Independent Income at later TL stages

[hal]

Hello Folks,
This is perhaps already been hashed out/over in past discussions. If so, I apologize. If not, I figure it is best to perhaps raise the point.

During one of my earlier Cyberpunk campaigns, I thought "hey, usually Cyberpunk is about the man on the street trying to drag himself up from the street. What if we put the shoe on the other foot, and make it such that the player character is trying to keep from being overwhelmed by those at the street level?"

So, we started to try and price out the character - where he has independent income (from stocks, royalty payments, etc). The idea was that his character's grandfather or perhaps father were to have created the computer chip architecture for the next generation computer chips. The independent income was intended to reflect that in order to manufacture said chips, other companies were paying through the nose in order to do so. In addition, the character was expecting to be able to live off of his stock portfolio - and finally, he would start to grow his "robotics" business in the form of buying a factory, designing robots, marketing them, etc.

So. What's the problem right? All we really need is Boardroom and Curia etc... right? Couple this with GURPS VEHICLE rules for factories and building machines etc - and we should be all set.

*cough*

Not so fast pilgrim...

Let's take Multi-millionaire III as an advantage for TL 9 for starters. Starting wealth is $30,000 at TL 9. Filthy Rich takes it up to $300,000,000. So far, no problem right? Starting assets for someone that rich means they're able to afford a 90 million dollar building, and have some 210 Million in assets still yet to buy. But let's look at Independent income. Each 1 point grants 1% of your starting wealth per MONTH. Taking 20 points worth of Indpendent Income means that the character is making 20% of 300,000,000 per month.

that works out to $6,000,000 per month. Wowsa! What is the best return on investment ratio for stocks these days? If the character is raking in 6 Million a month, and let's say return on investment is 20% per year (*cough*!!!!) - that would seem to imply that at 6 x 12, or 72 million a year, as a 20% return on investment, the character has a stock portfolio worth how much? I KNOW that I'm going to be wrong suggesting that it is worth around $360 Million - but that does seem to be in the ball park as best as I can figure. Initially, the character's total assets for Multi-Millionaire III was only supposed to be 300 million. Independent income bumps that up to a solid 360 million not inclusive of any other assets?

What are royalty payments like that a character gains that kind of money?

WHAT exactly is independent Income really supposed to be? Someone who is making a modest 6% return on initial investment of say, 100,000 - is only making 6,000 for the year, divided by 12, or roughly 500 a month!

At TL 9, that is only 500/30,000 or just a wee bit over 1% of starting wealth. Ie, a single point.

Every time I attempt to apply real world examples advantages or specific rules in GURPS 4e's wealth section, I keep bumping my head into "What were they thinking!"

Ever compute the hourly wage required to earn "average income" for someone working a 40 hour work week in order to earn *AFTER TAXES* 3,600 a month?

[Nemoricus]

Originally Posted by Basic Set p. 26

If your income derives from investments, you need not specify their value; this trait assumes that you cannot or will not invade your capital.

Since the trait abstracts away the details of *how* you're making your money, feel free to assume that the value of their investments is sufficiently large that the rate of return is more reasonable.

Otherwise, limit the trait to however many levels you believe gives reasonable results.

[Stormcrow]

When the description of Independent Income says you get an income of 1% of your adjusted starting wealth per level of the trait, it doesn't mean your Multimillionaire 3 with Independent Income 20 invested 20% of $300 million. The amount of income you get is completely unrelated to how much money you have, EXCEPT for purposes of counting character points.

In other words, it's a GURPS character-accounting feature, not representative of any specific investment.

What you're supposed to do is start with a reason you make extra money, decide how much money that is, then figure out how many character points it'll cost. It doesn't model any kind of economic system; it's not a simulation. It's just "I want a non-job-related cash income each month" advantage, and the point cost is relative to your starting wealth.

[Apollonian]

I'm going to assume your actual question is "What is Independent Income?" and you're not just ranting about the Wealth rules again. If it's the latter, well, you do you.

Independent Income is going to be a lot more than just stock dividends. Your character probably has a more diversified portfolio. Some of that II is going to come from rolling bond payments; some of it is real estate income, i.e., rents and leases; some if it, as mentioned, will be the licensing fees for that CPU architecture; and if we're going to be a bit more outre, some of it might be regular gifts, bribes, and courtesies that he gets as part of his social status (and that he reciprocates to curry favor, buy off inconvenient regulations, and live the high life). So that adds up to $6m pretty quick, I think.

