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

[CJC3392]

I'm not trolling. I hate trolls. I also trust it's not a scheme. The man has become a close friend of my father's, and if you knew my dad, you would know what that says about the man's character. Although, I highly appreciate your concern, I really do. For my father, it hasn't been super long term. It has it's ups and downs, but the guy's reputation shows that it's always been pretty high like that. He has several levels of investments, which do get riskier at the higher returns, but always come back if the money's left in. I've been trying to find out more, but he's pretty closed about it. That guy is just one of many seemingly incredulous people who've helped my dad since he became a Freemason. I've been temped to become one as well, just because of the caliber of people (in character, accomplishments, and career) that he's made friends with. As soon as I can find out more, I'll post more about it.

Fair enough- just give it a second look.

The odds of having a 30% compounded annual return over a period greater than 5 years is extremely unlikely. Impossible? No, but considering 99% of hedge fund managers can't consistently outperform the S&P 500 the odds are rather low.

Good luck!

 

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[Bobby-H]

From my man MJ (via email):

"Everything depends on market conditions. I’m preferential to tax free municipals, especially if you’re in a higher-tax bracket.

Glad you enjoyed the book and so cool to cya on the forum!!

Have a great weekend!

=)

- MJ"

 

[Ikke]

I started using Mintos after reading about it here and talking about it with some friends. My experience so far is excellent. I mostly buy claims with a buyback guarantee for when the loan is 60 or more days delinquent. The interest rates seem to be dropping for these kind of loans with a buyback guarantee. But for me the additional security is worth something too.

I have also been looking at twino.eu but they seem to be quite new in the game. Anybody on here have any experience with them?

 

[rc08234]

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?

There is a guy on Prosper making 14% on a 15k, 5 year loan.

 

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[H. Palmer]

I started using Mintos after reading about it here and talking about it with some friends. My experience so far is excellent. I mostly buy claims with a buyback guarantee for when the loan is 60 or more days delinquent. The interest rates seem to be dropping for these kind of loans with a buyback guarantee. But for me the additional security is worth something too.

Mintos is definitely worth checking out.

Thanks for the tip!

 

[Bouncing Soul]

Since I just pulled out to cash, I have this handy- 2005-2015- 6.8% in a very basic mixed stock index portfolio. Not including dividends. Volatility was pretty nasty over that time.

 

[MattCour]

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.

How would rising interest rates affect the yield on these Muni ETFs? Is there a risk that the municipalities could default on the underlying bonds?

 

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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.

 

[GlobalWealth]

Now I've been following the Mintos FB group, and there isn't much activity, which is great (there are a lot of people there, but there's not much to talk, meaning things are working properly). I've seen a post about a user having their first default with secured car loans and 1 or 2 days later the company (MOBO) buyed back is position (including interest!).
So like I said before, not only these are collaterized loans, there's also another layer of security. The only risk lies in either Mintos or MOBO going bankrupt.
The rates are 10 to 12% for car loans, for the rest of the loans it doesn't differ much, so I will probably be doing only this ones. You can see info like LTV (Loan to Value), the age of the borrower, country, car model and year, etc.

I looked into why would MOBO do this, and why would people borrow at 10% instead of going to the banks, to summarize, MOBO can grow quickly and has an alternate funding source (us), getting credit at banks at this small amounts (usually <15k €) has too many costs so it's a good alternative. The rates are also decent, I live in Portugal, where car loan rates, even from regular credit companies are going for 9 to 13%, so there rates are competitive.

MOGO has been around in Latvia for about 5 years. They are well known and do a lot of car loans.

The banks here typically don't touch lower level used car loans and if they do the rates are very high, 18-30%. So MOGO offers a much better solution than a bank if you are buying a 5 year old Volkswagen. Plus MOGO gives you a loan answer in 30 minutes, whereas the bank may take 2 weeks.

 

[JustAskBenWhy]

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

 

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[MattCour]

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 would say he's referring to a 100% passive way to generate income from Fastlane earnings.

 

[rc08234]

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.

I would be careful with prosper, it's way to easy to get a loan from them.

 

[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.

Sent from my SM-G900FD using Tapatalk

 

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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.

 

[JustAskBenWhy]

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.

Hah tou-che'

 

[NYCGoblin]

I would be careful with prosper, it's way to easy to get a loan from them.

I've had some good success with prosper. All my notes are still relatively young though. I try and select notes as carefully as I can to minimize my risk. I started with much lower rate interest notes that are not as volatile, but on my last few purchases I have bought notes that had a much higher interest rate 15%+. My portfolio is at 11.08% at the moment.

 

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[rc08234]

I've had some good success with prosper. All my notes are still relatively young though. I try and select notes as carefully as I can to minimize my risk. I started with much lower rate interest notes that are not as volatile, but on my last few purchases I have bought notes that had a much higher interest rate 15%+. My portfolio is at 11.08% at the moment.

