Have you ever wondered what a 9-figure amount looks like? It’s a sum of money too big to ignore, with a whopping total of 100 million to less than 1 billion. Discover more about this colossal figure and the wealth it represents
When we mention nine-figure sums, we’re talking about a truly astronomical level of wealth. To put it in perspective, nine figures represent anything from $100,000,000 all the way up to $999,999,999.
This figure surpasses the GDP of several small nations. For instance, Samoa reported a GDP of approximately 843.8 million USD in 2021.
Or consider that according to Investopedia, 7-figure wealth is what puts you among the top 0.1% of the wealthiest people on the planet. This means that having nine figures puts someone at an even more elite level, one whose luxury extends far beyond mere financial freedom.
Only a small fraction of individuals or companies globally can boast such immense wealth. However, it is not an unattainable goal. Let’s take a look at some of the strategies you can employ to accumulate substantial wealth while also examining the lifestyles and pursuits of those who have successfully achieved it.
How Much Is a 9-figure Salary?
Table of Contents
A nine-figure income signifies any earnings that flaunt nine digits, starting from $100,000,000 and soaring upwards. To put it into words, we’re discussing one hundred million dollars.
Quite a mind-boggling figure, isn’t it?
It’s like being handed the keys to a kingdom of unimaginable wealth. But remember, this is a sphere occupied by only a select few worldwide.
Their playgrounds? Often, you’ll find them in the tech sector, inheriting vast wealth or expanding an already thriving family business.
Now, let’s delve a bit deeper, shall we?
When we speak of nine figures, are we referring to the lower end close to one hundred million, the middle ground around 550,000,000, or the staggering high end nearing 999,999,999?
So, the next time you find yourself daydreaming about a nine-figure salary, remember this: It’s not just a number; it’s a lifestyle, a testament to extraordinary achievements, and a beacon of exceptional success.
And who knows? With the right mix of passion, dedication, and a sprinkle of luck, you might just find yourself joining this elite club.
After all, isn’t the sky the limit when it comes to chasing our dreams?
Examples of People Who Earn 9-Figure Incomes
Cristiano Ronaldo: A Sports Icon – With an astonishing income of $105,000,000, this celebrated athlete is not just a football superstar but also a nine-figure earner.
Safra A. Catz: Leading Oracle – As the CEO of Oracle, Safra A. Catz’s leadership prowess is reflected in her staggering earnings of $108,200,000.
David Zaslav: The Discovery Dynamo – Captaining Discovery as its CEO, David Zaslav, commands a whopping $129,500,000.
Nikesh Arora: The Palo Alto Networks Powerhouse – As the CEO of Palo Alto Networks, Nikesh Arora’s genius is rewarded with a hefty paycheck of $125,000,000.
Roger Federer: Tennis Titan – This globally recognized athlete proves that sports can indeed yield nine-figure incomes, as evidenced by his impressive earnings of $106,300,000.
Case Study: What Does A 9-Figure Earning Look Like?
Understanding the intricacies of nine-figure earnings can be a complex undertaking due to the lack of universally defined parameters. For the context of this case study, we will consider an annual income of at least $432K as the lower limit for this category. It is worth noting that any figure below this threshold would classify one into the realm of billionaires.
Renowned business magnates such as Warren Buffet and Mark Zuckerberg exemplify this earnings bracket, with annual incomes reported around $51M and marginally less than $50M, respectively.
Reaching the stature of a nine-figure income earner typically necessitates either a substantial inheritance or proprietorship of a prosperous company with diverse revenue channels. The case of Elon Musk serves as a prime example, with his considerable income derived from two distinct sources – Tesla and SpaceX.
Aspiring for this scale of income undoubtedly sets a high bar. However, with the appropriate strategy and relentless determination, it is not beyond reach. Be prepared to tread a path akin to those who have already achieved this feat.
What Is the Potential Monthly, Weekly, Daily, or Hourly Income in the 9-Figure Range?
How Much Is 9 Figures Monthly?
To figure out the monthly income from a massive annual salary, just divide the yearly amount by 12. Keep in mind that this will give you a range of values. But if you want to earn a nine-figure salary, the smallest monthly income would be $8,333,333.33.
$100,000,000 per year / 12 months
= $8,333,333.33 per month
This question might take a different perspective if you’re raking in 9 figures every month. That means your annual income would be at least $1,200,000,000 or even more.
How Much Is 9 Figures a Week?
If we were to divide the 9-figure annual salary by 52 weeks, we’d be looking at a minimum weekly income that could make anyone’s head spin – a cool $1,923,076.9! 💸💼.
$100,000,000 per year / 52 weeks
= $1,923,076.9 per week
While you’re at it, if you manage to rake in a solid 9-figure sum every week, your annual income will soar to a minimum of £52,000,000,00 or maybe even more.
How Much Is 9 Figures a Day?
Want to know how much you can earn daily from a nine-figure income? Just divide it by 365! If you make money every day, your minimum daily earnings would be $273,972.6. That’s your ticket to the nine-figure club!
Here’s the breakdown:
$100,000,000 per year / 365 days
= $273,972.6 per day
Now, let’s say you take weekends and U.S. holidays off. In that case, you’d need to earn around $381,679.3 per day to make $100,000,000 per year. It’s a good goal to aim for if you want that nine-figure salary without burning yourself out.
How Much Is 9 Figures an Hour?
If you’re seeking a nine-figure income from hourly wages, the calculations are slightly different. Just divide your per day salary by 8 hours, and voilà! The minimum number is $47,709.90per hour. This calculation is based on working days – usually 262 days per year in the US.
How Much Is 9 Figures After Taxes?
Achieving a 9-figure income is quite an extraordinary feat, one that is typically reserved for the most successful entrepreneurs, athletes, and entertainers in our society. It’s almost impossible to reach that level through a single salary alone.
Instead, individuals in this income bracket often have multiple income streams, such as investments, business ventures, and other revenue-generating activities.
Calculating the exact tax on a 9-figure income can be a challenging endeavor. Taxes can vary greatly depending on many factors, including location, type of income, applicable deductions, and more. However, it’s safe to say that anyone earning in the 9-figure range will face a significant tax bill.
What Is the Pathway To Achieving a 9-Figures Income?
If you are in pursuit of a 9-figure income, it is essential to have an understanding of the components that fuel this elusive status. What sets apart these high-net-worth individuals from the rest is their capacity to create multiple streams of passive income and capitalize on them.
Here are some tips to help you achieve this milestone:
Acquire Valuable Skills and Experience
The first step towards achieving a 9-figure income is building a solid foundation of high income skills and experience in a high-value field. This could be anything from technology and finance to entertainment and sports. The key is to become exceptionally good at what you do, often necessitating years of dedication, learning, and practical application.