Consider also that at higher TLs the extra cash doesn't just mean more money; it means that a higher TL society produces more stuff and higher quality stuff. This TL9 guy's going to be spending that $6m on more and fancier stuff than his TL7 equivalent - custom cars and yachts, sure, but also extraordinary security systems, luxurious VR experiences, sub-orbital tours, custom android servants... That money he's spending doesn't disappear; it goes into someone else's pocket to support their $6m/month Independent Income or whatever.

I don't think Independent Income adds to a character's base assets. If he's using return on investment as a rationale for his Independent Income, then that's tied into whatever Wealth got him. OTOH, if he inherited some assets he can't liquidate - like the right to extract license fees for CPU architecture, for whatever arcane legal reason - then that doesn't count as an asset except in the context of rationalizing his Independent Income.

As for your last question, if we assume a 20% tax rate, that person makes $4,500 a month; assuming 160 hours a week, that's a mere $28.125 an hour. (Note that's in GURPS $, not 2080 US$)

[Fred Brackin]

Originally Posted by hal

?

WHAT exactly is independent Income really supposed to be?

It's a specified end result and not a diagrammed process with input and output.

It doesn't even have to have anything to do with investment. Persons receiving Social Security checks have Independent Income on their Gurps character sheets. Same for any other kind of pension or annuity or even a Welfare check.

Independent Income means nothing except that you get X$ per month.

[whswhs]

Originally Posted by Fred Brackin

Independent Income means nothing except that you get X$ per month.

Well, actually, it means that you get $X per month and you don't have to work for it. Back in 3/e it cost 5 points; that seemed about right for "you have some money coming in but it doesn't take time away from adventuring." That free time was the main thing the advantage was intended to buy.

[Culture20]

Your PC isn’t getting 20% of their actual wealth, but instead probably 4-6% assured of an untouchable invested huge amount that won’t be measured in points because the PC will only ever see the dividends. Or it might be a diamond mine. Or the PC might have a program that takes every fraction of a penny in point-of-sale transactions and sends it to a Swiss bank account.

[whswhs]

Originally Posted by Culture20

Your PC isn’t getting 20% of their actual wealth, but instead probably 4-6% assured of an untouchable invested huge amount that won’t be measured in points because the PC will only ever see the dividends. Or it might be a diamond mine. Or the PC might have a program that takes every fraction of a penny in point-of-sale transactions and sends it to a Swiss bank account.

Or they might not have any wealth. They might live in a society that has a guaranteed minimum monthly income paid by the government. Or they might have a pension from a former job. Or they might have a family that sends them remittances every month, as long as they stay far enough away not to embarrass anyone. Independent Income is tied to Wealth only notionally.

[hal]

Perhaps I should have put it this way then...

If you have assets worth MORE than 300,000,000 at the start of your character creation - then as a character, you need to pay more points for what your assets are really worth no?

If Independent Income offers you cash from assets you can't or won't touch, or you lose the actual income, what you're really saying is that the value of such an "asset" that generates 72 million dollars a year, is considerably more than the initial 300 that the player paid for with the advantage Multi-millionaire.

Social Security income being defined in terms of starting wealth on a monthly basis, has no real mathematical relationship with real life to put it mildly.

Anyone care to try and figure out what the "inviolate" assets are worth in order to generate 72 million a year in income revenue without touching the principle? A return on investment of 20% is largely (I suspect) unlikely and is likely more closer to maybe 5 to 11% or so in that range, and such a return likely has times when the risks catch up to the person and he loses money. Independent income doesn't seem to work that way.

So - my point for brining this up, is that Independent Income was written, gives some wildly inaccurate results when the player is permitted to use up to 20% values as adjusted for wealth level. GURPS also doesn't seem to have any real guidelines for trying to emulate or simulate real life when it comes to someone living off the returns on their investments only. And, in real life, turning an asset into cash is always a possibility unless it is legally tied up in a trust or in terms of that kind of thing. Point is, turning such a performing asset into cash means that it is an asset that should have been covered under the original rules of 80% starting wealth is non-adventuring assets. Am I making sense here?

[AlexanderHowl]

Your Wealth represents your personal belongings while your Independent Income represents your earnings from your investments, retirement, etc. In general though, it does not make sense that social payments are Independent Income, as you generally are being paid not to work, so your 'job', paradoxically, is to be disabled and/or retired (in the USA, social payments tend to go down if you work). In that case, a person who gets social payments possesses a Struggling Job, not independent income, as they reduce their income from their social payments by the amount that they earn in another job.