$1,000,000 to invest

[Toiletcake]

Ok, lets say you get to a point where you have $1,000,000 in cash that you want to invest. Currently sitting in a basic account.

Single male
Late 20's early 30's

You dont need the money for the daily living activities, its to be invested wisely to get a strong return.

Now, what types of investment vehicles are to be used? How would you do it? Whats to be expected?

List the investment strategys and assumed rate of returns.

 

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[Russ H]

Ok, lets say you get to a point where you have $1,000,000 in cash that you want to invest. Currently sitting in a basic account.

Single male
Late 20's early 30's

You dont need the money for the daily living activities, its to be invested wisely to get a strong return.

Now, what types of investment vehicles are to be used? How would you do it? Whats to be expected?

List the investment strategys and assumed rate of returns.

You can't be serious.

How in the world could anyone do this without knowing what the investor's PLAN is? Long haul? International? Tax deferred? Married? Zero expenses? Immediate return or after 10, 20, 30 years? Aggressive (greater risk for losing everything), or super low risk? High maintenance (owning RE) or very little (long term bonds/treasuries)? Done personally, or with a corporate veil? Done as a living trust?

Oh wait, perhaps you're looking for "No Net Worth Know it All" replies from "financial advisors" who make money off "investing" other people's money, but can't balance their own checkbooks?

Sorry, I just can't quite figure out the gist of this post: Whether it's serious, or intended to smoke out greedy idiots who pass out financial advice but have no experience.

Could you clarify, Toiletcake?

Thanks!

-Russ H.

 

[mkzhang]

Give that $1m to me

I know a place to invest it that can net you 100% return (twice the amount) back within 9 months.

 

[Rawr]

First, glad to see you back, I guess my PMs got through.

I remember a good response a while back - if whatever you did brought you that money, why not continue doing that?

There are plenty of people making money using different strategies, but it is not suited for everyone, for example - Russ above could have replied - "Buy a bed and breakfast"

and what would that do for you? absolutely nothing unless you have the personality and the desire to do B&B.



Now get to the Lambo forum and post there as well!

 

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[MJ DeMarco]

However you got the million in the first place? That's how I'd invest it.

Now if you are looking for traditional investments with a retirement objective, I stick it in a conservative income fund and generate passive income with it. For example, I'm heavily invested in FAX (Aberdeen Pacific Income) which yields roughly 7% in monthly passive income. This little fund pays part of my mortgage.

Aberdeen Asia-Pacific (FAX): Income Down Under

Anyhow, a 7% yield on $1,000,000 is $70,000 per year in PASSIVE INCOME -- I MEAN SERIOUSLY "DO NOTHING" PASSIVE.

BTW, this is exactly how I live.

As for growth options, I don't use the markets for growth and/or wealth acceleration -- that heavy lifting is left to my Fastlane ventures.

 

[Russ H]

You can't be serious.

How in the world could anyone do this without knowing what the investor's PLAN is? Long haul? International? Tax deferred? Married? Zero expenses? Immediate return or after 10, 20, 30 years? Aggressive (greater risk for losing everything), or super low risk? High maintenance (owning RE) or very little (long term bonds/treasuries)? Done personally, or with a corporate veil? Done as a living trust?

Oh wait, perhaps you're looking for "No Net Worth Know it All" replies from "financial advisors" who make money off "investing" other people's money, but can't balance their own checkbooks?

Sorry, I just can't quite figure out the gist of this post: Whether it's serious, or intended to smoke out greedy idiots who pass out financial advice but have no experience.

Could you clarify, Toiletcake?

Thanks!

-Russ H.

Based on Rawr's post, I'm guessing you haven't spent much time around here, Toiletcake, and didn't realize how many unanswered questions your post contained.

So I'll retract the vitriol and sarcasm from my earlier post, and just rephrase my response:

*********

No one can answer this question without knowing more about the investor-- what it is they want.

-What is the investor's PLAN?
-Are they in it for the Long haul, or is this a "get money quick" situation?
-Are they International? What country?
-Do they have lots of other income, and need Tax deferred investments?
-Are they Married?
-Do they currently have Zero expenses, or do they need to live off the $1,000K?
-Do they need immediate return or after 10, 20, 30 years?
-Do they want Aggressive (greater risk for losing everything), or super low risk?
-Are they willing to put in a lot of work (High maintenance, like owning RE) or very little (long term bonds/treasuries)?
-Are they investing these funds under their own name, or with a corporate veil? (different rules apply)
-Is this done as a living trust?

****

There, just a few questions before we can start to ask a few more.

-Russ H.

 

[Toiletcake]

Let me try to break it down to Russ so he can get the GIST of this post.

1. Its a post geared to listen to those who actually have experience "first hand" with this situation. Thank you MJ for a quality response.

