Is Investment Income or Earned Income the Key to Financial Success? A Look at LeBron James' Earnings

Disclaimer: this does not reflect LeBron James' financial situation. It it merely to show an example of a high income earner. Numbers shown are estimates based on common tax percentage examples of that income bracket and statistical data of average savings rates in the United States.

Investment Income vs Earned Income

If LeBron James was like the average American in terms of his statistical financial habits, how much would he be left with?

LeBron James makes $44.47M per year in income. Around 55% of that will be taxed.

That leaves him $20M after tax. Say LeBron had the same savings rate as the average person in America and kept 7.1% of what he made.

Every year, LeBron would keep $1.42M. The rest would be spent on lifestyle. For this example, let's say he keeps the $1.42M in cash.

Investment Income

In terms of limited partner apartment deals it’s common to see a 20% average annual return (double money in 5 years).

With the tax benefits of real estate, you’re probably not going to pay capital gains or passive income taxes on what you make.

If you wanted to match LeBron's amount of money he keeps, you'd take $1.42M and divide by 20%.

You'd need $7,104,083 invested in order to gain and keep $1.42M.

In the United States, being in the top 1% in net worth is having $10,815,000, less than the $7.1M mentioned.

All you have to do in this situation is be 1/100 people and then invest in apartments. The chances having LeBron James' skillset? Probably 1/300,000,000.

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