Seeking Alpha

Zach Tripp's  Instablog

Zach Tripp
Send Message
Certified program manager (PMP) with a background in engineering. Fundamental investor who's portfolio consists of buy-and-hold dividend growth companies, growth companies (short-term) and index fund portfolio management (retirement / long-term savings).
My blog:
FOLLOW MY 529
  • Income Inequality Math 0 comments
    Mar 7, 2014 11:32 AM

    The President made more comments in regards to income inequality during his State of the Union and again during his budget release.

    It is not that I don't think income inequality exists, I wonder if it is natural. Is income inequality just a function of math?

    For example, you have two families, Family 1 and Family 2. Family 1 has a take-home pay of $100,000 per year and Family 2 has a take home pay of $50,000 per year. Both families have firm budgets and live within their means. Both families invest 5% of their take home in dividend producing securities. Matter of fact, they invest in the exact same stocks at the exact same time.

    The stocks have an initial yield of 3% at the time of the investment and between dividend raises and the effects of compounding, the distributions increase by 5% per year.

    After ten years, family 1 has an income of $1,887 per year and family 2 has an income of $943 per year.

    Is this income inequality? Does family 1 has too much dividend income? Or is it just a function of math. More disposable income that can be saved or invested and have the potential to grow over time?

    (click to enlarge)

    (click to enlarge)

Back To Zach Tripp's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

  • @WarrenBuffett bought $IBM b/c 3 of his largest holdings have IBM as a large expense. vertical integration. http://yhoo.it/1cjWLhJ
    May 5, 2015
  • Looking for $PKOH Q1 rev > $361M & Net income > $10.8M. If less, opportunity to dollar cost down.
    May 5, 2015
  • Why the 11% jump in rocky brands $rcky today?
    Apr 29, 2015
More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.