Serious question: If I wanted to buy 10% of your income for the next 10 years (let's assume this was possible pre-tax), how much would you charge me in up-front cash for that?
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It's v simple - you're asking for the present value of a stream of future cash flows. That's Net Present Value: https://en.m.wikipedia.org/wiki/Net_present_value …
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Yes, the qeustion is a. what do you think will happen to your future cash flows b. What is the current state of your finances, and could cash now move the needle
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Yes, you're after DCF valuation of future income if people taught by
@LambdaSchool, vs DCF for not and % of delta people will willingly pay. -
I also assume some folks would take it for pure non-DCF related reasons. Life circumstance and practicality.
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Yes, but in that case I'd caution against too long a timespan lock-in, otherwise all the good work you're doing might not look so benevolent
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I'm not seriously planning on doing it for 10 years, just a thought experiment
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including capital gains?
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Don't consider tax for now, pretend like it doesn't exist
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I’m thinking of your 10% like a tax. does it only apply to wages or do you want 10% of capital gains or any windfall too?
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any windfalls, but I'm also paying you 10% of current windfalls
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100K, but I could prob. be talked down to 80
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Then how much do you think you'd make over 10 yrs? Curious what your discount is. And what you'd do with the 100k.
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My guess is between 800K-1.1M. If you proposed a discount based on peoples current salary it would be interesting to see if they're more idealistic about the future or greedy in the present.
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Also, some might do it because, say, they can buy a house or pay off credit cards
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Yeah, more seriously at a house with low amounts of debt is pretty appealing
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100% of year ones gross salary
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You'd lose money (inflation) on that bet.
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I could use the cash now to invest in something that would apperciate in value faster and higher than inflation
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Oh, my bad. Not you.
@AustenAllred would. It's basically an advance. -
I'm betting that salary would increase
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I'd certainly take that, but you could probably negotiate me down to somewhere between that and one third of first year salary (if I were to basically treat your offer as a 10 percent per year loan).
End of conversation
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