2. Its a post to learn how to approach an investment strategy with a large sum of cash.

At no point did I say anything about my current position for those of you that are reading to deeply, I was simply always curious about how this is done. Ive seen first hand what a Financial Consultant at Merrill can do or not do with your investment, its a complete joke.

 

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[Russ H]

My questions remain.

The answers to those questions determine which roads/paths are taken, and which investment vehicles are used.

For instance, we got $980,000 in 2008, and generated about $800K in revenue on top of that. We knew exactly where it was going BEFORE we got it (it was all PLANNED out).

Last year, we got an additional $500K, and brought in another $1,100,000.00.

It, too, was all planned out beforehand.

MJ's response is what works for MJ-- not anyone else. He has a very different set of goals/needs than others.

Each person is different.

-Russ H.

 

[Toiletcake]

Well lets add to the post info,

Single Male

Money is not needed to live on

This would be purely an investment for the future, long term

Low maintenance as in stocks, bonds, funds, commodity's, that sort of thing, no real estate.

Taxes are always an issue

 

[mkzhang]

Find a company looking to go public, due your due diligence to make sure they are solid.

Pay for all of their IPO expense (roughly 1m), turn it into 50% convertible note.

Basically when company goes public, 1m @ 10 per share, that is 100,000 shares. 50% convertible note means each share is "worth" 5 to you, so in essence you are getting 200,000 shares back for that 1m.

Sell it at IPO or at later date for more than 10 per share, instant 100 (or is it 200%) return.

IPO time frame is usually 6-9 months.

Easy. Peasy.

The only hard part is finding the company, of which I have plenty. But 1m to throw away for 9 months, I cant afford

 

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[Russ H]

Well lets add to the post info,

Single Male

Is the entire plan that the person remain single, or will it all change if they get married/have kids?

Money is not needed to live on

So greater risk can be taken, if higher outcomes are desired.

This would be purely an investment for the future, long term

So investing in long-term businesses or things that took a while to ramp up (and had potentially 3000% ROI would be doable. Building a business from scratch has a great ROI for this.

Low maintenance as in stocks, bonds, funds, commodity's, that sort of thing, no real estate.

Oops. Scratch all the business-building stuff. While it has a ridiculously high rate of return, it does require work.

I have no experience with paper assets, so I will bow out here

Taxes are always an issue

Um . . not what I meant. US tax? Sweden? France? New Zealand?

Lots of millionaires move their money offshore to change the tax situation (this has been talked about at length in prior threads).

And if US tax, there are so many ways to structure your tax-- for instance, we use a corporate business structure to generate excess cash which funds our real estate ventures (much like RK does, but with less zeros). We do it w/hundreds of thousands of dollars each year, and he does it w/millions.

Oh, and BTW, none of the cash is ours. We don't "own" it-- just control it (see my signature quote, below).

Meaning we don't pay taxes on it. Neither does RK.

-Russ H.

 

[Toiletcake]

I hear that there are shining stars out there that control certain hedge funds and other private investment vehicles that do extremely well.

Has anyone had a positive experiences investing with these types?

 

[mkzhang]

I hear that there are shining stars out there that control certain hedge funds and other private investment vehicles that do extremely well.

Has anyone had a positive experiences investing with these types?

What I wrote earlier, is relevant to this.

Hedge funds, mutual funds, 401k plans etc, are the people I go to for bridge funds and also the investment banks goes to for IPO. How do you think they are able to manage a high to decent return?

Why do you rather pay someone commission to do the things that you can do yourself, is beyond me.

 

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[Rem]

Give that $1m to me

I know a place to invest it that can net you 100% return (twice the amount) back within 9 months.

Does it have to be a million? Could it be $10K for instance? Is this guaranteed or just happens to work out from time to time?

 

[Russ H]

Give that $1m to me

I know a place to invest it that can net you 100% return (twice the amount) back within 9 months.

And if you don't give me that rate of return, what can I do to you? What is my recourse?

What do you have to give to me as collateral or guarantee that you will give me this ROI? In other words, what will I take away from you if you do not return this rate of return?

These are questions any smart investor with a million bones will be asking.

-Russ H.

 

[Toiletcake]

Agreed, what Russ said..

 

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[Rem]

If you can truly double money in 9 months then... ok I'll even give you a year.

I give you $10K and in 1 Year you have $20K for me. I give the whole thing back to reinvest and in another year $40K.

Here is what it looks like doubling every year

1) $20K
2) $40K
3) $80K
4) $160K
5) $320K
6) $640K
7) $1,280,000

You really think you can turn my $10K into $1.2M in 7 years? If so I will send you it. :smxF:

 

[Russ H]

If you can truly double money in 9 months then... ok I'll even give you a year.

I give you $10K and in 1 Year you have $20K for me. I give the whole thing back to reinvest and in another year $40K.

