Which is better? 300k salary or 3m net worth
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3m net worth easy
3 M net worth , but with lots of key assumptions.
Assuming 33% effective tax rate 300k = 200k. Assuming 50k expenses, net future yearly cash in hand = 150k.
Return rate = 8%, inflation = 2%
Thus NPV of salary = 150k / (8-2)% = 2.5 M
NPV of 3 M net worth = 3 M
3 M > 2.5 M
You're being generous with the 2.5 NPV. I dont think most of us will be living forever. If you get 10 years of income NPV is low 1M and with a generous 40 years, NPV is low 2M. So yes, the 3M is the way
How is this a question?
By phrasing it as such?
??? 3M net worth all day every day. You can retire with that much in the bank if you invest it well.
I make closeish to 300k and I can assure you I still feel like a worker slave
Not a SC anymore this is an old account. I’m an S&O manager in tech now
Pro
What’s your net-worth with 300k salary? Can’t possibly answer without knowing because they’re 2 different things.
Would I rather have $3 million today? Or someone give me a job paying $300k?
I would take the 3 million. And find another job that pays like $120k-$300k.
Pro
3mil fo sho
Assuming 300k option if you saved 50% of your income monthly and averaged 8% ROI, it would take you 12y to get to 3mil.
By comparison, if you had 3mil at 8% and withdrew $150k a year for living you would have around $5mil in bank after same 12y
Lump sum always because there is no control of income when you are not self employed.
Chief
As in, which would you take? Salary is more sustainable, but if it’s $3m in assets, take the assets. You can make a lot more money, with possible tax avoidance, if you have $3m in assets
$3m in cash is high risk to sustainability and you shouldn’t take it
Thus is dumb. You can buy cash producing assets with cash. I am not an accountant and I hope you aren't either
Pro
3 million yielding asset such as rental property - I would take it any day over 300k salary. I can make upto 300k salary position anytime in my life but accumulating 3M yielding asset is really difficult even with 300k!
If it’s just 3M non yielding asset then it is a trick question, does my current job have enough money to pay my bills & the property tax, 3M non yielding asset will burn lot of money than it can make and if it is not in high demand area you will not be able to sell it at right price!
Pro
I’d rather have $3M net worth.
It’s harder to build that kind of wealth from scratch, even making $300K a year. Plus, if someone is very good at their job - consultant, sales person, etc. - $300K isn’t unattainable in many industries.
3 mil. Reduces risk from job loss, disability, etc. And I can keep my job while getting that free 3M.
3M invested at 5% post-tax yield is $150k/yr. I’d take that while retired vs. grinding to earn $300k
Where do you live and how old are you at the beginning of this arrangement?