Creative College Funding
A current auction on Ebay offers up a lifetime kickback on earnings for putting up $100,000 to pay for college.
The auction claims that Ron Steen will pay 2% of his annual earnings to anyone willing to give $100,000 towards his college education. His stated major is communications, and says he estimates his lifetime earnings at $30 million dollars.
While you have to admire his ambition, a potential investor would have to laugh at the promised payoff.
Over 40 yrs of working, Ron would have to average $125,000 a year for the 2% to break even at $100,000. This leaves out the time factor of money, meaning the $100,000 is paid later, thus worth less as the value of money diminishes over time due to inflation.
A more reasonable (yet still very optimistic) estimate of his future worth would be to take a communication majors starting salary, and adjust it by 10% a year for life - starting at say, $35,000. In this case, his initial payment would be $700. In his 40th year, his salary would be $1.44 million with total earnings of $15.5 million over 40 yrs. Total payout would only come to $309,814.
Even if the investor took every penny and put into a 6% investment for the remainder of the 40 year period, it would still only come to just over $600,000. Inflation at 4% make that amount equivalent to $117,000 in todays dollars. Wow...less than 1/2 of 1% return over the 40 year period adjusted for inflation.
Compare this to investing the $100,000 in a 6% CD over a 40 year term resulting in a $1,028,571 balance. Clearly, an investor could do much better with far less risk than giving $100,000 to this young man.
Ron says in his auction description, "Where else can you invest in something that pays off every year and has the potential of making you over six times your money? Not the stock market, not real-estate, definitely not gambling. I can't really think of any one thing that pays off ever year like this."
He's obviously not very imaginative or a very good researcher if he can't find any better investments out there!
So, it begs the question, is Ron's overestimation of his worth a result of school systems that emphasis self-esteem more than math skills? Ron certainly has plenty of the former.
And as for someone going into the communications field in the hopes of striking it rich...shouldn't he at least know how to make intelligible sentences? Check out this gem from his auction listing - "I want succeed, and I will"
Good luck, Ron! After perusing your financial acuity, writing ability and failure to market yourself well, you'll need it!
Copycats are already offering their own indentured servitude - although at a much better rate than Ron's offer.