- Joined
- 27 February 2008
- Posts
- 4,670
- Reactions
- 10
No it aint. Each punter pays tax on their P & L. The p & l just filters through the tree.
:
cool no worries , i did have a quick read but obviously missed how that part was going to be dealt with
20% above cash guaranteed: Would you invest?
- Thread starter Trembling Hand
- Start date
cool no worries , i did have a quick read but obviously missed how that part was going to be dealt with
Trembling Hand
Can be found on the bid
- Joined
- 10 June 2007
- Posts
- 8,852
- Reactions
- 205
:bonk:
Priceless contribution to the topic kincella. And I mean that in the most literal way.
Priceless contribution to the topic kincella. And I mean that in the most literal way.
- Joined
- 22 June 2008
- Posts
- 561
- Reactions
- 0
And none of those are truly guaranteed(granted they may be low risk), ie the real estate backing could topple over, the business could go bankrupt. The only thing that is truly guaranteed is the government backed banks savings acc at 4%(give or take)
The annual 20%+variable cash rate(and remember this compounds quarterly or possibly monthly) HT is proposing would be 100% guaranteed by his own cash in a bank account, ie he will take all the risk not the investors.
cheers
- Joined
- 22 July 2009
- Posts
- 602
- Reactions
- 0
TH would you consider to set this hypothetical structure offshore?
Cayman Islands, Bermuda, Luxembourg etc
Cayman Islands, Bermuda, Luxembourg etc
pursuitute
woulda,coulda,shoulda - didn't
- Joined
- 24 July 2009
- Posts
- 37
- Reactions
- 0
The difference is that there is ~40% security being offered in this hypothetical deal which, if managed honestly, can guarantee the minimum 20%. If the whole thing went pear shaped and suffered a 20% loss on day one, the game is over, half of the 40% is returned to you to recover your capital and the other half is paid to you to achieve your growth.
In a 'great' world, the hypothetical trader would fail miserably on day one and you'd make 20% whilst having a fat time laughing at the schmuck who just gave you his money. In a perfect world, it would all go swimmingly and as his profits grew, you would sell the kids to keep pouring in for as long as you could.
Point me anywhere I can get a "guaranteed with cash" 20% return that I can close out of and run whenever I feel like it and I'll slap a sticker on the dog tomorrow. She's 15yo but I reckon I could get 10c a kilo worst case
No tennants, no repairs, no insurance, no management fees, no land tax no worries. Sell the house, drop in $1m, kick back and relax on your hypothetical yacht.... don't forget to keep a very close eye on the current +/-. This is the interweb afterall
with the 9% rental coming in....there are no outgoings...the tenant pays all outgoings in commercial property....rent increases with cpi, Lend Lease is an excellent operator, the aged care industry is one of the fastest growing markets...and you would probably double the capital growth in the first 10 years...or even triple it....
there is very little risk in this deal.....its just food for thought
there is very little risk in this deal.....its just food for thought
- Joined
- 22 June 2008
- Posts
- 561
- Reactions
- 0
Difference being with TH's hypothetical(based on quarter) you would double your investment in just 3 years, tripple in 5 years......after 10 years you'd be up nearly 10 fold.
eg 1M investment +5%(TH interest)+1%(variable rate of 4%pa) paid each quarter.......after 10 years you'd have 9.7M(if I calculated that right)..........considering the standard variable rate will no doubt rise in that time, you'd be well over 10M, more if TH decides to run this hypothetical monthly instead of quarterly.
And remember TH's hypothetical is 100% guaranteed backed by CASH!!
..........hmmm 900% profit on investment after 10 years backed by cash, can't really sniff at that
cheers
prawn_86
Mod: Call me Dendrobranchiata
- Joined
- 23 May 2007
- Posts
- 6,637
- Reactions
- 7
Kincella,
Believe it or not but this is a stock market forum, hence the stock market focus.
www.aussiepropertyforums.com is a property forum, hence the property forcus.
www.aussietravellersforum.com is a travel forum, hence the travel focus.
etc etc
Julia
In Memoriam
- Joined
- 10 May 2005
- Posts
- 16,986
- Reactions
- 1,973
I'm a little surprised at the number of people jumping up and down at the idea of a 23% p.a. return when the XAO has done around 30% since March.
skc
Goldmember
- Joined
- 12 August 2008
- Posts
- 8,277
- Reactions
- 329
TH,
I think I fully understand your hypothetical scheme and I would be the first to put money in once I am satisfied that all the structure is in place. It's a no brainer. Your trading ability (or lack of) has nothing to do with my return if structured properly.
However, I think there are a few changes to make it work better for you.
You are always putting up $40 of your own money to attract $100 of investors funds, in year 1 or all subsequent years. To me you are reinvesting all your profits, leveraging 2.5 times every year and paying 20% interest p.a. The result of this is that you double your money every year, assuming you make 60% on the $100 investor funds. Another way to think about this is, TH is putting 40% away as a margin (which cannot be risked), and clearing 40% (being 60% return from trade minus 20% paid out to investors), so TH doubles what he has.
The key here is 2.5x leverage. Is this not achievable through other less costly (i.e. <20% p.a.) means? In fact, you can achieve the exact same result for yourself with just 2x leverage if the cost is 10%. If you had $1m cash, can you not borrow another $1m at 10% p.a. while pledging your trading account balance as security, with a LVR of 60% as a convanent or something like that?
