Money System - What Are You Investing That's Getting 5% Return?

[craig1928]

I'm determined to figure out what my father's financial advisor is doing that makes 30% to 50% return consistently. Those numbers are unheard of!

 

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[MJ DeMarco]

5% sure as hell don't sound like FastLane to me...

On $10M, 5% is a miserly $42,000/a month, some of it tax free if your thing is munis. That's as Fastlane as you get. Just so happens that most of the convos here are about how to get that $10M.

 

[GlobalWealth]

I have an exponential mentality, my good man.

Just out of curiosity - how old are you?

I ask because we tend to have different goals at different stages of our lives.

I am 42. I have had lots of business successes. And probably even more business failures.

As @JScott said I also don't consider the accumulation of zeros on my bank statement the goal.

I prefer the quality of life money affords. I am not hugely wealthy but I have enough passive income from enough different sources to not have to bust my a$$ every day of I don't want.

My 20s were different though. It was all about accumulation. Mostly ego driven in my case.

Nowadays its a much different story. I worked about 8 hours last week. But my income did not suffer. Did I make exponential money? No. But I made more than I could spend.

And my 5-10% yields continue to compound.

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[zr1]

http://finance.yahoo.com/news/nuveen-closed-end-funds-declare-212700594.html

Do due diligence on tax free municipal bonds and choose a few and diversify geographically.

On average, you will get you about 6% tax free (equivalent to 9% taxable yields).

Payout comes in the form of monthly distributions.

$1 million = $5k per month tax free passively.

Live simply and you're out of the rat face and freedom is yours.

Spend 1 hour a week maintaining portfolio.

 

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[GlobalWealth]

I am confused - are we still on FastLane? Cause if so, what the hell are we doing talking about 5% returns? Who has that ever helped, satisfied, or secured?
5% sure as hell don't sound like FastLane to me...

Hahah

I think you missed the point here. The idea is to build a fastlane business that can either be sold or it throws off lots of cash.

Next step is to rake that cash and leverage it into some passive or nearly passive income to eliminate the dollars-for-hours grind.

If you are sitting on $1mm and can earn 12% per year thats $120k of additional cashflow.

Even at 5% thats $50k.

It does not detract from fastlane. It only enhances it.

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[GlobalWealth]

@Phones, @GlobalWealth, what do you think about it?

Of course most times your best roi is in your own business. But not always. What if your business is declining (or even crashing)? What if you just got a new competitor that is kicking your a$$ with new technology or processes or contracts?

As entrepreneurs our instinct is to fight because we always think we are the smartest/best/savviest/etc. But sometimes we are not.

Or what about when there is an economic crisis. Look at all the smart real estate investors in 2008-09. Most didn't fare very well and the ones who put all their eggs in their own basket are still rebuilding, or working at Starbucks.

Or maybe there is nothing for you to invest in with your own business. Maybe you are earning an extra $20k/month but only live on $2k and cannot deploy more than another $2k in your own business for growth.

If you are in some virtual type business with very low overhead maybe you can take some of that excess cash and invest in some advertising. But maybe you cannot spend an extra $18k in advertising. Or maybe you don't want that much additional business as it may change your lifestyle.

Ultimately I think it depends on what stage you are in with your business.

If you are in a startup and growing rapidly, it is likely the best option to invest in your own business. But if your business is more mature then it would be very smart to diversify and get some of that excess cash working for you.

 

[GlobalWealth]

Also I believe if someone has about 1M or more to invest then they must happen to know the money market very well or must have good advisors.

That is a common fallacy. I have many clients with large sums sitting in their deposit accounts because they have no idea what to do with it.

If you think about it though it makes sense. They are successful because they know their business. They are focused on what works for them. Money management is not their area of expertise.

I recently had a client with a ecomm business and he had over $1mm in his checking account. He had no idea what to do about it.

 

[MJ DeMarco]

Wow at that 22.22% Dividend even though it's low compared to before in terms of stock value, 22% is amazing.

When LINN Energy was trading at 12 bucks, it also had a 22% dividend. Now it has a ZERO dividend and is trading at two bucks. In other words, a stock with an advertised 22% dividend is advertising for suckers who'd rather not visit the casino.

Here's a recent article that highlights some stocks with 5% dividends. In this list, I'd be favored toward the commodity movers and utilities.

http://www.fool.com/investing/gener...s-yielding-5-or-more-do-exist-here-are-5.aspx

 

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[Deleted35442]

@Cyriex

What you think?

I think this. I've heard of far too many people make millions but then lose it because they didn't plan accordingly. I have a good friend of mine that was living cozy with eight figures in Los Angeles. He went all in on Lehman Brothers on a rather....Inopportune time you wanted to be going all in on Lehman Brothers (08). He went broke and his business that got him that money went under. He was not prepared and now he's starting over.

Advice I give people is once they have their first million, let it grow in a conservative 5-10% return environment. High net worth guys that invest in hedge funds are actually happy if you tell them they can get these kinds of returns. We have unsustainable pension funds that are bleeding for this kind of alpha.

