.
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So if he'd done it maybe five years earlier,
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he probably could have actually had a case,
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but they were like, oh, you've waited way too long.
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And also, the company that is OpenAI now is now worth billions of dollars.
14:17
And so no wonder he's pissed off and now he's claiming these huge losses.
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So they're just like, you know what, you took too long.
14:23
Elon Musk said he's going to appeal, but essentially it's a non-offent.
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So apologies.
14:29
There is no Netflix series coming out of this about Elon Musk and Sam Altman
14:33
kind of going at it for years.
14:34
And but one interesting thing that actually came out of the court case,
14:38
which is kind of embarrassing for Elon Musk, is that he wanted OpenAI
14:42
to be a for-profit company.
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And so this is all becoming like, well, hang on a second.
14:46
You wanted it to be a for-profit company.
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And you actually have seen an email that you wanted to become CEO.
14:52
So this is just a complete power struggle of two men
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who have these dominating AI businesses.
14:58
Anyway, it's probably a good thing.
15:00
It allows now for SpaceX to kind of have its time in the sun
15:05
in terms of being a new public company.
15:07
And they've also actually got OpenAI,
15:09
which is going to become public soon.
15:11
Probably this year, haven't given any dates yet.
15:14
But yeah, both founders can just swan off into the sun
15:17
and just focus on, focus on growing the businesses.
15:19
Coming up after the break, we talk about a lawsuit
15:22
that Shakira has filed, and actually won.
15:26
But before we dig into that, here is a note from today's motto.
15:29
Oh, I invest so much more now,
15:31
but I still don't feel great about profiting from companies
15:35
that I don't believe in.
15:36
You know, weapons, I just, I personally,
15:38
do not want to be making money from conflict.
15:40
But what about weapons companies that supply
15:42
like both sides of the conflict?
15:44
Pretty confusing, right?
15:45
I know it's so confusing.
15:47
And I feel like I'm not alone in that.
15:49
Yeah, I mean, 80% of New Zealand investors
15:51
don't want weapons in their Kiwis over yet.
15:53
Mindful money reports that over $400 million
15:57
is still invested in weapons manufacturers,
15:59
which is why choosing the right provider matters.
16:01
Like Pathfinder Kiwis have a plan,
16:03
which aims to avoid profiting from conflict.
16:06
They've been recognized as weapons free by Mindful Money
16:08
and written loads of blogs on this topic,
16:11
even covering their position on Gaza,
16:12
which a lot of people have avoided.
16:14
So if you want to check out our podcast show notes
16:16
to learn more, and thanks so much to Pathfinder
16:18
for making this episode of the Curve Weekly possible.
16:20
Pathfinder asset management limited
16:22
is the issuer of the Pathfinder Kiwis ever plan.
16:24
A product disclosure statement is available
16:26
at Pathfinder.qwe.
16:28
Now look, for many people who have listened here for a while,
16:31
you will know that I hate talking about tax.
16:33
And anytime we get us a tax question,
16:35
I just avoid it like the plague.
16:36
It is so personal.
16:38
And everyone's situation is different.
16:39
And so when we get questions about
16:41
what amount of tax should I pay,
16:42
which should I pay tax, or where do I pay tax?
16:44
Like it totally depends on your personal situation.
16:46
But this headline sparked my interest
16:49
because it said Shakira wins a 55 million Euro tax battle.
16:57
And I was like, oh my goodness, that's a lot of tax.
17:00
The context of this.
17:01
So she had been in a relationship
17:03
with a Barcelona footballer.
17:06
So a very high profile Barcelona footballer.
17:08
So naturally, it's been a bit of time in Spain.
17:12
And Spanish tax authorities actually claimed
17:15
this made her a tax resident.
17:17
This is way back in 2011.
17:18
So she's just been fighting since then,
17:20
and she's just won this.
17:22
But yeah, they claimed that she was a tax resident
17:25
because she'd been dating this Barcelona football player.
17:28
And therefore, she was liable to pay Spanish tax
17:31
on worldwide income.
17:32
So some countries you only pay it on your income
17:35
that you are a tax resident for.
