What is the value of an 18 year old?

in #investing5 years ago

What is the value of an 18 year old?

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Have you ever seen those stories about people trying to “IPO” themselves? They are all over the place and the most extreme ones get the news – such as the guy who put whether he should breakup with his girlfriend to a shareholder vote!

Anyway, I think the concept is fairly intriguing and is something I would consider investing in – it could have amazing results for both the person and the investors.

How about a conceptual example – a high schooler is graduating and is getting ready to go to college. Instead of borrowing money to get a college degree, he decides to IPO himself to raise some funds. He decides that 1,000 shares is the right number for himself, and wants to retain 90% of the shares for himself (or to sell later) and wants to raise $80,000 to go to college. Based on this, he would issue 100 shares for $80,000, or $800 per share. He now has the money to go to college debt free.

In return, these investors are now holding 10% of his future net earnings, though this is subject to plenty of risk. Once our man graduates, he gets a job and is making $80,000 a year. He has cost of living expenses (food, shelter, medical, etc) of $60,000 a year, so there is a $20,000 net profit on our man for the year. He then pays out the dividend of his profits, of which 90% go to him, and 10% go to the investors. So the investors get $2,000, or $20 per share this first year, which is a 2.5% return on their $800. As our man continues to earn more, the annual profits go to $25,000 for the next 3 years, $30,000 for the next 3 years, and $40,000 for the next 3 years. That means in the first 10 years he is out of college, he would have returned $305 per share to his investors who invested $800, so a cumulative return of 38%.

If our man levels out at a net profit of $50,000 per year from age 35-55, then he would be returning $50 per year, so total dividends of $1,000 for these 20 years. At the 30 year mark, he would have returned 163% of the $800, plus the investors still hold their share in him for any future earnings (and entitled to a portion of his other assets?). Maybe not the greatest returns for the investors in this example, but I think you can understand the concept.

All this to say, if people were “going public” and issuing shares on themselves, I would be a potential share buyer as it is an intriguing investment opportunities.

In our example, the high schooler valued himself at $800,000 at age 18… Do you think this is too high or too low of a valuation given the potential of the average 18 year old?

Take care!

Brian

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It all depends on how much they have on their Steemit account !

Interesting article. It depends on the person, skills and location i think. Because what matters is what the potential income will be.

I would want a royality o. Every dollar, not going to let someone else set thier "expenses", too many wants are labeled as needs.

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Is this legal in US? Slavery was abolished many years ago and I don't think that eternal contracts are legal. Who would check if the dividends are correct and what action can any shareholder take if something is amiss with our "company"?

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All the 18yr olds I know snapchat while driving. Too risky of an investment for me.

It is a brilliant idea if it will work out and will just be based on the credibility of that IPOing 18 year old @brian.rrr

What are the expected returns for a start up company headed by an 18 year old CEO with no experience and guaranteed lifetime employment? I'm thinking negative numbers.

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I think it's too high at the age of 18 years but if someone prove himself at this early age then I think his future will be bright.

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