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Minimum ROI After the Fastlane

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Forza

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Mar 14, 2008
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Let's say you require an after tax income of at least $200,000 per year for your lifestyle in 2008...

For a truly passive cashflow at the end of your fastlane days of rapid business building, what is the minimum acceptable amount of return on your money for 2008? (Exclude the appreciation of your assets' market value as directly contributing to your income)

This question is assuming you already have millions and millions of dollars.

What type of investment assets would you have?
 

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RaisingWealth

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Feb 12, 2008
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Well with millions and millions (i.e. 4m) you would only need a 5% ROI for a 200000$ income (excluding taxation)

So... Pretty much anything would get you that, and many 5% ROI investments are hands off and not really fastlane. Basically, with that amount of capital already raised you don't need to be fastlane anymore in order to get that 200000$ salary
 

slim_jim

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Jan 31, 2008
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A well diversified portfolio, so that you wouldn't be caught in a crunch, like the current affairs - interest rates, value of the dollar and declining home values, (depending on your location) and inflation. ANY OL' THING, LOL, might not be paying you 5%.
 
OP
OP
Forza

Forza

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Mar 14, 2008
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The most important factor I am asking about is the minimum acceptable amount of return on your money.

You could want more than $200,000 after tax. I just included this figure to reduce the factor of 'Oh, it depends on how much income you want'.
 

SteveO

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This really depends on the risk/rewards profile that you want to take. You would need to consider a diversified program as well. I personally would want something that has building cashflow and thus capital gains as well. So, your question is difficult to answer.

But, just to toss something out, 20% would sound about right to me. This could be higher some years and lower in others. Perhaps even negative in some cases (risk/reward).
 

snowbank

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This really depends on the risk/rewards profile that you want to take. You would need to consider a diversified program as well. I personally would want something that has building cashflow and thus capital gains as well. So, your question is difficult to answer.

But, just to toss something out, 20% would sound about right to me. This could be higher some years and lower in others. Perhaps even negative in some cases (risk/reward).
Steve,

What do you look for 20% gains in?(when not investing in apartments)

-Bill
 

SteveO

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C'mon snow... put me on the spot!!! :smx4:

I would mix it up. There are broker dealers out there that do nothing but scour the world for deals. Find one that knows how to sniff out the good startups, RE deals, and other standard types of investments.

I know someone that give money to a guy that specializes in business turnarounds. Find an investment like that. Put some money into a NNN deal that isn't the standard "here is an inplace circle-K". Perhaps a "build to suit" on a prime piece of land. Don't forget that there are passive apartment deals as well. Buy right and sit on it for cashflow. Don't forget to use a value-add formula. :smxB:

There are a lot of people out there looking to put money to use. All you need to do is find the right group.
 

unicon

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Feb 23, 2008
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The general rule is the more money you have the lower the returns. Making 5000% is not uncommon in small deals, real estate, etc using leverage. Buffet has something like 200 billion, he works hard to get 30% even when he has the infrastructure in place.

If you have many properties in inventory, and you had interest rates between 6 and 10% you could just pay off the loan and make that return.

Bigger promises = bigger risk, I suspect when you get big it becomes more about certainty and allocation of assets to influence what you want to get done. Everybody pursues power to a degree and Buffet has unlimited influence.
 

WestCoast

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Jan 20, 2008
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I think it's worth noting that:

a) Warren Buffet doesn't have anywhere near $200B

b) the percentage return might decrease as investment funds increase, but the net dollar return is always higher.

100% return on $100 would be $100

1% return on $100,000 would be $1000


I think most of us would rather have $1000 than $100, no matter what the rate of return is compared to a small dollar value.


On a personal note, our business grew 115% last year, to roughly $800k/year. (roughly $415k in additional business)
I couldn't possibly handle another 115% growth this year, so the goal is 40% growth. That reduced rate of growth, compared to last year, will still potentially add over $300k in new business.

Dollars are dollars, I always say. You can add them, multiple them any way you like to fit any situation, but more dollars are better than less dollars, percents be damned :smxB:


sorry for the minor soapbox. I see this a lot when people say 'I WANT TO WIN THE LOTTERY, IT IS AT $250MILLION!) as if that is materially different to a person making $35k/year than winning the lottery at $1MILLION. Dollars are dollars. $1Million is not bad compared to where you are.

Slower percentage growth, while piling on the dollars, is not bad compared to where you were....
 

JScott

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b) the percentage return might decrease as investment funds increase, but the net dollar return is always higher.

100% return on $100 would be $100

1% return on $100,000 would be $1000

I think most of us would rather have $1000 than $100, no matter what the rate of return is compared to a small dollar value.
There is certainly some validity in your points if you take a short term view of investing income. But, most people (at least on this forum) aren't in this for a single year return, they're in this in an attempt to create a financial freedom that will allow them to retire and not have to worry about money.

Take you example above...

Personally, I'd rather start with a $100 and continue to see 100% return for 20 years than start with $100,000 and see 1% return for 20 years. In the first case, I'd still be working; in the second I'd be spending my time trying to figure out what to do with my money.
 

unicon

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Feb 23, 2008
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Percentages are everything, hard dollars are elementery

Understanding compounding is the 8th wonder of the world

Buffet has about 50 billion in cash, but his companies control many times that, thus Buffet controls immense capital and power
 

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