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I think you are misunderstanding the point. It's not that he was saying 4k a month is FU money (although it could be) its that since he ostensibly already has FU money he can turn down 4k a month so he doesn't have to compromise his principals.

That said if you have zero debt, low expenses and a ton of money in an account that yields 4k a month in interest, 4k a month could be considered FU money.



In this case, how much of the 4k should be re-invested to counter the inflation?


That's a function of both inflation rate and your expected ROI. Using 3% inflation and 6% ROI you need to reinvest ~51.6% of your income to break even. (1-(ROI-((1/(1-inflation rate))-1)))/ ROI = 1-(.06-((1/(1-.03))-1))/.06 = ~51.6% Edit: Ok there must be a simpler way to write that...

((1/(1-inflation))-1) / ROI = ((1/(1-.03))-1)/.06 = 51.6%

PS: Just keeping what left over when you subtract the inflation rate from your ROI is close and you don't actually know the inflation rate or your long term ROI most of the time.


Got it. Thanks!




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