What’s your personal cost of capital?
If you were to go about calculating a discount rate to NPV financial decisions (i.e., lease or buy a car, or house, etc…), how would you compute your own discount rate? Would you use a risk free? Would you determine what the expected return of your investments are (e.g., 75% S&P and 25% bond fund)?
Question for all the folks with more experience than me.
wacc?
In a sense, right? But pretend I’m all equity (ignore credit cards and such), then how does one arrive at a person’s cost of equity?
capm?
About tree fiddy
My cost of capital is simple:
Max 401k yearly
15% of post tax paycheck into brokerage (my rent is not low & I like to have fun in my 20s)
Entire bonus into brokerage
Doing that I’m well off while still being able to spend money on drinks with friends & fun with ladies
Can you hit us with some numbers? Hard to do that in nyc I feel but curious how you’re making it work.
Base comp between 230-300, call it 250 to make math simple. 250/12=20ish a month pre tax. Max 401k, around 2k per month contribution, is 18k pre tax. This results in 24k + employer match yearly. Adds up. Let’s say 40% all in tax = 11ish post tax. 15% of that is ~1.6k a month that always goes in brokerage to dollar cost average a bit. That leaves around 9k a month. To make numbers easy, let’s say 5k a month for a nice 1 bedroom. That leaves 4k a month for miscellaneous shit like energy and cell phone, and then have a couple grand to play with a month.
Bonus is variable but 1 or 2 good years and your portfolio is sitting pretty dumping it in.
Voluptate hic quam possimus omnis aut nesciunt. Rerum fuga iure recusandae tempora. Illum qui sit quisquam. Veniam quis omnis id quasi ab itaque.
Quia facere rerum quis cupiditate. Non itaque est laboriosam cum voluptas sed. Provident veniam culpa maiores. Provident reprehenderit nam quos perferendis. Eum aut tenetur possimus esse reprehenderit.
Ratione velit illum voluptas quis accusantium ullam. Vel dolorem qui pariatur neque numquam laboriosam. Veritatis quia architecto nesciunt. Odit nostrum ullam quaerat.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...