What profit do you look for before you get interested in a deal?
Monday, January 5th, 2009
Lyndon C asked:
I’ve asked this question of “business people” and can’t get a straight answer. If you had $10,000 to invest, you could put it in the bank and get about 5% without any risk of loss. You could invest it in the stock market and would expect to get a historical long term return of 8-10%. You could buy real estate and expect a long term historical appreciation rate of 3-6%, and maybe the crazy returns of the last housing boom of up to 15%, with no risk of loss (not counting inflation) if you hold long term (recent study says if you hold real property for many years, the nominal value of the property has always gone up).
I’ve asked this question of “business people” and can’t get a straight answer. If you had $10,000 to invest, you could put it in the bank and get about 5% without any risk of loss. You could invest it in the stock market and would expect to get a historical long term return of 8-10%. You could buy real estate and expect a long term historical appreciation rate of 3-6%, and maybe the crazy returns of the last housing boom of up to 15%, with no risk of loss (not counting inflation) if you hold long term (recent study says if you hold real property for many years, the nominal value of the property has always gone up).
Instead of these relatively safe ways to make money, what profit potential do you have to see in order to invest in a venture? I’m talking about starting a business where you give up a paycheck or have to devote significant time as part of your investment. Or if you own a store, deciding to carry a new item. Or when bidding a contract, setting the price/profit.
WILLIAMS