Build or Join a High-Growth Venture
Next, it’s super important to either build or get involved in a high-growth venture. This could mean starting a business with a game-changing idea or joining a rapidly expanding company in a leadership position. The aim here is to use your unique skills and experiences to create substantial value and wealth, which could potentially lead to a massive income if the venture becomes incredibly successful.
Invest Wisely and Diversify Your Income Streams
Who said you can’t have your cake and eat it too? Investing in the stock market, real estate, bonds, and other alternative investments is another way to generate a 9-figure income. It’s important to diversify your portfolio across multiple strategies so that you’re not overly exposed to any one asset class.
Let’s give you an example.
If you’re already running a successful business, consider investing in cryptocurrency or another digital asset class to increase your income streams. This could provide an additional source of passive income that can help solidify your journey to a 9-figure salary.
Equities and Derivatives Trading
The stock market is an incredibly powerful tool that can help you to achieve a 9-figure income. Through equity and derivatives trading, you can tap into the world’s most lucrative markets and make substantial returns on your investments in a short amount of time.
Learning how to navigate this complex ecosystem of risk and reward requires patience, dedication, and a lot of practice. Start by investing in the stock market or trading on a simulated platform to get comfortable with the process before taking it to the next level.
Leverage Networks and Opportunities
Networking is a critical component of achieving a 9-figure income. By cultivating meaningful relationships with influential people in your industry, you can open doors to opportunities that might otherwise remain closed. These could include partnerships, investments, or high-profile job offers that can significantly boost your income.
Jobs That Pay 9 Figures
Earning a nine-figure salary is an incredibly rare achievement reserved for the top echelons of various lucrative industries. Here are some of the highest-paying jobs and industries that can bring in nine-figure salaries.
Tech Company Bosses
Tech company bosses, particularly those at the helm of companies like Amazon, Facebook, and Tesla, are among the highest earners globally. Their compensation often comes in the form of stock options, which can value in the hundreds of millions or even billions when their companies perform well.
Examples include:
Elon Musk, CEO of Tesla ($242.4 billion)
Jeff Bezos, CEO of Amazon ($151.5 billion)
Mark Zuckerberg, CEO of Facebook ($103.4 billion)
Professional Athletes
In the world of professional sports, athletes like Cristiano Ronaldo, Lionel Messi, and LeBron James have managed to secure contracts and endorsement deals that push their annual incomes into the nine-figure realm. These athletes excel in their respective sports and have built strong personal brands, attracting lucrative sponsorship deals.
According to reports, these athletes earned more than $100 million in a single year:
Hollywood Celebrities
Hollywood is no stranger to nine-figure earners. Actors like Dwayne Johnson and Robert Downey Jr., thanks to their roles in blockbuster franchises, command massive salaries. Additionally, they earn significantly from endorsements, producing roles, and profit participation deals.
Media Stars
Media stars, especially those with a strong presence on digital platforms, can earn nine figures. For instance, YouTubers and influencers with millions of followers can generate substantial income from ad revenue, brand partnerships, and merchandise sales.
Hedge Funds & Investment Bankers
Investment bankers and hedge fund managers are some of the highest earners in the financial sector due to their expertise. Some notable examples include:
Ray Dalio, founder of Bridgewater Associates ($19.1 billion)
David Tepper, hedge fund manager ($18.5 billion)
Carl Icahn, founder of Icahn Enterprises ($10.1 billion)
Pop Superstars
The music industry has always been a lucrative field for successful artists. Pop superstars like Taylor Swift and Beyoncé have made fortunes from their music sales, concert tours, and endorsement deals. These musicians not only create hit songs but also build powerful brands that amplify their earnings.
Entertainment (actors, singers, dancers, etc.)
Performers in the entertainment industry, including actors, singers, and dancers, can achieve nine-figure incomes. Successful film actors can earn millions per movie while top-charting musicians make a significant portion of their income from touring. Broadway performers and dancers in high-demand shows can also command high salaries.
Top-notch Business Owners
Business owners, especially those who own large corporations or successful startups, can earn nine figures. This income comes from their business profits and, in some cases, from selling their businesses. Entrepreneurs like Elon Musk and Jeff Bezos have made billions from their ventures.
These careers represent the pinnacle of earning potential in their respective fields. However, it’s essential to note that reaching this income level requires exceptional talent, hard work, and often a good dose of luck.
Are 9-Figures Rich?
When we talk about money, figures, and digits start dancing in our heads. Six figures? That’s quite impressive. Seven figures? Now you’re playing with the big boys. But when we leap into the world of nine-figure incomes, we’re talking about a whole different ball game. It’s like comparing a kiddie pool to the Pacific Ocean!
A nine-figure income means someone is raking in between $100,000,000 and $999,999,999 annually. That’s right. There are more zeros in that figure than in a beginner’s Sudoku puzzle! This income bracket places individuals among the financial titans of the world. To put it plainly, if you’re earning nine figures, you’re not just rich—you’re Scrooge McDuck swimming in a vault of gold-level wealth.
But let’s be real, nine-figure incomes are as rare as a unicorn at a donkey convention. Even some of the world’s wealthiest individuals, like Bill Gates and Warren Buffet, didn’t make their billion-dollar fortunes overnight. It took years of smart decisions, a bit of luck, and probably a few sleepless nights.
And don’t forget, these ultra-wealthy folks aren’t waiting for a paycheck every month. Their wealth comes from various sources, including investments, real estate, and businesses3. They’ve got their fingers in so many pies; they could open a bakery!
What Does a 9-Figure Lifestyle Entail?
Living a 9-figure lifestyle is beyond the realm of what most people could even imagine. It involves not just extraordinary wealth but also the responsibilities and opportunities that come with it. Here’s a detailed look at what such a lifestyle might entail:
Extreme Luxury
A 9-figure lifestyle allows for some of the most opulent luxuries in the world. For instance, consider real estate: billionaires often own multiple properties around the globe. According to a report by Economics Times, the average billionaire owns 4 homes, with each worth nearly $20 million.
Traveling is another area where this wealth is evident. Private jet travel is commonplace among this group. The cost of owning a private jet can range from $3 million to over $90 million, not including the ongoing costs of maintenance, fuel, and crew salaries.
Philanthropy
Philanthropy is a significant aspect of a 9-figure lifestyle. Many ultra-wealthy individuals are committed to giving back to society. For example, Warren Buffett, one of the richest people in the world, pledged to give away 99% of his wealth to philanthropic causes.
The Giving Pledge is another example of this. Initiated by Bill Gates and Warren Buffet, it’s a commitment by some of the world’s wealthiest individuals and families to give away more than half of their wealth to solve societal problems.