17:38
Other countries you have to pay it on your worldwide income,
17:40
like in the US, you have to pay, if I lived here in the UK,
17:44
but I had a US passport, for example,
17:47
then I might have to pay it on my worldwide income.
17:50
So anyway, this is what was going down with Shakira.
17:53
This week, a Spanish high court overall that decision
17:57
and said that the tax agency had failed to prove its claims.
18:01
And part of this, which seems so obvious,
18:04
is like the Spanish tax agency had failed to prove
18:08
that she had spent 183 days in the country in 2011.
18:13
So one of the biggest things that claim that you're a tax resident
18:16
if you spend more than 183 days in that country.
18:19
And I remember with Sophie and I,
18:21
when we were kind of going back and forth between the UK and New Zealand,
18:24
I had to prove that I, in order to be a tax resident in New Zealand,
18:28
that I'd spent in more than 183 days there.
18:30
So this is kind of a bit of a common thread
18:33
with a lot of countries, is this threshold.
18:38
And anyway, her defense was that it is materially impossible
18:43
for her to have spent more than half a year in Spain
18:47
because she was on a wheelchair.
18:49
So she had performed 120 concerts in 37 countries.
18:53
And she was like, that just completely shows
18:56
that I could not have spent more than 1803 days in Spain.
18:59
Anyway, it was overturned.
19:01
The tax agency in Spain has to pay her 55 million euros plus interest.
19:07
I think the kind of the takeaway for me from this was that
19:12
if you are, I guess, in between countries
19:15
or kind of doing your tax,
19:17
one thing that you should always do,
19:19
if you're not in a salary job and it's kind of all done for you,
19:23
is make sure that you keep all your receipts.
19:25
I know it sounds really, really basic,
19:27
but like document everything.
19:29
Keep your receipts, have a diary or at least note down
19:33
if it's digitally or in a note pad or something,
19:36
like the days that you're in each country
19:38
and just make sure that your document
19:40
keep your boarding passes, all of that just,
19:42
even if it's physical or online,
19:45
because you'll never know.
19:46
And I remember having to scour through all boarding passes
19:50
and trying to figure out what days I entered
19:53
and what days I did and it was actually really cumbersome.
19:56
So if you are in a position where you're working
19:58
in different countries,
19:58
just make sure that you document everything.
20:00
Also, it's where you actually live, not where your partner lives.
20:05
It's all about you.
20:06
And there's other things like if you own a house
20:08
or if you have family in that country.
20:09
So there's lots of different things,
20:10
but that's a bit of a,
20:12
I guess a bit of a learning from Shakira.
20:14
So yeah, thanks.
20:15
Thanks.
20:20
Now, we had a podcast a while ago about how we think
20:25
that AI is actually going to create more jobs,
20:28
not destroy them,
20:29
but there's been a bit of an alarming economic stat
20:32
that's come out last week.
20:34
And it's all around jobs that have been created in the US.
20:37
Now, people look at this kind of statistic quite closely
20:41
because it does show like the health of an economy.
20:44
And in the US,
20:46
the jobs data came out last week for April.
20:49
And it showed that there was 115,000 jobs
20:51
that were created, which is great news.
20:54
And this is the kind of,
20:55
this is two months now of gains and jobs.
20:58
So really, really positive to see two months of growth.
21:01
But if we dig under the surface,
21:05
there's actually some real warning signs.
21:07
And firstly is that that number of jobs was,
21:11
or that jobs growth was dominated by health care.
21:13
And we need to kind of strip health care out
21:15
because it's always going to grow.
21:17
There's always going to be jobs.
21:18
It's because people always get sick.
21:20
We've got an age in population.
21:21
There's always a need for it.
21:22
So it's, it's quite recession proof.
21:24
Yeah, 30% of all those new jobs were created in the health care space.
21:28
So if we strip that out and you take health care out of the equation,
21:32
the US economy is actually losing jobs.
21:35
So it's losing more jobs and it's gaining.
21:38
So it's like a net negative.
21:39
So it might have added some, but it's lost more.
21:42
So like overall, it's lost jobs.
21:45
And the predominant places are in government
21:48
because there's massive government cuts right now,
21:50
government spending cuts.
21:51
So they're not hiring, not creating new jobs.
