being a landlord is an unforgiving job. it's like doing everything, opposed to doing nothing.
£800k to invest
- Thread starter alexrpeters
- Start date
being a landlord is an unforgiving job. it's like doing everything, opposed to doing nothing.
I'm a bit confused as to what you want here. You initially said you wanted to make a satisfactory return with limited risk, and asked whether trading was a good way for you to do this. IMO it is bad - trading is risky, and has no inherent return unless you are highly skilled at it. Because of that, I suggested a proven, theoretically sound investment approach that should give you returns of 6-8% per annum with very low risk of losing money over the long-term (short-term you will suffer occasional 1-2 year drawdowns of maybe 10-25% during serious bear markets).
Now you come back with a different approach - you want advice on how to find amazing business deals in advance, or want opinions on investing in commercial property. Be clear with your questions and you will get clear answers.
Now, about your new proposals. Commercial property has the following disadvantages - it has high costs, it is illiquid, it is riskier than a diversified financial portfolio, its expected return is no higher when adjusted for risk, and it is not a passive investment. I.e. it will take time, effort, and attention to manage it. This would be worthwhile if it made more money, but historically it doesn't - the capital growth + income is less than that in equities. Compared to a diversified portfolio of equities, bonds, and real-estate investment trusts, you will be taking on more risk, hassle, workload, and expenses, to earn a similar or lower return. That makes no sense. The way to make big money in commercial property is to do it full-time, and use lots of leverage. That takes years of training and experience, and a fair amount of risk. There are lots of rich developers, but lots of broke former millionaire developers too.
Regarding entrepreneurial investments. These are far more risky and speculative, and are almost a full-time job. You are as likely to find a 2.5 mill to 80 mill return in 20 years as you are to become a famous celebrity, best-selling novelist, or a political leader. It's possible if you really put your mind to it and have the talent, but the odds are against it. For every businessman who strikes it big, there are hundreds or thousands who fail and go broke, and dozens who just get by. You can't look with hindsight at the past big winners, and assume they are who you will emulate. What about all the people who in 1991 were flat broke because they took a punt with 2.5 mill in the 80s then got killed in the 1990-92 recession? Don't fall into the trap of hindsight bias.
If you want to speculate, I stand by my earlier advice - take a chunk of your capital, say 10-20% of it, and speculate with that. Many people have built business fortunes with less than £85k starting capital. You yourself started with probably less than that, and made 850k out of it. If you really have a great idea, you should be able to get investors to back it with big money, so you don't need more yourself. Take your £85-170k to play with, and invest the rest conservatively as I suggested. You then will practically guarantee having 3-4 million by the time you retire, from your investment portfolio, whilst also having the upside in case you really do well with your 85-170k speculative capital. And if you can't succeed with 100k+ in cash (far more than most entrepreneurs start with), then you aren't going to succeed with 850k either.
You are on a trader board so you are going to get trader advice. The first thing is to control your risk and cover the downside. Right now, from your posts I see you are only focused on the upside, what can go well. Not what can go disastrously wrong. That is novice thinking. Pros always limit the downside first, only then do they try to make money. A simple way for you to do that is limit your speculative efforts to 10-20% of capital, and invest the rest safely, conservatively, and with minimal effort and hassle.
"4 pillars of investing" and "The Intelligent Asset Allocator" by Bernstein. "Unconventional Success" by Swensen (guy who runs the Yale endowment fund and has made billions in investing profits for them).
Taking income out of your 850k investment will reduce the long-term return *a lot*. Living off investments is a poor idea unless you have like 5 mill+. If you are in your early/mid 30s, you don't wanna retire, you'll get bored and your skills will waste away - do consulting or something you enjoy.
The approach I suggested should make 6-8% per annum long-term. At 7% your savings will roughly double every 10 years. That will become 5 mill in about 31 years at 6%, 26 years at 7%, or 23 years at 8%. Basically you'll be worth 5 mill roughly in time to retire, or 5-10 years earlier if you are a bit lucky. If you earn an income in future and make additional contributions of say 10-20% of gross salary, this will help a lot. Remember you will have your property too, which should appreciate at about the same rate as inflation, maybe a bit more if you are lucky.
Once again Cutten, bravo on your post(s). It's a shame there's no 'buddy list' on ET, you'd be the first entry. Reason: clear, concise, detailed but not chatty, solid arguments. There's simply no grip on your post, LOL.
I might add however
about real estate: the greatest risk in RE is tax. Someone with a working knowledge knows that RE is owners (especially leveraged and/or speculative) are fucked with every change in the tax code, and there's hardly any way to avoid these hits, due to the aforementioned illiquid nature.
This thread is clearly typical ET fare: new nick comes, claims to have experience and money, asks for advice about modest returns. He gets excellent advice (what's reasonable) and shitty advice (what's possible), OP gets confused, but it starts to itch due to the shitty advice, now he wants to scratch the itch, gets arrogant at people giving solid advice.
Personally, I believe this particular OP has neither the money nor the experience in real estate, he claims. Regardless, the thread is worth wile the read because there are some good posts here. Especially Cutten's. And he doesn't charge for this, it's simply heaven.
I might add however
about real estate: the greatest risk in RE is tax. Someone with a working knowledge knows that RE is owners (especially leveraged and/or speculative) are fucked with every change in the tax code, and there's hardly any way to avoid these hits, due to the aforementioned illiquid nature.This thread is clearly typical ET fare: new nick comes, claims to have experience and money, asks for advice about modest returns. He gets excellent advice (what's reasonable) and shitty advice (what's possible), OP gets confused, but it starts to itch due to the shitty advice, now he wants to scratch the itch, gets arrogant at people giving solid advice.
Personally, I believe this particular OP has neither the money nor the experience in real estate, he claims. Regardless, the thread is worth wile the read because there are some good posts here. Especially Cutten's. And he doesn't charge for this, it's simply heaven.
Gross is not really running a hedge fund, but you may not want to invest in one of his bond funds in any case:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=146757&highlight=pimco
This would be a good idea if he had $8million.
The minimum investment for most real hedge funds is around $1-5million. In fact one of Cohen's funds had a minimum of $25mil.
If you did have the money to get into a hedge fund my pick would be John Arnold's Centaurus Energy. Google him. He manages $5billion and his fund has averaged 200% after fees since inception, and in his sh*ttest year he was up about 50%. Lol this guy was made for the big time. Youngster as well.