Investments
Individuals with a 9-figure income often have vast and diverse investment portfolios. For instance, Jeff Bezos, the founder of Amazon and one of the wealthiest individuals on the planet, has investments spanning multiple industries. He owns The Washington Post, has a venture capital firm called Bezos Expeditions, and invests in space exploration with his company Blue Origin.
Personal Staff
Having a 9-figure income often means employing an extensive personal staff to handle daily affairs. For example, Oprah Winfrey, a billionaire media mogul, reportedly employs a team of over 3,000 staff, including gardeners, chefs, housekeepers, and security personnel.
This level of staffing isn’t uncommon among the ultra-wealthy. After all, managing a 9-figure lifestyle requires a lot of planning and assistance to make sure everything runs smoothly.
Political Influence
The ultra-wealthy have significant influence in politics due to their large contributions to political campaigns and the influence they can wield over policy decisions. This influence can be used for both good and bad purposes, depending on who is wielding it.
However, the effects of political influence by wealthy individuals shouldn’t be underestimated. It can have a profound impact on policy decisions and shape public opinion in powerful ways. This level of influence is not available to everyone, but those with 9-figure incomes typically use it to their advantage.
Privacy and Security
With great wealth comes the need for privacy and security. People with a 9-figure income often invest in advanced security systems, hire personal security staff, and take measures to maintain their privacy.
This isn’t just to protect their money; it’s also about protecting themselves and their families from potential threats. After all, when you’re one of the wealthiest people in the world, there are bound to be a lot of eyes on you.
High-End Experiences
Those with a 9-figure lifestyle often have access to experiences that are out of reach for most. This can range from private concerts with top musicians to exclusive dining experiences with world-renowned chefs.
This level of wealth also opens up opportunities to travel to the most luxurious places in the world. From private island getaways to luxury cruises, the experiences available to 9-figure earners are limited only by their imagination and budget.
Taking all of this into account, it is clear that those with a 9-figure income have access to exclusive and luxurious experiences, as well as the privacy and security often associated with great wealth. This level of influence can also be extremely powerful. Therefore, it should not be underestimated or overlooked.
Overall, 9 figures is an amazing achievement and one that requires hard work and dedication. It is often an indicator of success and can open up a world of new possibilities for those who have achieved it.
Regardless of your current financial status, never forget that anything is possible with determination and perseverance! With the right attitude and mindset, you, too, could one day reach 9 figures or more. Start planning today, and remember to take every opportunity that comes your way. With a bit of luck and the right attitude, success is just around the corner.
FAQs – Making 9 Figures
How many words are nine figures?
Nine figures is a term used to refer to incomes between $100,000,000 and $999,999,999. It does not refer to the number of words.
Does anyone make nine figures?
In the United States, a remarkably small number of individuals achieve the remarkable milestone of earning nine figures or more. According to a report by Market Watch, only 205 people in America earn an astonishing sum of over $50,000,000 in wages alone annually.
To put this into perspective, a nine-figure income would be twice the amount of $100,000,000! As a result, the exclusivity of this income bracket is amplified, leading to a limited number of individuals who can boast such astronomical earnings.
What do “figures” mean in money?
Figures is a term used in accounting and finance to refer to digits of numerical values. It does not refer to physical currency or coins. For example, if you have $50,000, five figures are present (50000). This can also apply to other forms of money, such as stocks, bonds, and investments.
What is a nine-figure job?
A nine-figure job is a term used to refer to the careers of those who have achieved the tremendous milestone of earning nine figures or more annually. This could include professionals from various industries such as tech, investment banking, and sports.
These individuals are typically highly successful in their fields and command higher salaries than other professionals due to their extensive experience and knowledge.
What’s the difference between a 9-figure salary and a 9-figure income?
A 9-figure salary is an annual income of $100,000,000 or more. A 9-figure income is a measure of all sources of income that a person has, including wages, investments, and other revenue streams like royalties. This means that a person can have a nine-figure income without having an extremely high salary.
For example, someone who earns a salary of $1,000,000 but has investments of $100,000,000 would have a 9-figure income. This demonstrates why it is important to consider all sources of income when assessing the overall financial health and status of an individual or family.
What is the difference between 9 figures and 8 figures?
Eight figures refer to financial values between $10,000,000 and $99,999,999. In contrast, 9 figures are incomes of $100,000,000 or more. This is an important distinction to make when discussing the wealth of individuals because it shows how much greater the income of a nine-figure earner is compared to someone with eight figures.
For example, someone who makes $100,000,000 in a year would have twice the earnings of someone who makes $50,000,000. This is why it is important to consider figures when discussing wealth and income, as they can provide valuable insight into the financial status of an individual or family.
Is 9 figures a lot of money?
Yes, 9 figures is a lot of money. It is an astronomical amount that few individuals ever reach. As such, it demonstrates the impressive achievements of those who have managed to achieve nine-figure incomes and provides insight into their level of success and financial status.
There’s nothing I like more than writing my annual checks for all my insurance protection…cough.
Not including my long-term disability policy, my $2.5 million 30 year term policy, standard homeowner’s and auto policies, and personal umbrella policy; I pay roughly $5,124 per year for my total business insurance coverage.
But we all know that insurance is a necessary evil.
When you damage someone else’s property or cause injury to someone else, you are usually held personally liable for the costs.
This means that you have to pay restitution.
In some cases, these costs can exceed your ability to pay. That is not a good situation!
With the help of personal liability insurance, though, it is usually possible to meet these types of obligations.
Personal liability insurance is a completely different ballgame from life insurance.
What is Personal Liability Coverage?
Chances are that you already have some liability coverage. Most homeowners policies and auto policies include a certain amount of personal liability coverage.
If someone is injured at your home, or if you ruin someone’s property with your car, the insurance company pays the claims, up to the amount that you are covered for.
Personal liability coverage helps you protect your assets since the insurance company pays out the claim, and you don’t have to dip into your savings, or into your other assets.
However, the personal liability coverage that comes with your more common insurance coverage isn’t always enough.
Consider Umbrella Insurance
One way to augment your personal liability coverage is to purchase an umbrella policy.
Umbrella insurance protects you in larger amounts than what is usually offered with your other policies, but the premium increase isn’t as bad.
You can usually buy a popular umbrella coverage amount for about $150 a year, and an increase of $50 for each additional $1 million. Many consumers find that boosting the deductible on auto or home insurance can offset the cost of umbrella insurance.
If you have factors that increase your chances of damaging property or injuring others, it can be worth it to get umbrella insurance — especially if you have a high net worth.
