If you were an investment,what would be your worth?

Before some people take offense to this, let me say this is not a value judgement about you, this is a thought exercise in calculating how much your Employer thinks you are worth..

Rule of 25

When doing retirement planning, there is a simple “Rule of 25” to calculate your “Retirement Number”.You multiply your annual expenses by 25 to get the number.This is the retirement fund you need. You can withdraw 4% each year from this each year without touching the principal

So if your annual expenses are $100k, then your retirement number is $2.5M. Rule of 25, comes from the idea that you can invest your retirement fund and get 4% relatively risk-free on that amount. If you want to use 3% to be safer, you can call it a Rule of 33 instead

What’s your number?

But what does this have to do with you and how much your Employer thinks you are worth?

Well, for your Employer you are the annual expense.. You can multiply your annual salary by 25, you can get an idea of how much your company thinks you are worth…

Is your salary $200k? Your company values you at $5M.

Is your salary $60k? Your company values you at $1.5M.

So, what’s the number for you? What are you worth to your company?

Unhappy?

Don’t like that number? Think you are worth more? What are you going to do about it?

Luckily, you are not an inanimate retirement fund..

You can work on increasing your value.. You can upskill and then asking for a raise or get a new job.

Or, you can create and sell something that is more valuable than what your company thinks you are worth..

PS – This is a rule of thumb, you could actually do a more sophisticated calculation using excel. Add your annual salary increase ~3% in US and not think about your company paying you in perpetuity and but only for next 30, 40 years. But that’ll take out the fun from the exercise