When these guys have idle money they put it everywhere. Angel investing and venture rounds, ETFs, you name it. One million is my safety net. Despite the draconian levels of inflation we face, if you made 5% per year on a million per year you could live like a King in SE Asia or South Am. Would I be just content with that? F*ck no. But consider this contingency planning. The question is, what is your number? Ten million? Hundred million? Billion? Lots of guys here have simple wealth goals. They don't want to be broke and don't want to work again. You and I @Ubermensch are the ones that want even more.

Question for @GlobalWealth do you ever look into smaller international banks usually only operating in their country of origin? Deposit rates globally are obviously much more attractive than here even after you account for inflation differences and the risk of that financial institution. Stress tests I'd imagine would look much different than US banks. Are only citizens of these countries able to put money there? I heard not all of them allow for American clients. Additionally I've heard you can get some exposure through HSBC's Expat. Global rates: http://www.deposits.org/world-deposit-rates.html

@JScott What did you do for "two of the wealthiest people in the world"? I remain suspicious reading this while seeing you peddle books on house flipping in your signature.

 

[Phones]

Right now my P2P loans are 50% on Mintos and 50% on Twino (also with buyback guarantee). You should also check Twino @GlobalWealth , they are doing 14.9% on long term loans. The buyback guarantee is on them, but they are owned by a bigger financial group FinaBay which looks really solid.

I have 25% on 12+ month loans at 14.9% and 75% on 1 month term loans at 12.9% (this is "business money" so I need it liquid).

To the people that think this isn't fastlane, I'm living off the interest of part of my business cash reserves, I could have to be working 8+ hours / day to have that covered.

 

[GlobalWealth]

What's to stop someone with a good credit score etc, from getting a loan from like mintos and loaning it out on prosper for a hire %?

Even better. A US person could get a loan from a traditional source with a good credit score and pay mid single digits interest, then open an account on mintos or twino and loan that cash out earning 12-15% interest.

You would earn the spread free and clear.

 

[biophase]

In the past years I've been putting it into real estate at about a 6% return. Buy cash, let it cashflow. Fairly easy if you have good tenants.

 

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[Phones]

P2P lending, 10 to 12%, currently looking into car loans and RE loans on European platforms. Both collaterized.

Needless to say, put your eggs in many baskets.

 

[eliquid]

That is a common fallacy. I have many clients with large sums sitting in their deposit accounts because they have no idea what to do with it.

If you think about it though it makes sense. They are successful because they know their business. They are focused on what works for them. Money management is not their area of expertise.

I recently had a client with a ecomm business and he had over $1mm in his checking account. He had no idea what to do about it.

This is sooooo true.

Many times a successful person hit its good and is so overwhelmed with the success, they just stick the money into a bank account until they can find time to learn how to best use it.

When I was starting, I was so busy trying to "run my business" and keep cash coming in, I had no time to even look at my bank account and consider what I needed to do with it other than stock pile it into savings. All that concerned me was that more money was coming in each month, than money coming out.

Then came Dec 31st and I was wishing I took the time to learn more about my money since the gov. got a large chunk of it after that day....

It's still hard to manage even after that. So many options change and numbers fluctuate every week. One month XYZ is doing good, the next month its a horrible investment because of something else.

Money management can be a 24/7/365 job if you let it. Key is, don't let it be.

 

[Vigilante]

I was talking with the bank the other day, and for kicks I asked her what the current rate was on a 6 month CD for $50,000.

Her answer? The bank was offering .05%.

1/2 of 1/2 of 1%.

 

[MJ DeMarco]

Any updates from anyone?

5% is about to become much easier as interest rates are going up. Soon we might be talking about 7 or 8%.

 

[CJC3392]

http://www.dividend.com/dividend-stocks/25-year-dividend-increasing-stocks.php

Average the top 5 together and you'll get around 5%, plus look at Shell, BP, Verizon, etc. Lot's of blue chips out there that can get you 5% annually

 

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[Phones]

Could you PM me details on which ones?

Thanks!

Also, MJ wrote this in 2012 about a money system. It could be relevant today.

Mintos, specially looking into the car loans as there is a buyback guarentee, if the loan defaults 60+ days they will buy back your part.

And Estateguru for RE loans.

 

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[GlobalWealth]

Mintos, specially looking into the car loans as there is a buyback guarentee, if the loan defaults 60+ days they will buy back your part.

And Estateguru for RE loans

thanks for the heads up on these. I had coffee this morning with the founder and ceo of Mintos. Very smart guy and really cool model.

They have 4 loan categories:

• Mortgages (but only small loans for renovations or refinancing other unsecured debt and only 1st position)
• Car loans (very interesting)
• Business loans
• Personal loans

They just started a year ago with loans and completed their marketplace platform in January. As of today they have placed just over eur7mm.

Their bottleneck is not investors, but finding good loan originators. But that is growing rapidly.