Someone who knows you have more assets might be more willing to sue you for $2 million after a slip and fall at your home. Umbrella coverage kicks in after your regular insurance is tapped out.
So, if your homeowner’s policy has $750,000 in liability coverage, and you have $3 million in umbrella insurance if you are sued for $2 million, your homeowner’s policy will be tapped first.
Once the $750,000 has been paid out, the remaining $1.25 million will be paid from your umbrella policy.
We initially started with a $1m umbrella policy but recently increased that to $2m of total coverage. I also have an umbrella policy for my business, too.
Errors and Omissions
When you are self-employed, you have to be aware of some of the liability issues that can come with your job.
If a client holds you responsible for a service you provided, or if the promised results were not realized, or if you are considered liable for a service you didn’t provide, this can become an issue.
Financial planners, lawyers, cosmetologists, and others who are in positions to provide advice and some services to clients can benefit from this type of liability insurance.
This is my whopper of a premium, but with my profession; it’s a necessity. My total premium is $3,654 per year for E&O coverage…gulp.
Some additional benefits that my E&O coverage policy covers on top of the $1m of coverage are:
Business travel Accidental Death Benefit: $25,000
Emergency Real Estate Consulting Fee: $25,000
Identity Theft Expense: $25,000
Key Individual Replacement Expense: $25,000
Kidnap Expense: $25,000
Theft of Work Materials: $2,500
Should You Buy Personal Liability Insurance?
Make sure you consider your situation and your position. If it appears that you could be sued for what you have done, it’s important to make sure that you have the proper liability insurance.
That way, you will protect your assets, and avoid financial ruin if you are held liable for someone else’s injury, loss, or property damage.
Read more: Fed hikes interest rates again Danushka Nanayakkara-Skillington, assistant vice president for forecasting and analysis at the National Association of Home Builders, voiced the same concerns: “The lack of existing inventory and the Federal Reserve nearing the end of its rate hikes signal that demand for new homes may rise in the coming quarters.” … [Read more…]
THE Home Development Mutual Fund, better known as the Pag-IBIG Fund, set a new record in home loans released for the first half of the year.
The agency’s top officials said Pag-IBIG released a record P57.07 billion in home loans from January to June this year, up 10 percent from last year’s P51.96 billion.
Jose Rizalino Acuzar, Pag-IBIG chairman and head of the Department of Human Settlements and Urban Development, said Pag-IBIG’s first-half performance was it best so far and that the home loans released during the period enabled 44,414 members to acquire their own homes.
Of this, 5,748 members or 13 percent came from the minimum-wage and low-income sectors who are now homeowners after having secured a total of P2.42 billion in socialized home loans.
“We are happy that the number of Filipino workers who were able to become homeowners through Pag-IBIG’s housing loan programs continues to grow,” Acuzar said.
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“Inspired by President Ferdinand R. Marcos, Jr.’s recognition of our efforts in his report to the people, we remain committed to his administration’s Pambansang Pabahay para sa Pilipino Housing or the 4PH Program under the Bagong Pilipinas Campaign, which is also in line with our united efforts of providing our fellow Filipinos access to decent, safe and affordable homes,” he added.
Pag-IBIG chief executive officer Marilene Acosta attributed the continued growth in the agency’s home loan releases to its affordability.
“We at Pag-IBIG always strive to provide our members the means to have their own homes through affordable shelter financing. And, with our collections strong and our performing loans ratio high, we were able to further reduce the interest rates on our home loans and make it even more affordable,” she said.
Acosta expects sustained growth in home loan releases in the second half after the agency announced plans last month to further reduce its home loan rates.
“Overall, we are optimistic that the excellent performance of our home loans will keep its pace for the rest of the year. More affordable home loans translate to more Filipinos turning their dreams of owning a home a reality,” Acosta said.
Telling your own girlfriend that you won’t host a work even at her place because her home decor is bad?
It must be BAD.
But did this guy go too far by saying that to his GF?
Let’s see what’s going on here…
“I’ve (M32) been with my girlfriend (F29) for over a year now. She’s smart, funny, a bit quirky, and has a serious job with a good salary.
We have a great time together and generally get along very well. The only thing is her choice in home ‘decor’ is bizarre, to put it frankly, and not something you think a normal, grown adult would be into.
Her apartment is definitely a reflection of herself and interests. Not in the best way though.
My girlfriend has wall dedicated to animation in one room of her apartment, like Futurama pieces and etchings of some weird triangle guy. Then there’s the wall of framed preserved insects in another room. But not insects like butterflies or moths. Instead she displays tarantulas, beetles, and large stick insects.
Her bathroom has a subtle theme of the ocean-pretty common. But instead of starfish or shells, she has a little anglerfish nightlight, a small vampiric squid painting, and then a framed diagram of what apparently is a Goblin Shark right by the toilet.
I would say a majority of her home decor and furnishings are okay. The apartment itself is very modern and sleek. It’s just the random decor and juvenile-ish themes like cartoons, insects, and bizarre ocean creatures, is off putting.
This is where I might be the AH. I avoid bringing people over to her place, especially people from my job, because of how juvenile it looks. Everyone’s impressed when they see the high rise, but that quickly fades once you enter. The one time I brought a work colleague over they ended up telling me after that they found her insect wall terrifying. I work in finance and appearances and first impressions are important.
My office will hold casual gatherings where we get together for a few drinks, good food, and we rotate hosts. And this time, it’s my turn. The problem is my place is under some construction and not an ideal place to be right now, so I’ve been staying with my girlfriend.
My girlfriend suggested that we host my colleagues here since she has the space and thinks it’ll be fun. I told her I planned on skipping my rotation and seeing if the next person would be okay with hosting early.
She kept pressing on why I didn’t want them over here, so I finally said it’s because her home decor is strange and not something a grown woman would have, and also that her insect wall horrified the one colleague that did come over.
My girlfriend got mad and said at the end of the day, it’s not my space and these things bring her joy. She also said that she is indeed an adult woman, which is exactly why her apartment is decorated in such a manner.
I love my girlfriend, I do. And it’s okay to have different interests. But does an adult really need to decorate with them besides a few things here and there? I mean, my own mother asked if my girlfriend was autistic after she saw the entire apartment for the first time.
So Reddit, AITA for telling my girlfriend her home decor is the reason I won’t host a work gathering at her place?”
Here’s what Reddit users had to say about this.
This reader said this guy is an a**hole and they don’t think any of this stuff is childish.
Photo Credit: Reddit
Another Reddit user agreed that this guy is an a**hole.
Photo Credit: Reddit
And one individual agreed and said that adults are allowed to have interests!
Photo Credit: Reddit
My opinion… who has work get togethers at their homes anymore?
