Monday, June 9, 2014

A guide to the top 1% after college

This article is quite fun to read
http://www.cnn.com/2014/06/09/opinion/macintosh-piketty-wealth/
"The obvious implication is that you must find a job where the distinction between capital and labor is blurry. A job where you can take a slice off the top by getting paid as if you owned a piece of action even though you don't. Because without some capital working on your behalf, no amount of even the hardest and most skillful labor will get you anywhere near the top. (How many doctors or engineers join the country club these days? Virtually none.)
...
Let's assume that you won't settle for mere membership in the top 1.0% but have your sights set on the top 0.1% with a corresponding annual income of roughly $4 million. Piketty's analysis of long-run returns (4% to 5%) suggests that this would require you to have roughly $100 million of capital working on your behalf. Although this seems daunting -- it's what the average American makes in 2,000 years -- fear not, for there are a few places where this type of money can be found:
Listed stocks: The average Fortune 500 company has a market value of $28 billion (280 times more than you need) and its real owners -- the shareholders -- are virtually powerless to stop senior management from taking 3.0% or more off the top. So even if the company's performance is lackluster, and the pot is split between you and four or five other top guys, there's plenty to go around. So while the corporate ladder can be long and greasy, it's worth the climb. I'd suggest you steer clear of smaller companies as they're just as hard to run as the bigger ones but don't hold enough capital -- the average Russell 3000 company has a market value of only $1.4 billion -- to be worth your while.
...[ Read the link for more]

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