They company was VC funded and the CEO is brilliant.

I personally will be funding my account.

I will most likely also do accounts with RealtyShares(dot)com and Prosper(dot)com and possibly LendingClub(dot)com.

 

[illmasterj]

I look at it as the safety net that allows you to take greater risks. If you sell the fastlane business and invest 100% of that into the next business, there is the chance of losing the lot. Why not invest a portion to cover your living expenses so you literally never have to be concerned about eating ramen while living in your car again?

How many people can't take the jump to fastlane from their slowlane job because they have a mortgage, have kids to feed, etc. A portion of well invested money for income removes a lot of excuses.

 

[H. Palmer]

Stock market listed real estate investment companies.

Closest thing I know to real passive income.

I'm not talking stock price appreciation, just dividend pay out.

Study their annual reports first and get a grip on the industry before you jump into it though.

 

[Phones]

Does it make any sense whatsoever to consider investing money in anything else but your business/yourself if you have less than, say, a few hundred thousand to invest?

What you say makes complete sense, my business yearly ROI was over 200% for the past two years. But you can't always just throw cash in and expect the same returns. I do P2P because my business is seasonal, so apart from getting inventory ready and getting some improvements done, the money is just sitting in the bank so I put a part of it in P2P loans.

But even for regular business, it all depends on the risk, the money you have available, and the money your business needs, at some point it may be best/most wise to put some money apart in a more passive investment.

I expect to do this soon, to put enough money apart (not just on slow season) to cover my most basic expenses (housing and food). Of course if I see that I can put that money in the business and expect a much greater return with almost 100% certainty, I would do it. But I'm 21, I have no kids, no family to support, no mortgage, it all depends on risk/reward.

 

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[biophase]

Does this mean you can use net profits from your business to reinvest into other assets before tax season to avoid paying taxes?

No you cannot. When you purchase an asset for your business it still has value so you cannot just add it to your expenses. If it was only that easy.

 

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[biophase]

I am confused - are we still on FastLane? Cause if so, what the hell are we doing talking about 5% returns? Who has that ever helped, satisfied, or secured?
5% sure as hell don't sound like FastLane to me...

Hahah

In many ways, this thread is actually an advanced fastlane topic. Or a post-fastlane topic.

 

[Phones]

I'm upping my P2P portfolio to cover my monthly expenses (around 500€) in the next couple of months.

30% at Mintos.com
30% at Twino.eu
40% at Estateguru.co

All the above are currently at 11-12% rates, around 10% after tax.

IMO, these 3 markets are the best and safest players ATM on the EU market.

 

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[GlobalWealth]

A hustler invests in hustles that make way more than 5% ROI.

If you're not getting double-digit returns, why bother.

I partly disagree here.

A hustler focuses his energy on what gives a high return.

Excess cash can be reinvested with minimal input for lower yield because of low risk and hands off.

For example. If you earn $30k/m but only spend $10k, do you want to invest the $20k every month in a business that will inevitably divert your focus from the thing that brings in $30k/m?

If you are rational the answer is no. Take that $20k/m and dump it in investments safely paying 5-10% pa and watch your wealth compound without adding more workload.


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[Bobby-H]

I've been looking at all the Vanguard ETFs and nothing gives around 5%, not the VIG or anything in dividends.

The only things giving 5% would be a really extremely risky bond for corporations or international bonds.

What are you investing in that gives 5% returns for your money system?

 

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[zr1]

If you are concerned with $7 commissions, it would be wiser to keep it in cash. Focus on your fastlane business first. Save until you reach 7 figures cash and at that point $7 is like buying a stick of gum.

Technical analysis (chart). 15 mins.
Fundamental analysis (news and stats). 45 mins.

 

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[Deleted35442]

I've been looking at all the Vanguard ETFs and nothing gives around 5%, not the VIG or anything in dividends.

The only things giving 5% would be a really extremely risky bond for corporations or international bonds.

What are you investing in that gives 5% returns for your money system?

Vanguard is like the holy church of asset management. They're some of the more conservative ETFs. Oil will rebound. I'd long VelocityShares 3X Long Crude Oil ETN, ticker UWTI. This ETF triple leverages your position. Additionally, I see people here say get real estate....Does anyone actually want to be a landlord? Buy REITs. Add RSO specifically, yielded just under 15% with a low debt-to-equity ratio. If all this is still confusing, look into http://www.motifinvesting.com which is like a community investing platforms where you invest in "themes" which are industry-segregated bundles of stocks up to 30. Do any of this, and you'll be laughing. Due to all the talk of this, I think I'm going to write a thread on this and hope it's marked gold. Cheers.

P.S: No to P2P vs. a professionaly-managed REIT.

 

[GlobalWealth]

You (falsely?) presume that investing in a business will inevitably divert my focus from the primary source of income.

I don't presume to know you and your mentality.

But I've been involved in lots of businesses and investment deals. And I know reality.

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