Return on equity (ROE) and return on investment (ROI) are two important financial metrics that are used to measure the profitability of a rental property, a business, or another type of investment. Both metrics are expressed as a percentage, and they both measure the amount of profit that is generated from a given amount of investment. However, there are some key differences between ROE and ROI. I think most investors think of ROI when determining how good their investment is, but ROE can give indications of how good the investment is based not just on the initial investment but the current equity. Some properties may have a great ROI but a poor ROE. These numbers can help you decide if it is an investment worth keeping or selling.
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What is Return on Equity?
ROE measures how effectively equity is being used to generate profits. Equity is the property’s value minus any liens or debts against the property. For example, if a property is worth $500,000 and has a $200,000 mortgage against it, there is $300,000 in equity. This figure may not be the figure you want to use to base keep or sell decisions on since there are selling costs as well. It may cost you $50,000 to sell the property after commissions, closing costs, and repairs to make the property marketable. If you sell the property you may have to pay taxes on the profit as well. If you are making $100,000 in profit on the sale, you might have to pay $15,000 or $20,000 in capital gain taxes unless you use a 1031 exchange.
The return on equity is calculated by dividing the profits the property makes by the equity. If the property makes $10,000 a year, then the ROE would be 5 percent if there is $200,000 in equity.
10,000/200,000 = .05
However, as I said earlier you may want to use a different number based on the money you would get out of the sale. If you are only getting $125,000 after all the costs you would have to pay you would be making 8 percent:
10,000/125,000 = .08
What is Return on Investment
ROI measures the profitability of an investment property based on the profit generated and the initial investment into the property.
For example, if a property has a net profit of $10,000 per year and there was an initial investment of $100,000, then its ROI would be 10%. The ROI analyzes the property based on how much money was used to buy, rehab, and rent the property, not by how much money is tied up in it now. ROI is useful in seeing how a property might perform, but I would argue it is not as important when figuring out whether to keep or sell an asset.
How to know when to sell rental properties?
Differences Between ROE and ROI
The main difference between ROE and ROI is that ROE measures profitability in relation to equity or the money you could get if you sold the property, while ROI measures profitability in relation to your initial investment. ROE is a better judge of how well a property is performing today.
Once you have invested a certain amount of money into a property, you can’t undo that investment. The money is spent and keeping a property because it has a high ROI or you dumped a bunch of money into it, might not be the best financial decision. You could have a very high ROI but a very low ROE because the property has increased in value.
A real-life example of ROI vs ROE
I bought a property in 2010 for $97k that I sold in 2019 for $275k. I spent about $27,000 buying that property and in 2018 it was making about $9,000 a year. That is a 33 percent ROI just based on the rent coming in! The tricky thing with real estate is that the property was also appreciating in value, had tax advantages and the loan was being paid down. The ROI was much higher than 33 percent, probably close to 100 percent.
This seemed like an amazing investment so why did I sell it? My ROE was much lower because I had $220,000 in equity in the property. I could use a 1031 exchange to sell the property and pay about $15,000 in selling costs ( I am an agent so I save money there). I could take about $200,000 out of the property which means my ROE was only 4.5 percent based on rent alone. If I factored in taxes and appreciation, that ROE might increase to 10 to 15 percent.
The question I had to ask myself was not if that was a good ROI, but if that was a good use of the money I had tied up in the property, or ROE.
I decided to sell because I could take that money and get a better ROE on a new property that had a better rent-to-value ratio. I could also get a great deal when buying which also increases my returns. Instead of making $20,000 to $30,000 a year from rent, appreciation, loan pay down, and tax advantages. A bigger property with better numbers could make me $50,000 to $70,000 a year with that same amount of money. I could build more equity as well because I am getting a good deal on the new property.
Other options to optimize ROE
If you have low ROE, you don’t always need to sell. You may be able to refinance the property and take some of that equity out to use in other deals. It is harder to refinance with higher rates but this made a lot of sense when rates were lower. When you refinance you are replacing the old loan with a new loan and when you use a cash-out refinance you are replacing the old loan with a larger loan and getting cash back in the process. One of the advantages of a refinance is that the cashback is tax-free since it is not income.
Conclusion
ROE and ROI are both important financial metrics that can be used to measure the profitability of a company or project. However, they measure different things, so it is important to use the right metric for the situation.
I hope this article was helpful. Please let me know if you have any other questions.
Mortgage rates trickled lower this week, but still remain above record lows seen three weeks ago, according to the latest survey from mortgage financier Freddie Mac.
The 30-year fixed fell just two basis points to 4.80 percent for the week ending April 23, but remains much lower than its year-ago average of 6.03 percent.
The 15-year fixed was unchanged from a week ago at its new record low 4.48 percent, and sits well below the 5.62 percent average seen this time last year.
Adjustable-rate mortgages got in on the fun as well, though they can’t seem to keep up with the low, low rates tied to fixed loans at the moment.
The five-year ARM averaged 4.85 percent this week, down from 4.88 percent last week and 5.68 percent a year ago, the lowest since Freddie Mac began tracking in January 2005.
The one-year ARM dropped to 4.82 percent from 4.91 percent, and remains below its year-ago average of 5.29 percent.
“Although long-term mortgage rates eased slightly this week, ARM rates remain elevated relative to those fixed-rate mortgages,” said Frank Nothaft, Freddie Mac chief economist, in a release.
“For instance, interest rates for 1-year ARMs exceeded those for 30-year fixed-rate mortgages over the last two weeks; this is the first time this has happened since Freddie Mac began collecting data for ARMs in January 1984.
It makes you wonder why anyone would choose an adjustable-rate mortgage these days; of course, nowadays they only account for about 1.5 percent of total application volume, so most borrowers are steering clear.
Nothaft also expressed optimism for the ailing housing market, citing recent data from the FHFA that shows increases in home prices, though it could easily be skewed by the disproportionate number of sales in the strongest markets.
“The housing market is showing further signs of possible improvement. House prices rose for the second consecutive month in February, the first back-to-back increase since April 2007, according to the Federal Housing Finance Agency. Among the nine Census divisions, six experienced positive gains in February, led by a monthly increase of 3.8 percent in the Pacific Division.”
The mortgage rates above are good for conforming loan amounts with a loan-to-value of 80 percent.
Jumbo loans continue to price much higher, and are more restrictive, requiring higher credit scores and larger down payments.
Ever since Mel Watt hinted at the return of 3% down mortgages, there’s been a lot of worry that we could be headed down another dark path.
After all, it was a lack of skin in the game that caused all the carnage during the most recent housing crisis, right?
Well, maybe not. An analysis from the Urban Institute seems to put the blame more on low credit scores than low down payments.
