Saturday, May 27, 2017

The opportunity cost of investing vs. working a minimum-wage job

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If I, as an amateur with limited disposable income, put $5,000 into the market, and I have an extremely fortunate year and post a 10% RoI, I will have earned $500 before considering taxes/inflation. Suppose I spend 15 hours per week managing my $5,000 portfolio. I will have worked 780 hours at a rate of $0.64/hr to earn that $500 before taxes. That’s more than an order of magnitude below the minimum wage. To make the equivalent of minimum wage (let’s say $10/hr for simplicity’s sake) using the above figures, I’d need to invest at least $78,000 and pray for a 10% annual RoI. So why does it make sense, or why doesn’t it make sense, to invest at all if I have anything less than several tens of thousands of dollars with which to invest? Otherwise, am I not making well below minimum wage?

submitted by /u/Magyarorszag
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May 27, 2017 at 08:14PM

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from /u/Magyarorszag

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