To be the equivalent of a millionaire...

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I figure you need to be making about $5,000 a month in IM.

My maths is as follows:

A decent return on investment after inflation, fees and taxes is roughly 6%. It might be more or less than this depending on your country and market conditions, but 6% works out to 0.5% a month (if we ignore compound interest), which makes things easy to calculate.

If you had a million bucks making 6% net per annum, you'd rake in $5,000 a month.

So if you make $5,000 a month in IM, your net worth - measured entirely in passive income (which I know ignores many factors) - is about a million bucks.

$500/month = $100,000
$50/month = $10,000

Another way of looking at this is, if you increase your passive income by $20 a month (if you made $80 last month on AdSense and now make $100), that's as if you just added $4,000 to your passive net worth.

So, measured entirely in terms of passive income, a job that allows you to save $4,000 a month is equivalent to working IM and adding $20 a month to your internet empire.

This assumes a very long-term view, though. And because of hyperbolic discounting I suspect that most people would rather work for a month for $4,000 than have $20 a month forever.

Still, if you're planning on making a career out of IM this is an interesting benchmark, I think.

Thoughts?
#equivalent #millionaire
  • Profile picture of the author DrewClement
    Really not meaning to be rude,

    But I suggest you spent a lot more time working on making yourself a success, rather than using this much energy to crunch all the numbers.

    It certainly is a nice thought, what you have put together, but in reality it certainly lacks substance
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    • Profile picture of the author AdappMedia
      Originally Posted by DrewClement View Post

      Really not meaning to be rude,

      But I suggest you spent a lot more time working on making yourself a success, rather than using this much energy to crunch all the numbers.

      It certainly is a nice thought, what you have put together, but in reality it certainly lacks substance
      I disagree - you cant set goals and become a success unless you know where you want to be. In fact, if you are measuring success monetarily then its an absolute must to crunch the numbers to even gauge what a success or failure is. Not having a clearly defined end goal also leads to internal misrepresentations when there is a failure because its easy to shrug off or make excuses instead of admitting there is a problem.
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  • Profile picture of the author E. Brian Rose
    I work my ass off to make the money that I make each month in Internet marketing. Posts like this give more fodder to the hype that making money in IM requires no work and it's all just "passive income". Sure, there is some passive income, but it took a lot of work to get there and even more to keep it coming.... so is it really passive?
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    • Profile picture of the author JamesGw
      Originally Posted by E. Brian Rose View Post

      I work my ass off to make the money that I make each month in Internet marketing. Posts like this give more fodder to the hype that making money in IM requires no work and it's all just "passive income". Sure, there is some passive income, but it took a lot of work to get there and even more to keep it coming.... so is it really passive?
      This is so true. It's more work than you'd think to be successful in IM. And throwing silly stuff like this out is kind of pointless. Making 60k a year on IM is not the same as collecting 60k a year from interest on your money.
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    • Profile picture of the author Isaiah Jackson
      Originally Posted by E. Brian Rose View Post

      I work my ass off to make the money that I make each month in Internet marketing. Posts like this give more fodder to the hype that making money in IM requires no work and it's all just "passive income". Sure, there is some passive income, but it took a lot of work to get there and even more to keep it coming.... so is it really passive?
      I find this to be 100% true being able to sustain the amount of money you make over the course of a year, its not like your being paid salary your getting paid per unit you sale.
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  • Profile picture of the author seasoned
    If a millionaire is defined MERELY just as one making a million dollars. Wait a decade or two, and everyone in the US is likely to be making a million bucks. But NOBODY wants more money! They NEVER have! WANT PROOF? Offer a million $ worth of large denomination confederate notes, etc.... How about a 1944 Million mark bill? NOPE! NOBODY wants lots of money. It is too much to deal with, etc... HECK, I have touched more currency this year than any year in the last decade! Maybe 1 or 2 thousand dollars! YIKES! Those cab rides are EXPENSIVE! $100-$140 round trip. YIKES!

    NOPE, it is BUYING POWER that they want! At that, I figure I need at least 5 million today to be a millionaire! HOW do I figure? About the right amount to buy a home equivalent to a millionaire of say the 70s. At 10% it is $500,000 a year, so you could live like a millionaire.

    Steve
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    • Profile picture of the author ThomM
      Originally Posted by seasoned View Post

      If a millionaire is defined MERELY just as one making a million dollars. Wait a decade or two, and everyone in the US is likely to be making a million bucks. But NOBODY wants more money! They NEVER have! WANT PROOF? Offer a million $ worth of large denomination confederate notes, etc.... How about a 1944 Million mark bill? NOPE! NOBODY wants lots of money. It is too much to deal with, etc... HECK, I have touched more currency this year than any year in the last decade! Maybe 1 or 2 thousand dollars! YIKES! Those cab rides are EXPENSIVE! $100-$140 round trip. YIKES!

      NOPE, it is BUYING POWER that they want! At that, I figure I need at least 5 million today to be a millionaire! HOW do I figure? About the right amount to buy a home equivalent to a millionaire of say the 70s. At 10% it is $500,000 a year, so you could live like a millionaire.