They looked at Fannie Mae’s default rates for 30-year fixed mortgages before, during, and after the crisis to see what kind of impact ultra-low down payments had on mortgage performance.
In 2001, the default rate on mortgages with a 3-5% down payment (95-97 LTV) was 3.3%, compared to 3.1% for loans with a 5-10% down payment (90-95 LTV).
During 2007, the worst mortgage performance year in recent history, the default rate climbed as high as 27.8% for 3-5% down mortgages, compared to just 22.7% for the 5-10% down cohort.
Post-crisis, the defaults numbers are super low for both groups, and were in fact the same in 2011 at 0.4%.
In 2012, the 95-97 LTV loans defaulted at a rate of just 0.2%, compared to 0.1% for the 90-95 LTV group.
What About Borrowers with Excellent Credit?
The data show that credit score is huge
When it comes to predicting mortgage default
Even if the borrower comes in with a low down payment
A low credit score seems to be more impactful
Interestingly, the numbers move a whole lot more when you throw credit score into the mix.
For example, in 2001 the default rate was 1.2% on loans with a 3-5% down payment and a credit score of 750 and above. Meanwhile, mortgages with down payments of 5-10% and credit scores between 700-750 had a default rate of 1.6%.
This trend can be seen throughout all the years in the analysis. In every instance (other than 2012) a lower credit score coupled with a higher down payment led to a higher default rate.
During 2007, the 95-97 LTV loans with 750+ FICO scores had a default rate of 13.5%, much lower than the 18.2% default rate seen with 90-95 LTV loans with 700-750 credit scores.
The more recent data doesn’t show much of a difference, but the data is pretty fresh and mortgage performance has been a lot better.
If you look at credit scores of 700 and below, the default rates skyrocket no matter what the borrower actually puts down. The upside is that they can sell and/or the bank won’t get stuck with an underwater mortgage.
Low Credit Scores Are Always Bad, Low Down Payments Can Be Bad
The takeaway is that a low credit score is always bad
At least relative to higher credit scores
Whereas down payment size isn’t necessarily a default indicator
But you probably still want the borrower to have some skin in the game
What seems to be clear is that a mere two-percent difference in down payment doesn’t lead to many more defaults in normal situations.
More importantly, a low credit score can result in some really ugly stuff, regardless of what’s going on in the market.
Obviously a combination of high credit score and high(er) down payment is best, as you can see from the data, but perhaps we shouldn’t freak out so much about low down payments.
My assumption is that credit scores are a pretty good way to determine if someone will make good on mortgage payments, whereas down payment-related performance tends to be dependent on what happens with home prices.
If home prices take a dive, those with little skin in the game will probably strategically default, but I’m not sure two percent would make a difference.
However, if home prices are steady or up, down payment size probably won’t come into play much, while a low credit score can certainly be a problem.
Put simply, low credit scores are always going to be an issue whereas low down payments can look bad in hindsight if and when home prices tank.
In other words, offering 3% down mortgages to creditworthy borrowers makes sense. Offering them to borrowers with terrible credit scores, FHA I’m looking in your direction, is the opposite of smart.
When an IPO is “oversubscribed” that means certain investors have committed to buy more than the available number of shares that were originally set for the initial public offering.
That’s because when new stocks or bonds are issued via initial public offerings (IPOs), they’re issued in limited amounts, based around the new company’s financing needs and desired debt-to-equity structure.
Depending on investor appetite for the new stocks, IPOs can either be under or oversubscribed; this reflects the level of demand investors have for the shares.
In most cases, though, only institutional investors and accredited investors can subscribe to an IPO stock before it actually goes public. Retail investors may hear about an IPO being over- or undersubscribed, but they typically can’t take advantage of it — although knowing the information may aid an individual’s assessment of the opportunity.
What Is an IPO?
IPO stands for “initial public offering,” which marks the first time a private corporation offers its securities for sale to the public.
In such a process, a portion of the firm’s shares are transferred from private ownership by company insiders to public markets, so that both retail and institutional investors can buy IPO shares.
IPOs are usually initiated for two reasons: 1. To raise additional capital for a firm’s operations, and 2. As a way for company insiders and early investors to cash out their holdings.
During an IPO, a company that wishes to go public will work with an underwriter, or team of underwriters, to value its business, document and register its shares with the U.S. Securities and Exchange Commission (SEC), and market its shares to the investing public.
Once a company’s board approves the IPO sale, the underwriters set the IPO valuations. The investment banks that underwrite a company’s public offering set the IPO price.
These underwriters use several variables to determine the IPO price, including an analysis of the company’s growth potential, a comparison to related firms, and a determination of market demand conditions.
Once the company has the green light to proceed, the underwriting team proceeds to market the shares and take orders from investors.
What Is Oversubscription in an IPO?
Investors interested in IPO investing may be interested in an IPO’s subscription status. If an IPO is oversubscribed, that means there aren’t enough shares of the new stock issued to meet initial investor demand at the listed IPO price.
To compensate for this mismatch in supply and demand, the underwriters selling the IPO can choose to either raise the IPO price to reduce demand, or increase the supply of shares to meet demand. 💡 Quick Tip: Access to IPO shares before they trade on public exchanges has usually been available only to large institutional investors. That’s changing now, and some brokerages offer pre-listing IPO investing to qualified investors.
How Does Oversubscription Work?
Oversubscribed IPOs generate a shortage in shares that usually results in a higher price or additional shares being issued, which can lead to more capital being raised for the now-public company. These funds are also called the IPO proceeds.
This contrasts with “undersubscription” for IPOs. Undersubscribed IPOs are caused by the converse scenario happening, where there’s insufficient investor demand to buy all available shares at the listed IPO price.
What Is Undersubscription?
When an IPO is undersubscribed, it generally signals a lack of enthusiasm for a newly public company and may be the result of either poor marketing, overpricing, or poor company fundamentals.
When an IPO is undersubscribed, underwriters may work to reduce the size of the issue, cut the share price, or pull the IPO offering altogether.
In some cases, as a result of contract terms with the issuing company, underwriters may be forced to “eat” the cost of the IPO and purchase remaining shares at a pre-agreed price themselves. This is generally an undesirable outcome for underwriters as it may force them to hold shares on their books rather than flip them to investors. 💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.
Pros of Oversubscription
Oversubscription can be beneficial to both the issuer and underwriters of new securities, as well as to investors who manage to obtain an allocation of shares around the IPO price.
The issuing company can benefit, as the high demand for IPO shares allows the underwriting team to either reprice the IPO shares higher or offer up additional shares from company reserves to alleviate demand.
In either case, this results in additional funding for the issuing company at more favorable terms while the underwriter generates additional fees.