21:54
But it's also in finance, tech and IT
21:57
with the next biggest sectors of job cuts.
22:01
US employers across the board
22:04
announce the third highest monthly cuts
22:08
since the 2008 financial crisis.
22:11
That's quite massive.
22:12
And that just shows, I guess, the uncertainty
22:16
that employers and businesses are facing now.
22:18
And this is not only in the US.
22:20
We're seeing this across the board.
22:21
We're seeing this in the UK.
22:22
We're seeing this in New Zealand, less so in Australia,
22:24
but we are seeing it across the board.
22:26
And like even speaking to friends who are unfortunately
22:29
being made redundant and trying to find new jobs
22:31
or in the job market, young people,
22:34
young people are really struggling to find jobs at the moment.
22:36
And it's because when there's a lot of uncertainty
22:39
in the world, it makes it harder for businesses
22:42
to make decisions.
22:43
So even just taking the curve, for example,
22:44
if we didn't really know what was going to happen
22:46
in the future and of course you don't to a degree.
22:48
But if you were trying to make decisions about growth
22:52
and whether to go into this market or launch this product
22:55
and you couldn't make those decisions
22:56
because you didn't know what the world was going to be,
22:59
then of course you're not going to be hiring people either.
23:01
So everything that's going on that I run,
23:04
the oil price, inflation,
23:05
that all of those things that are going on in the world right now
23:07
have made it really hard for businesses to grow
23:10
and therefore hire.
23:12
And then you throw on top of that AI.
23:15
It's not quite what you think.
23:17
It's not a case of robots replacing people overnight.
23:20
It's definitely not that.
23:21
But companies are kind of cutting divisions
23:23
or cutting costs in certain areas
23:26
so they can redirect that money into AI.
23:29
So they're like, instead of spending over here
23:30
or maybe hiring in HR and operations or whatever,
23:34
we're going to spend on AI.
23:36
So there's not new jobs being created.
23:38
It's either jobs being cut due to AI
23:41
or status quo, we're just not going to hire anyone.
23:44
We're going to make people more efficient by using AI.
23:48
But I just want to say this is,
23:50
it's kind of like a reallocation of resources.
23:53
It's not a kind of mass automation
23:56
and we're going to see waves of people live their jobs.
23:59
Yes, in the short term right now, we're seeing this,
24:01
but over the long term, I genuinely believe
24:06
that this is going to create so much more opportunity
24:08
and growth and so many more jobs in the long run.
24:13
But when we do see these big changes,
24:16
like evolutions, revolutions going on in the world,
24:19
there's almost like a bit of a digestion period
24:21
as people rejig to, I guess, get the kind of correct foundations
24:26
that then invest and grow again.
24:28
Also, if you are looking for a job right now
24:30
and you are feeling disheartened and, you know,
24:33
it is tough, don't get me wrong.
24:34
But just remember, this is a cycle that is happening.
24:38
It's not because of you.
24:39
And I think the best thing that you can do is
24:42
look at how you can upskill and maybe incorporate AI
24:45
a bit more into your CV and into your experience,
24:48
your talent, so therefore you're more likely to get fired.
24:51
But also, think of the jobs that are going to be around
24:54
in 10, 20 years' time or where the growth is going to be.
24:57
And how can you position yourself to be part of that?
25:00
And I think that's for me, the really exciting part
25:03
is always looking into the future of being like, okay,
25:06
where is the growth, not only from an investment standpoint,
25:08
but obviously from you personally,
25:10
as a little asset and as an investment,
25:12
how can you upskill so that you can grow with those jobs
25:17
and with the movement of the world right now
25:19
and where it's hitting rather than being left behind?
25:21
Speaking of jobs, we have one available at the curve.
25:23
It is a junior-editor role and it is based in London.
25:26
It's full-time and you get to work with the amazing curve team.
25:29
If you're interested, we'll put the link in the podcast show notes.
25:33
But the applications close on the 30th of May.
25:36
Yeah, it's just the MLS is telling me it's the 30th May.
25:38
Yeah.
25:39
Now we have our community question, which I love these.
25:41
And it says, when people say they're getting an income
25:45
from their investments, i.e. being able to retire
25:48
because of investing, are they selling their stocks
25:51
to generate income or is this from dividends?
