The Opportunity Cost of a Bosendorfer Strauss Grand Piano
It takes every ounce of my self control to avoid buying it, and every year that goes by, the future value of the investment opportunity cost gets lower and lower so I come closer and closer to doing it.
I’m going to teach you a financial technique that can help empower you to make informed choices about your own life and keep more cash in your pocket. I’ve been using it since college and it’s done wonders from my bank balance and investments.
From the time I was a kid and had only a few thousand dollars in the bank, I have wanted a Bosendorfer Strauss model grand piano, probably in a 7 foot size (which is comparable to a Steinway & Sons Model B semi-concert grand). Yet, the list price is $111,080 plus you’d be looking at sales tax of roughly $8,331 for a grand total of $119,411. As most of you know, I paid for college on a combined music and academic scholarship (vocal performance) and was able to test out of years of piano work, which freed up far more credits to take things such as graduate level finance courses and years of music theory composition. This is more than a hobby.
If I were to take profits out of my companies and the investments we’ve built up to buy one, what would the result be? Well, the average American business earns 12% after tax on book value. So, let’s presume that I become average overnight and our businesses never grow at more than that rate. (We are growing much higher than that but I want to keep the example simple without giving away too many details.) (more…)