Early investors to an oversubscribed IPO may benefit from the initial pop in pricing that excitement can generate. This sometimes leads to positive momentum that may continue to push the price upward in the short run.
Cons of Oversubscription
For most average investors, oversubscription ends up being a net negative. First, it’s rare for individual investors to be able to subscribe to an IPO. Typically that’s reserved for large institutional or high-net-worth investors. Then, by the time the average investor can buy the stock, higher pricing may make the IPO opportunity less attractive — with the risk of being overinflated.
If you’re unable to obtain an allocation at the original IPO price, it’s likely that secondary market prices for these securities may be substantially higher due to the high demand for these shares.
While this may not be a concern for long-term investors, this can pose a challenge if initial momentum causes the price of a new security to skyrocket beyond its reasonable fundamental value. This can cause the value of shares to tumble back to lower levels in subsequent months.
This is one of many reasons that retail investors should be cautious about IPO shares. They are a high-risk proposition at best.
Strategies to Maximize the Oversubscription Opportunity
Even if you were one of the lucky few to obtain early IPO shares, there isn’t much you can do to capitalize on an oversubscription opportunity.
If you receive shares from an oversubscribed IPO, you will want to consider both the long-term prospects of the company as well as the short-term prospects for its share price.
Depending on the company and your investment strategy, this will influence whether you intend to hold the security for the long-run or flip the shares for a quick profit.
If you’re unable to obtain an allocation during an IPO, it’s likely that the oversubscribed IPO would see its shares bid up in the secondary market. In this case, it’s not a bad strategy to wait a few weeks, or even months, after the initial IPO to see whether prices come back down — and gauge the company’s prospects from there.
In some instances, shares often decline a few months later after the expiration of the initial lockup period, once insiders are free to sell their shares. However this isn’t always the case, and can vary widely from company to company.
Seek Advice From a Professional
If you’re allocated shares from an IPO and are unsure of what to do with your new holdings, it might be worth consulting with a financial advisor or investment advisor to determine your next steps.
Financial professionals can help inform your decision making on how to proceed with an oversubscribed IPO. However, the final decision will ultimately be up to you and should be made within the context of your overall investment portfolio.
Do Your Research
Regardless of whether you’re able to gain access to the IPO, you should base your investment decisions on your own due diligence and fundamental analysis, i.e. a thorough review of a company’s disclosures, financial statements, and future prospects.
Reviewing the track record of company executives and the board of directors can offer insight into how competent the company’s management may be when it comes to executing on long-term strategies.
Thoroughly reading the prospectus of the new IPO shares can help you understand the core drivers of a firm’s business, its core customer base, key markets, and major risks it might face.
Additionally, there’s a multitude of research out there that follows your stock’s performance on both fundamental and technical grounds; these can go a long-way towards informing your investment actions for new IPOs.
The Takeaway
Oversubscriptions for hot IPOs can sometimes offer opportunities for investors who are able to secure allocation of shares; however, they can also turn into feeding frenzies for retail investors who wish to buy these securities on the secondary market.
The resulting media blitz, and (typically) wide swings in valuations, can easily end with inexperienced investors getting burned on the share price. In short: IPOs can be volatile. To protect yourself, it’s important to understand the drivers of IPO pricing and how it impacts demand.
Whether you’re curious about exploring IPOs, or interested in traditional stocks and exchange-traded funds (ETFs), you can get started by opening an account on the SoFi Invest® brokerage platform. On SoFi Invest, eligible SoFi members have the opportunity to trade IPO shares, and there are no account minimums for those with an Active Investing account. As with any investment, it’s wise to consider your overall portfolio goals in order to assess whether IPO investing is right for you, given the risks of volatility and loss.
Invest with as little as $5 with a SoFi Active Investing account.
FAQ
What is the meaning of oversubscription?
Oversubscription, as it pertains to IPOs, refers to a supply and demand mismatch of the newly issued IPO shares. Either the price must adjust upward, the supply of shares issued must be increased, or a combination of the two must occur to meet investor demand.
In the event that the supply of IPO shares is unable to meet all investor orders, shares will typically be issued out to investors on a partial pro rata basis, or in proportion to each investor’s requested order size, subject to minimum block sizings.
In some instances, a lottery system may be implemented to maintain impartiality. Any unfilled orders will be rejected and cash returned to investors.
How can you calculate oversubscription?
At the basic level, IPO oversubscriptions are calculated as a ratio of the aggregate order size for IPO shares relative to the total number of IPO shares available to be distributed.
For example, if there are 1,000,000 shares of new stock available for an IPO pricing, but the underwriters receive an orderbook totaling 3,000,000 shares from investors, this IPO would be considered “3X oversubscribed.”
Photo credit: iStock/nensuria
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While Rhode Island is the smallest state in the nation, it packs a lot of charm and natural beauty into its 1,214 square miles. Living in the Ocean State gives you access to its 400 miles of scenic coastline, quaint seaside towns and fresh, delicious seafood. Life is laidback and easy. But, as is the case with most New England states, the overall cost of living in Rhode Island is on the high side.
You’ll find that cities like Providence and popular coastal retreats like Newport have the most expensive cost of living. But, that doesn’t mean you can’t find nearby towns or cities that are more affordable. No matter where you live in Rhode Island, you’re never far from its vibrant cities, picturesque coast and fantastic art, culture and dining. This in-depth look at Rhode Island’s cost of living will help you find the best city or town to call home.
Rhode Island housing prices
That romantic vision of living in a seaside town or city in New England will cost you big in Rhode Island. Housing costs here are well above the national average. You can expect high rental rates and home prices throughout the state, with the highest rates in popular cities like Providence and Newport. The good news is that more reasonably-priced towns are never far away from major urban centers. So, you’re likely to find lower rents and home prices in the general area you want to live in.
In Rhode Island, housing costs are 19.6 percent above the national average. The average monthly rent for a one-bedroom apartment in Providence climbed 34 percent from last year to $2,410. Two-bedroom units have an average monthly rent of $2,700, up 12 percent from last year.
In Newport, another major Rhode Island city, one-bedroom units are $2,000 and two-bedroom apartments are $2,500. You’ll be paying around $1,550 for a one-bedroom and $1,750 in Cranston, Rhode Island’s second-most-populous city.
The median sale price to buy a house in Providence has gone up 14.1 percent over the past year to $405,000. This is fairly close to the national median sale price of $428,006.
Rhode Island food prices
Seafood lovers will have a field day living in Rhode Island. This coastal state has tons of famous seafood dishes, like Rhode Island clam chowder, clam cakes and Rhode Island-style calamari. Rhode Island is also famous for its domestic chicken breed the Rhode Island Red. But, for access to all these unique local specialties, you’ll be paying more than the national average.
