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.
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