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Assuming a working career of 40 years, with a salary of 25000 GBP (Great Britain Pounds) , you will earn a cool million over a lifetime.
For a quick million, convince your manager that you'll work for the company for 40 years and insist on the money up front.
1 million GBP in the bank will
earn you 50,000 GBP a year in interest ... much more than you'd earn ordinarily.
How about if I sign a contract stating that if I fail to complete my 40 years service, then the money is repayable. Then my estate pays (40 - years already served)*25000 back to the company.
[You're quite right, it'll never work. Worth a shot though]
sea slang terms
http://www.yacht-vo...alk/seaterms04.html
about halfway down [ato_de, Oct 04 2004, last modified Oct 05 2004]
Do you need a "dead horse?"
http://www.lifeline...5852.asp?RootID=381
more modern application [ato_de, Oct 04 2004, last modified Oct 05 2004]
[link]
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How about if I sign a contract stating that if I fail to complete my 40 years service, then the money is repayable. Then my estate pays (40 - years already served)*25000 back to the company. |
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ways and means.... ! Can I have a croissant now? |
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Excellent!. Even better extension, with your 50k you could employ someone for 25k to do the job for you and still bank interest to the value of the original 25k that you would have earned simply by working yourself!.
A Win:Win situation |
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Even if your boss was mad enough to fall for this, you'd pay tax at the higher rates on most of this rather than paying tax at a lower rate as you would do normally. This would result in your lifetime tax bill being much higher than if you got the money in dribs and drabs. You'd also be paying higher tax on the interest too (based on the current UK tax regime). Doing a quick first run at it, I reckon the difference is about GBP200,000 on the lump sum alone. |
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oneoffdave - UK tax rate on 25000 would be 23% and I admit that on 50000, some of those earnings would fall into the 40% tax bracket. You would still, on a year by year basis, be better off. |
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This is called "working off a dead horse" and is B.A.D. see link. |
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If you're looking at a salary of £25,000 over a 40-year career, you need a better line of work. |
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DrCurry - merely an example! How to be a 2.2millionaire didn't quite have the same ring to it! |
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Also your employer would have to pay national insurance at the full rate too, making you much more expensive than if you were paid periodically. |
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Nobody reaches a position in a company where they have the authority to make 1 million GBP payments without knowing what is meant by the term "net present value." |
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oneoffdave - but also remember that salaries would ordinarily increase year on year by inflation. With this system, I am salary inflation free. |
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25000 GBP increasing by inflation for 40 years would give a final year salary of 81550.84 GBP. |
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Thus, despite a huge outlay at first, my employer will save long term. |
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Nobody works for the same company for 40 years anymore. |
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This system will encourage me to stay with this company for 40 years, thus reducing the companies advertising, recruitment and HR costs. |
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From bitter experience [beauxeault] I know that that's not always true. |
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// This system will encourage me to stay with this company for 40 years, // |
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That's not how I meant it. Companies go under, lay people off, force veteran employees (who cost more) to early retirement so they can higher younger, cheaper staff, etc. It's not in your control. |
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No company is going to commit to an employee for 40 years. |
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Invest 10% of annual earnings in a superannuation fund, at 10% average p.a. (moderate risk). |
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At the end of 40 years of average 5% pay increases you will have about $2.1M in your retirement fund, or about 12.5 times your final year's salary of $167K |
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If you can achieve a 20% rate then you'll end up with $23.4M. This does not take into account taxes and fees. |
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[jon] but the future cost of money is less so it's not as cut and dried as it would at frist appear. It will also depend on the employer being able to produce cash to pay you without having to take out a loan. |
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[dave] you're quite right. Assuming that the company has the cash ie. doesn't have to take loan, all parties may win. |
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Only 5 ways to be a millionairre: 1) be born rich; 2) work till you drop; 3) marry rich; 4) win lottery; 5) it's a secret. |
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I'm resisting the urge to model both scenarios properly but I can feel that I might have to give in. |
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See my post, [git]. You need to work smart, not hard. In the US it is called 401K, I believe. |
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[jon], inflation of 3% will reduce your effective yield from 50K to 20K, and 40% taxes reduce it to nil. Bad investment. Your million reduces to an effective buying power of 970K, in the first year, at 3% inflation. If your govt roots up its fiscal policy then it gets worse. |
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If you work for a mega-national with enough capital to front the dough, It should work. Give it a try. After receiving the lump sum, quit the job, repay your salary off the interest from a million pounds, and spend your time more productively developing the perfect margarita. |
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Aside from the dubious phrase origin, [ato_de]'s article has it right. [jonthegeologist] is essentially proposing a jumbo unsecured loan against future earnings. Since it's a loan, he wouldn't have to pay taxes on the principle, but he would surely have to pay interest. People do this all the time, but usually in a mortgage, where the loan is limited to and secured by the value of the property. But as described, no sane employer would accept the risk ([jon] absconding) for the limited gain (interest). (No vote.) |
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millionaire is too easy nowadays. gotta go for billionaire |
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