For total grocery costs, Rhode Island is 8.7 percent above the national average. Even though food costs here are elevated, the amount of money that Rhode Island residents spend on food each month is pretty middle-of-the-road. The average Rhode Island local spends between $233 and $266 a month on food. Annually, that comes out to between $2,801 and $3,200.
Luckily, food costs in Providence are significantly cheaper than the statewide average. They actually fall 1.2 percent below the national average.
As a few examples of food prices in Providence, a dozen eggs cost $2.13. Buying a half-gallon of milk will set you back $2.19, and a loaf of bread is $4.27.
Rhode Island utility prices
When it comes to utilities like electricity and water, you’ll be paying more than the national average living in Rhode Island. In the capital city, it’s especially high at 22.9 percent above the national average.
As an example of how high utilities costs are in Providence, let’s look at some average monthly bills. Total energy costs for the month come out to around $242.81 in Providence. For water, the average statewide bill is $28.
This New England state relies on natural gas for the majority of its electric generation, followed by hydropower and petroleum. Reservoirs and rivers supply the drinking water.
Rhode Island transportation prices
One of the benefits of living in Rhode Island is that its small size allows mass transit almost everywhere. The Rhode Island Public Transit Authority provides public transportation throughout the state with its fleet of buses and vans. Its main hub is Kennedy Plaza in downtown Providence. Bigger cities like Providence and Newport have larger, extensive systems with more frequent service and stops. But rural, regional and express long-distance routes between cities are also available, as well as paratransit and vanpool commuting options.
If you don’t want to use a bus, this coastal state also has ferry routes. The private Seastreak company operates a Providence to Newport ferry route between coastal cities like Providence, Bristol and Newport. One-way fares cost $12 and roundtrip is $24.
If you do plan on using a car, Rhode Island does have some toll roads and bridges. Although I-95, a major interstate highway that runs through the entire state, does have tolls, those only apply to commercial trucks and tractor trailers. The Clairborne Pell/Newport Bridge near Newport charges a $2 toll for residents with E-ZPass and $3 otherwise.
Using public transportation is a great way to save money. It’s also more environmentally friendly and can reduce traffic congestion and commuting times. But the total cost of transportation in Rhode Island cities is above the national average. So, whether or not using mass transit saves you money depends on your personal situation.
As Rhode Island’s capital city and most populous urban center, transportation costs are higher in Providence at 6.9 percent above the national average.
RIPTA in Providence
Providence is one of the main hubs for RIPTA service, centered around downtown’s Kennedy Plaza. A range of fixed-route, rapid bus and high-frequency routes run through the city center, with some routes extending out into the metro area. A one-way ride costs $2 and a day pass is $6. Using the WAVE fare collection system, a monthly pass is available for $70. You can pay fares in cash or with the WAVE card or app.
Overall, RIPTA does a decent job of connecting Providence through mass transit. Its transit score is 56. As a compact coastal city, you can also easily get around Providence on foot or by bike, as well. It has high scores in both areas, with a walk score of 84 and a bike score of 69.
Rhode Island healthcare prices
If you’re looking for a state that offers good healthcare for reasonable prices, Rhode Island fits the bill. It ranks ninth in the nation for its overall healthcare and is fourth in the nation for healthcare access. The quality of its healthcare and general public health is also high.
The costs for this high-quality level of care are also reasonable. For example, the average cost to go to a doctor’s office in the state capital is $132.24.
If you want to go to the dentist in Providence, it costs around $115. Several of the top-ranked hospitals in Rhode Island are also located in Providence, giving locals near-instant access to top-tier care. The overall cost of healthcare in Providence is almost on-par with the national average at only 0.7 percent above the national average.
It’s difficult to calculate average healthcare costs, though. Based on personal factors like pre-existing conditions or medication needs, healthcare costs vary widely from person to person. The above healthcare figures are rough estimates, so you may pay more or less for things like doctor’s visits depending on your healthcare needs.
Rhode Island goods and services prices
Living in Rhode Island, you’ll be paying more than the national average for miscellaneous goods and services. Overall, those costs are 13.8 percent above the national average.
But, compared to other big cities in the region, it’s more affordable in Providence. Paying for a haircut in nearby Boston is $43.33, but in Providence, it only costs $28.67. Want to go to a movie? You’ll pay $13.83 for tickets in Providence compared to $14.96 in Boston. But, some services are more expensive here than in other regional cities. In Hartford, CT, which is just over an hour from Providence, dry cleaning costs $16.99. In Providence, that dry cleaning bill will be closer to $17.50.
Taxes in Rhode Island
When calculating your monthly budget and expenses, taxes are sometimes overlooked. But whether in the form of sales tax or income tax, living in a state with high tax rates does have an impact on your bottom line. If you’re living in a city with high sales tax, it can quickly whittle away at your budget. Knowing tax rates in your state will help you better understand and prepare for spending.
In Rhode Island, the statewide sales tax is 7 percent. That means that, if you spend $1,000 on clam cakes and other local goodies, you’ll be paying an additional $70 in sales tax.
While 7 percent is a decent mark-up, the good news is that cities and counties in Rhode Island don’t levy a local sales tax. That means that the sales tax rate in Providence is the same as the statewide rate of 7 percent.
For income tax, Rhode Island has a graduated individual income tax system. Rates range from 3.75 percent to 5.99 percent depending on your income level.
How much do I need to earn to live in Rhode Island?
As you can see, the cost of living in Rhode Island is expensive. So, how much do you need to make to afford to live there?
Usually, your biggest monthly expense is housing costs like rent or a mortgage payment. Experts recommend that you only spend 30 percent of your gross monthly income on rent. This general rule of thumb ensures that you have plenty of money left over after paying rent for other expenses like food and utilities.
In order to afford Rhode Island’s average rent of $2,196, you need to make $7,320 a month or $87,840 annually. However, the median household income in Rhode Island is $70,305 and the average salary is $65,317. So, some residents may struggle to follow the 30 percent rule and will need to spend more on housing.
Our rent calculator can help you determine what you can afford to pay in rent based on your income, expenses and location.
Living in Rhode Island
As you’ve seen, living in Rhode Island isn’t always cheap. Access to its scenic coastlines, fun cities and great cuisine requires a high income or flexibility with living outside the major cities. But, since you can find lower rents in smaller cities and towns, you can enjoy Rhode Island’s charms at a variety of price points.
The Cost of Living Index comes from coli.org.
The rent information included in this summary is based on a calculation of multifamily rental property inventory on Rent. as of August 2022.
Rent prices are for illustrative purposes only. This information does not constitute a pricing guarantee or financial advice related to the rental market.