Here is what it looks like doubling every year

1) $20K
2) $40K
3) $80K
4) $160K
5) $320K
6) $640K
7) $1,280,000

You really think you can turn my $10K into $1.2M in 7 years? If so I will send you it. :smxF:

This is why we invest in RE. If we sink our money into property, or loan it to someone who has equity and they re-neg, we get the property (and that's how we're able to get loans on our property-- if we default, we lose the property, which has equity).

I've never found a paper assets broker or seller who was willing to give me collateral. They just shrug and say "it's a risk you have to be willing to take".

My response is: "I'll be happy to take the risk if you guarantee it with something."

Because if it doesn't pay off, what have they to lose?

-Russ H.

 

[mkzhang]

And if you don't give me that rate of return, what can I do to you? What is my recourse?

What do you have to give to me as collateral or guarantee that you will give me this ROI? In other words, what will I take away from you if you do not return this rate of return?

These are questions any smart investor with a million bones will be asking.

-Russ H.

If I am an investment banker, I can give you nothing And neither does any of those funds (I see in the above reply you already knows this).

Usually, this is an example, when you spend 1m to invest into a going public but still private company, the company signs a "make good" clause guaranteeing their net income for the next few years.

If the company does not make those net income figure, there are escrow accounts holding (say 20%) of the company's equity, and those equity will be distributed to you and other investor to sell to recoup your loses.

To add on to this point, when you invest through a hedge fund, the escrow account will pay the hedge fund to make good on their loses, and not yours (even if you were the source of the money), which is why I said why go through someone and have them make all the money.

That is, if the company goes public. Which is why you should only invest when you know other larger institutional investors invested, or its a reputable bank that you trust, or at least an investment bank that you have good working experiences with.

Its a balance of the time till liquidity, the rate of return, the performance of the market, the attractive of the business, who are the investors, the investment banks, that really shapes the risks and returns of your investment.

Most importantly, do your own due diligence.

If you can truly double money in 9 months then... ok I'll even give you a year.

I give you $10K and in 1 Year you have $20K for me. I give the whole thing back to reinvest and in another year $40K.

Here is what it looks like doubling every year

1) $20K
2) $40K
3) $80K
4) $160K
5) $320K
6) $640K
7) $1,280,000

You really think you can turn my $10K into $1.2M in 7 years? If so I will send you it. :smxF:

Sorry but your 10k isn't worth its weight in poop even if you dip it in pure gold. In this industry 10k can pay for the retainer for me to fly out to the company to do due diligence, that's it.

To be able to invest privately into a pre IPO bridge fund, you are regulated by federal regulatory body. You must be a high net worth individual with 7 + figure net worth, and I think (dont quote me on this) the min investment amount is 250k.

If you invest 10k (say you are able to), if someone does a reverse split with the stock, your 10k will be gone since its such a small amount. This situation happens in a RTO (reverse take over), company goes public via a reverse merger, so reverse split happens like 100 or 1000 shares into one to clean out the older misc junk holders.

There is a way for 10k to double or even return 1000 fold on return. But typically anyone else from the "outside" does it, it will be considered INSIDERS's trading. I can do this for myself, but not in the form of 10k, maybe I can spend 50 bucks and return 10k? 100k?

Does it have to be a million? Could it be $10K for instance? Is this guaranteed or just happens to work out from time to time?

It's as guarantee to return as the people driving the process, the bankers, the advisers, the company management. That's why you really need to check out the company yourself.

However, like I mentioned above, no one will take 10k. In finance, the larger the amount the better. It is easier to get funding for 70m than funding for 7m.

If you really have 1m to invest, listen to MJ and be the driver. Go directly to the source of money creation and be a player in it, dont be some back seater and let some other fool play with your money.

This is investing in stocks, before the stocks are even created. The stocks you create will be purchased by many others during the life of the company... but remember, you had the first dip

 

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[milliona]

Give that $1m to me

I know a place to invest it that can net you 100% return (twice the amount) back within 9 months.

mkzhang, are we talking about the same strategy? lol.

Actually right now there is an opportunity that I am looking on but the guarantee is just 10% - 20% for 12 months (PM if interested)...

We may not live long to see when our investments bear fruit; what, 5 years? 10 years? 3 years? Personally, I am not a very patient person, so if there's a shorter course to gaining (more) wealth, i will take it...Thankfully i've found it, i'm on my way...

 

[mkzhang]

I doubt it lol.

Some times information are sensitive, I feel I am spilling too much beans online already so if you don't mind, we should keep some info between ourselves.

I hope you success however, it seems like you found something nice. Just be careful, and go with it

 

[hatterasguy]

When you make a million cash come back and on the off chance you don't already know where it will be going, you can loan it to someone on this forum.