I took out a loan in July, they didn't verify I was self employed, I had 15k+ in CC debt and an 8k car lease with no verifiable income. They even put the money in my bank before I verified my address, which come to think about it I never did.

Btw: Thats a pretty good return!! Hope it works out

 

[NYCGoblin]

I took out a loan in July, they didn't verify I was self employed, I had 15k+ in CC debt and an 8k car lease with no verifiable income. They even put the money in my bank before I verified my address, which come to think about it I never did.

Btw: Thats a pretty good return!! Hope it works out

Well that's not that encouraging to here. What grade/interest rate did they attach to you? Great for you to get the loan so easily. Who knows I might be invested in your note haha.

 

[rc08234]

Well that's not that encouraging to here. What grade/interest rate did they attach to you? Great for you to get the loan so easily. Who knows I might be invested in your note haha.

I was thinking the same thing! 5 year 15k note at 14.5%, at the time I had a 760 credit score

 

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[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.

 

[MTF]

At what point does it make sense to invest in P2P vs reinvest in your business/other ventures? Theoretically, ROI-wise it would always be better to invest in your business/new ventures than go with P2P.

Obviously, P2P is much more passive than business. However, if you want to grow your net worth quickly, wouldn't it make more sense to keep reinvesting all in your business (I assume you already have enough FU money) until you can live off interest?

Example: let's say I have $20,000 to invest. P2P would give me 15% a year = $3000 before taxes. Keeping it in something simpler, safer and more passive (with P2P you have to spend time choosing the right loans) - a savings account/bonds - could give me 3% a year = $600. The difference between these two is $2400 a year.

Now with a business you can usually pretty easily get 50-100% yearly returns (or much more). If I invest $20,000 and am not stupid about it (meaning, I invest in something with a very high probability of high positive ROI), I'll get $10,000 or $20,000 which is substantially more. Why would I choose P2P over this?

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?

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

 

[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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[GMJimmy]

My bank gives 4% on account balance,I'm not sure I clearly see the need of the investment for 5%. You lose liquidity and take risk without any benefit.
My real estate renting yields 12% to me. Many of my previous businesses yielded infinite % (you can"t divide the profit with zero investment, mathematically impossible).

 

[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]

My bank gives 4% on account balance,I'm not sure I clearly see the need of the investment for 5%. You lose liquidity and take risk without any benefit.

I would agree "why chase 5% when you can get 4% in a deposit". The issue is that it is virtually impossible to get 4% in a bank deposit. I am curious, where are you located and where did you find 4% in a bank deposit?

 

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[GMJimmy]

I would agree "why chase 5% when you can get 4% in a deposit". The issue is that it is virtually impossible to get 4% in a bank deposit. I am curious, where are you located and where did you find 4% in a bank deposit?

I'm in the UK and I get 4% up to £5000 balance at Lloyds. Above than that the interest rates decrease gradually. So if you have a lot of money to invest in the money market I agree that you cant get 4% in a plain bank account, but I very rarely keep large sums. I usually invest it in my own business (fixing flats, buying inventory, ads, improvements etc) immediately.

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.

 

[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.

 

[MTF]

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.

That's very true. I'm at this point with my business, so I figured I have to start a new business to be able to reinvest money. I'm still not at a very high level of earnings and have low living costs (and few financial responsibilities), though, so that's why I choose my own ventures over P2P or other investments - I optimize for more money, not more safety.

But now I understand the idea much more clearly, especially when you refer to the instinct to fight. In this sense, even when you only have, say, $20,000 to invest, it may make sense to invest it in P2P instead of a new venture just to protect yourself against yourself (especially overconfidence).

 

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[GMJimmy]

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.

Wow, thanks for the insights!
I'm sure you could give your client some good advice. At least, it was a smart move from them getting in touch with you provided that they could make the money but do not know what to do with it..

 

[bringitnow28329]

If you are buying muni's make sure to buy individual bonds and not muni funds since as interest rates rise, the prices of bonds will fall. We have had near zero interest rates for 6 years and eventually the federal reserve will raise rates. When you buy an individual bond you lock in a rate and are guaranteed to get your initial investment back at the end, assuming the municipality does not go bankrupt. Revenue bonds are usually a better idea since revenue can fund the payments, where as General obligation bonds are just an I owe you. With Bond funds this is not the case. The bond fund could just drop as interest rates rise and not come back up. You are not going to get 6% in a US muni except for maybe Puerto rico bonds which may have already defaulted. 10 -15 year Muni's are only paying 2-4%. Also keep in mind if you buy individual bond you have to lock in the current rate so since bonds are low although you won't lose your initial investment when rates rise, you are getting very little. You do however get the tax benefits but that really only matters if you are in a high tax bracket.