      Steve
      In a heart beat I'd take both of them.
      Legitimate confederate notes are worth a fortune . Even though I never heard of the 1944 bill, I'd wager it's worth a pretty penny also.
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      • Profile picture of the author seasoned
        Originally Posted by ThomM View Post

        In a heart beat I'd take both of them.
        Legitimate confederate notes are worth a fortune . Even though I never heard of the 1944 bill, I'd wager it's worth a pretty penny also.
        That's why I said a few large ones. But you would take them ONLY because others would likely pay you something for them. At this point, it is likely to be 100% of what jim straw calls the burning match. The more that buy, the more likely one is to get BURNED.

        Nazi germany released some VERY large bills to pay because of the high inflation. Hence the reference to a 1944 note. IF they were good today(they AREN'T), they would be worth a bit over $500K USD. Think of them as nazi gemany's confederate note.

        Steve
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  • Profile picture of the author derekwong28
    The big problem with your calculations is that a $5000 income business in IM sells for much less than $1M. In fact, the average "benchmark" is only around 10 month's income. Therefore, you are looking at around $50,000. Just do some research in Flippa and Digital Point and you will see what I am talking about.
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    • Profile picture of the author seasoned
      Originally Posted by derekwong28 View Post

      The big problem with your calculations is that a $5000 income business in IM sells for much less than $1M. In fact, the average "benchmark" is only around 10 month's income. Therefore, you are looking at around $50,000. Just do some research in Flippa and Digital Point and you will see what I am talking about.
      Flippa and Digital Point aren't good benchmarks. They are probably LARGE companies with lot's of dead weight. A companies low end value should be AT LEAST what the depreciated inventory, fixtures, licenses, investments, and supplies can sell for, which is called book value. A rule of thumb is that people generally want to see a return within 3 years. That would be 36 times monthly income. But income, ESPECIALLY in IM, can be rigged or tied to an individual. BTW $5000 is almost nothing in American terms. Many workers make more than that a month. They probably won't risk their savings on a business that only makes $5000/month. Have something they can see VALUE in, and proof you are making $5000/month, and they MIGHT be willing to pay $180000. MAYBE! $18000 almost definitely, though they may wonder why you are giving up $60,000 for a mere $18,000! $50,000? Well, you WILL have a FAR smaller market. AGAIN, you sell ALL the company for a mere 5/6 of its worth in one YEAR?

      Steve
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      • Profile picture of the author derekwong28
        Originally Posted by seasoned View Post

        Flippa and Digital Point aren't good benchmarks. They are probably LARGE companies with lot's of dead weight. A companies low end value should be AT LEAST what the depreciated inventory, fixtures, licenses, investments, and supplies can sell for, which is called book value. A rule of thumb is that people generally want to see a return within 3 years. That would be 36 times monthly income. But income, ESPECIALLY in IM, can be rigged or tied to an individual. BTW $5000 is almost nothing in American terms. Many workers make more than that a month. They probably won't risk their savings on a business that only makes $5000/month. Have something they can see VALUE in, and proof you are making $5000/month, and they MIGHT be willing to pay $180000. MAYBE! $18000 almost definitely, though they may wonder why you are giving up $60,000 for a mere $18,000! $50,000? Well, you WILL have a FAR smaller market. AGAIN, you sell ALL the company for a mere 5/6 of its worth in one YEAR?

        Steve
        The ballpark of 10 months' earnings is not set by Flippa or DP. It is commonly benchmark by experienced buyers and sellers of websites, but it is not set in stone. You cannot expect an online business to be valued as high as an offline business because of the high incidence of fraud and also sustainability.

        With a offline business, the transaction would usually go through lawyers and you can get a third party to look at the books carefully. This is not usually the case with Internet businesses. If someone is selling their site at a really knockdown price, you really to to ask yourself why. More often than not, there is fraud, or that the owner thinks the business is not sustainable, or other factors such as copyright infringement etc.

        Derek
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  • Profile picture of the author StoneWilson
    There wasn't easy math in IM for me, back to the beginning I was so excited seeing thread like this, then I bought 50 domains and dived into IM, I have to say it's killing me to manage 10(yes, not 50) websites per day. So start with a successful site should be a better idea, and math in IM is more like crap. No offence.
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  • Profile picture of the author Mixengineer
    Honestly, one thing ive learned about with working with marketers for music labels is that crunching numbers gives you a realistic goal.
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  • I gotta say...

    Sometimes E. Brian Rose can be a real smart-ass dickhead...

    but he always speaks the truth.

    OP: Spend more time on actually working, and less on doing math.

    Stop wasting everyone's time posting useless stuff like this. I can tell you exactly what I average per day, but that's really none of your business, nor does it reflect on how much work YOU are doing per day.
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    • Profile picture of the author jimbo13
      To be the equivalent of a millionaire you need to be able to write a cheque for a million £s forget $s and have it not bounce.

      Can you do that earning $5k (£3k) per month?

      No.

      Dan
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