25:53
Really good question.
25:54
Look, it completely depends.
25:56
Some people do both.
25:58
So some people might sell their stocks.
26:00
Some of them might just live off the dividends.
26:02
It completely is up to their own situation.
26:05
So firstly, some of them might live off the dividends.
26:08
So that just means that they're getting paid
26:11
for owning the shares.
26:11
So if you think of, maybe a property.
26:13
If you think of a property and you rent that out
26:16
and you get rental income, it's exactly the same.
26:18
A dividend, when you own a share,
26:19
you get paid some of the profits.
26:20
So that's kind of what a dividend is.
26:22
If you have a large enough sum,
26:23
you can actually generate a pretty livable income
26:26
off your shares that give you dividends.
26:29
Let's use an example.
26:30
If we had someone called Sarah who say she owned 500,000
26:36
by the time she retired in a dividend paying fund
26:39
or in stocks that pay dividends,
26:41
and she received a 4% dividend each year.
26:46
That's $20,000 a year.
26:47
So if that's enough for her to live off, that's great.
26:49
She doesn't have to sell her stocks
26:50
because she can just live off the dividend part,
26:52
if that makes sense.
26:53
So her 500,000 just keeps growing and growing
26:57
and she just kind of clips the 20,000 in dividends
27:00
each year that it pays.
27:02
And she can live off that absolutely fine.
27:04
So she didn't have to dig into her 500,000 if that wasn't enough
27:09
and you actually had to maybe do a combination of both.
27:13
So you had the 20,000 from the dividends,
27:15
but then you also maybe had to take out 10,000
27:18
by selling your shares.
27:19
Then yes, you're going to reduce that amount
27:21
that 500,000 each year.
27:23
So there is actually a really good rule
27:27
and that most kind of financial advisor
27:28
and financial planners use.
27:30
And it's called this rule of 4%.
27:33
And it's the idea that if you withdraw
27:35
no more than 4% of your portfolio each year,
27:39
your money should last about 30 years.
27:41
So if you decided you know what,
27:44
I think I can live off 40,000 a year
27:46
when I'm in retirement,
27:47
then kind of back solving that,
27:49
you'd need a million dollars when you retire.
27:52
So 4% for 30 years on a million dollars
27:56
is about 40,000 a year to live off.
27:59
So if you're like, you know what, actually 40,000,
28:01
I can't live off that, I need 60,000.
28:03
Then when you retire, you'd need 1.5 million.
28:06
So it's called this rule of 4%.
28:08
4% of 1.5 million is 60,000.
28:12
So if you can live off that per year,
28:14
that's what you need when you reach retirement
28:16
is 1.5 million.
28:17
And just to be clear,
28:18
you are not taking 4% out from when you first start investing,
28:21
you are taking 4% out when you retire at 65.
28:24
Yep, just to be clear.
28:28
Thank you so much for listening to The Curve Weekly.
28:30
Make sure you hit subscribe or follow wherever you're listening.
28:32
So you're always up to date with the latest finance
28:34
and investing news.
28:35
And feel free to leave a comment
28:36
to let us know what you thought about this episode
28:38
because we would love your feedback.
28:40
We've got new Curve Weekly episodes
28:41
for you to listen to every Monday.
28:43
But until then,
28:44
listen to a raise in the curve.
28:45
These are our in-depth podcast episodes
28:47
where we chat about all things money.
28:48
We're also around all week on socials,
28:50
if you're hungry for more Curve content
28:51
and all the links are in this podcast store notes.
28:54
We hope you have a great week
28:55
and we'll catch you for the next episode
28:57
of The Curve Weekly on Monday.
28:58
Okay, quickly, the curve was created to empower
29:08
and educate you about investing,
29:09
but we are not financial advisors.
29:12
Our platform exists for educational purposes only
29:14
and it doesn't provide personalized
29:16
investing advice for your individual needs
29:17
and should not be relied upon to make
29:19
an investment or financial decision.
29:21
And always remember to do your own research
29:23
before making any investment or financial decision.
29:26
We're here for any knowledge and support you need,
29:28
but the final call is always yours.
29:30
And thanks for being here. You got this.
29:32
Yeah, we know you got this.