Now if it falls out of some trust fund or the lotto this thread might have value.

 

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[bflbob]

mkzhang, are we talking about the same strategy? lol.

Actually right now there is an opportunity that I am looking on but the guarantee is just 10% - 20% for 12 months (PM if interested)...

We may not live long to see when our investments bear fruit; what, 5 years? 10 years? 3 years? Personally, I am not a very patient person, so if there's a shorter course to gaining (more) wealth, i will take it...Thankfully i've found it, i'm on my way...

Please, oh please, tell us!

And if the guarantee is 10% - 20%, I think I'd choose the 20%. But I'd check that with my CPA first. I'm not good with numbers.

 

[Russ H]

Please, oh please, tell us!

And if the guarantee is 10% - 20%, I think I'd choose the 20%. But I'd check that with my CPA first. I'm not good with numbers.

Oy.

I'm gonna get a million percent return on MY money, Bobbo.

So there. Hah!

(I'm joking-- please, no PMs on how I'm gonna do this)

-Russ H.

 

[milliona]

Please, oh please, tell us!

And if the guarantee is 10% - 20%, I think I'd choose the 20%. But I'd check that with my CPA first. I'm not good with numbers.

bflbob, I will break it to you in PM.

I say, you're very lucky to jump in. This is not a speculative investment because the market is already there and it's very promising.

 

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[mkzhang]

This entire thread reminds me of a maxim I tend to live by:

"Never take investing advice from anyone who doesn't have more money than you do."


Anytime someone says:



And then in the next post says:



Sorry, if you can't figure out how to earn $1M yourself, I'm certainly not trusting you with my $1M...

Its okay, I don't expect you to understand.

If you think I am bluffing then that's fine, what I said before can't be Google up... take it with a grain of salt okay?

What I said before is an INSIDERS information regarding how to do IPO's, that's basically how it works, whether or not you believe me lol

 

[bflbob]

There is only one place to go for a guaranteed return!

[ame=http://www.youtube.com/watch?v=6JPcimrnXGA]YouTube - US To Trade Gold Reserves For Cash Through Cash4Gold.com[/ame]

 

[Rawr]

Find a company looking to go public, due your due diligence to make sure they are solid.

Pay for all of their IPO expense (roughly 1m), turn it into 50% convertible note.

Basically when company goes public, 1m @ 10 per share, that is 100,000 shares. 50% convertible note means each share is "worth" 5 to you, so in essence you are getting 200,000 shares back for that 1m.

Sell it at IPO or at later date for more than 10 per share, instant 100 (or is it 200%) return.

IPO time frame is usually 6-9 months.

Easy. Peasy.

The only hard part is finding the company, of which I have plenty. But 1m to throw away for 9 months, I cant afford

How much it the total for launching the IPO? You got the underwriters taking a huge chunk, you have to pay for the roadshow, what is the total breakdown of the pie, and how big is it?

 

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[mkzhang]

IPO fees are as follows:

Underwriter discount (roughly 7-10% of the IPO amount)
IPO fees (everything else)

You don't have to pay for the underwriter discount, because the company sells the equity to the underwriter for 93% of the price, and the underwriter gives them the money. The under writer then sells the stock for 100% of the market value and pockets the difference.

The IPO fee is as follows (typically)

Auditing of 3 year financial - usually 240k unless you use the big 4 auditing firms, which then can go into a million
SEC legal counsel - usually 150k, unless you hit some legal issue
Company counsel (if company is foreign based) - usually 50 to 100k
Advisory fee (other advisers) - usually 100 to 300k
SEC filing - around 5k
FINRA filing - around 10k
Listing fee - 100k for NYSE, 50k for AMEX and NASDAQ
Printing fee for legal document - around 100 to 200k

Underwriter engagement fee - around 200k (pays for road show, travel expenses, due diligence, and underwriter counsel)

As you can see, close to if not more than 1m dollar of expenses for IPO, it can go up to 3m if you hit some problem along the way.

This is why its not profitable to do small IPO less than 20m for almost all company, and anything smaller either they do an IPO on the OTC bulletin, or they do a private equity round first.

 

[mkzhang]

I never said you were bluffing...

My point is, you're suggesting that people should trust you to successfully invest large sums of THEIR money for huge returns, but haven't yet figured out how to generate large sums of money yourself...

The second part of that sentence makes me question the first part...

Well, if you have time you can read my progress thread

This will be one of the primary investment vehicle for my money in the future. Even now, I know fund managers that are into this, and when I refer a deal that I am working on and they do a bridge fund, I get a % as a "finder". I just haven't been in the business long enough to accumulate such a large net worth yet.

Plus if you read through my post in here, you will know that any money I can come up with (short of 250k), and that unless I am verified by IRS as a high net worth individual or a fund holder, cannot participate in this activity.