Does It Pay To Become A Chess Coach?

After reading the Stonemaster's comments here, I went and did some of my own calculations.

I did a 20-year projection on how much money a chess coach/organizer can make compared with a fresh graduate. Of course I had to make certain assumptions.

1. Based on the Stonemaster's figures, I assumed that 100% of his income comes from coaching. Because of that, a chess coach will find it hard to increase tuition fees in the near term. Hence, I allow a 10% upward revision in coaching fees every five years. It is hard to estimate the profits of an organizer because I do not have any data of the costs involved, and many times, organizers depend on sponsorship to obtain profits. In short, I can't calculate what I can't estimate.

2. I assume the Stonemaster does not pay taxes

3. I also assumed that the Stonemaster has already maxed out the number of hours that he is willing to spend on coaching and organizing. This means that he is unable to increase income simply by increasing the number of hours coached. Hence, the increase in income must only come out of the increase in coaching fees.

Table 1 below shows the income projection of the Stonemaster in the next 20 years.

Table 1

On the fresh graduate side, I had to make several assumptions as well. A quick check showed that a fresh graduate can easily get a banking job with a starting pay of RM3,000. Please correct me if I am wrong.

1. Based on this, I assumed that the fresh graduate will get a salary increment of 5% per year for the next 20 years. I think this is on the low side. But let's be conservative.

2. I assumed that the EPF contribution from the employer is 12% of his gross income.  This is standard. This should be handy during your retirement. If you are a chess coach, when are you going to retire?

3. I based the tax rate on the 2010 tax brackets. I used the full gross income as the taxable income. This means that I did not subtract all the deductibles. Once again, trying to be conservative. You can view the tax bracket here.

4. I assumed that the medical and other benefits begin at RM200 per year and will grow at 5% per annum. This could easily be more. Another thing I did not include is that if there is a serious medical condition, the coverage could be more. Even if you are hospitalized, you will still continue to receive income. If you were to be coaching chess, you do not get paid if you are hospitalized. What will you eat then?

5. I assume that no bonuses are paid throughout the 20 years. Again, this is to be conservative. Most banks pay about two months bonus annually. Again, correct me if I am wrong.

Table 2 shows the projection of the fresh graduate's total compensation.

Table 2

For your convenience, here is a chart to show you the rough difference in compensation:


Chart 1

So kids, this is why people do not become chess coaches/organizers. Stay in school and study hard. Unless you REALLY want to become a GM. For that, go to my previous post.