A back-of-the-envelope calculation on an LJ Permanent Account.

[randomness]

LJ permanent accounts are now on sale. I'm thinking aloud: does it make any sense for me?

My paid account costs me $19.95, charged to my credit card annually. A permanent account costs $150.

Assuming I can earn 3% interest on my $150--a rate I can easily get from a money market fund--that $150 grows to $195.72 over 10 years. (Today's average yield for a money market account in Massachusetts is 3.46%, according to bankrate.com.)

Ten years of a paid account works out to be $199.50.

Assuming that LJ doesn't raise its prices, and assuming that I can continue to earn 3% on my money, it will be 2017 before I come out ahead on my permanent account. (Of course, these assumptions may not hold.)

So the question is, will I still be using LJ in 2017? Will LJ even still exist?

Worth thinking about, anyway.

If there's something seriously haywire about my assumptions or my calculations, please let me know; I'm not an accountant, nor do I play one on TV. I'm sure there's someone on my flist who probably knows more about this than I do and can point out where I've screwed up.

Comments

[starheptagon.livejournal.com]

Your math is a bit off. I would try to either compare 2007 dollars to 2007 dollars, or 2017 dollars to 2017 dollars. You're comparing $195.72 in 2017 dollars in the one case to $20 in 2007 dollars plus $20 in 2008 dollars plus $20 in 2009 dollars, etc, the other way.

Moving everything to 9 years out:

150 * 1.03^9 = 195.72

sum (i in [0,9]) 19.95 * 1.03^i = 228.70

So it will happen a few years sooner, but perhaps not soon enough to affect the basic premise. I would also tend to use either 5% or 7% for the time value of money, but I can understand wanting to be conservative for the sake of argument.

[(Anonymous)]

Thanks for posting this. I was about to do these calculations out, but you've saved me the effort.

--Adam

[r-ness.livejournal.com]

Sure, that's fair. And slightly over a year's difference is clearly within a range of reasonable variation in yield.

Thanks!