If you feel like starting a fund, what you might want to do is guarantee and pay out less than 20%. Quoting 20% makes people suspicious and is a drag on your own performance. Whereas a 10% payout in year 1, and then a 2% increase per year or something like that might be a better way to go.
The other key issue to me is how much $ can you trade on your own as a single individual who needs 4 hour+ sleep? $2m? $5m? Regardless, you will need to employ someone else to trade for you soon, may be as early as year 2 or 3. The issue then becomes whether they can generate 60% p.a. straight away, and what's stopping them from just running away to trade privately after learning your craft? Something to seriously think about if your idea is to become a meaningful ($10m+) scale. Otherwise you might as well just continue doing what you are doing and take a couple more years to get to the same place. You may have to let other traders in as partners (after hefty buy-ins) for your business to continue to grow.
Do send me details when your scheme moves from hypothetical to conceptual.
P.S. I am impressed with your scheme structure, but even more impressed at your patients in responding to the many repeated questions being raised here.
I think I fully understand your hypothetical scheme and I would be the first to put money in once I am satisfied that all the structure is in place. It's a no brainer. Your trading ability (or lack of) has nothing to do with my return if structured properly.
However, I think there are a few changes to make it work better for you.
You are always putting up $40 of your own money to attract $100 of investors funds, in year 1 or all subsequent years. To me you are reinvesting all your profits, leveraging 2.5 times every year and paying 20% interest p.a. The result of this is that you double your money every year, assuming you make 60% on the $100 investor funds. Another way to think about this is, TH is putting 40% away as a margin (which cannot be risked), and clearing 40% (being 60% return from trade minus 20% paid out to investors), so TH doubles what he has.
The key here is 2.5x leverage. Is this not achievable through other less costly (i.e. <20% p.a.) means? In fact, you can achieve the exact same result for yourself with just 2x leverage if the cost is 10%. If you had $1m cash, can you not borrow another $1m at 10% p.a. while pledging your trading account balance as security, with a LVR of 60% as a convanent or something like that?
If you feel like starting a fund, what you might want to do is guarantee and pay out less than 20%. Quoting 20% makes people suspicious and is a drag on your own performance. Whereas a 10% payout in year 1, and then a 2% increase per year or something like that might be a better way to go.
The other key issue to me is how much $ can you trade on your own as a single individual who needs 4 hour+ sleep? $2m? $5m? Regardless, you will need to employ someone else to trade for you soon, may be as early as year 2 or 3. The issue then becomes whether they can generate 60% p.a. straight away, and what's stopping them from just running away to trade privately after learning your craft? Something to seriously think about if your idea is to become a meaningful ($10m+) scale. Otherwise you might as well just continue doing what you are doing and take a couple more years to get to the same place. You may have to let other traders in as partners (after hefty buy-ins) for your business to continue to grow.
Do send me details when your scheme moves from hypothetical to conceptual.
P.S. I am impressed with your scheme structure, but even more impressed at your patients in responding to the many repeated questions being raised here.
skc
Goldmember
- Joined
- 12 August 2008
- Posts
- 8,277
- Reactions
- 329
Guaranteed vs market return... quite different animals.
No matter how you look at it a 20% guaranteed return has a place in anyone's investment portfolio.
A lot of people lost 50% prior to March
.Agreed, borrow more money and/or put unused funds into it. Free 20%.
Trembling Hand
Can be found on the bid
- Joined
- 10 June 2007
- Posts
- 8,852
- Reactions
- 205
Julia - There are many who haven't the skill to even keep their capital let alone beat 20%.
Skc - the numbers need twikin' but you can see the concept. What after 1 year of operation Max monthly DD was 3% on funds. I reckon I could convince "investors" that for example 12% is adequate DD protection.
Or if we went to say quarterly guarantees (ie 5% per quarter, better for me, bit better compounding for investors).
On the other traders, yes thats the idea of sorts but I'm not thinking usual fund structure, that too is a little "outside the box" but I'm not going to spew that idea up here. Yet
Skc - the numbers need twikin' but you can see the concept. What after 1 year of operation Max monthly DD was 3% on funds. I reckon I could convince "investors" that for example 12% is adequate DD protection.
Or if we went to say quarterly guarantees (ie 5% per quarter, better for me, bit better compounding for investors).
On the other traders, yes thats the idea of sorts but I'm not thinking usual fund structure, that too is a little "outside the box" but I'm not going to spew that idea up here. Yet
Timmy
white swans need love too
- Joined
- 30 September 2007
- Posts
- 3,457
- Reactions
- 3
Makes sense.
mods, do you really believe I am unaware of the focus of ASF ...as a stock forum.......so I now have 2 mods needing to point it out to me
ASF also has a huge following for both the property threads
I was not detracting from the stock, I was giving an alternative to the cash side of the subject...
and as for the property forum....I put in a big effort trying to entice bloggers over there.....to no avail....all the bloggers on the ASF interested in property, stay on this site and have not gone over there...
ASF also has a huge following for both the property threads
I was not detracting from the stock, I was giving an alternative to the cash side of the subject...
and as for the property forum....I put in a big effort trying to entice bloggers over there.....to no avail....all the bloggers on the ASF interested in property, stay on this site and have not gone over there...
prawn_86
Mod: Call me Dendrobranchiata
- Joined
- 23 May 2007
- Posts
- 6,637
- Reactions
- 7
Yes i know you do a lot of work on the property forum, and it is much appreciated. I personally know how hard it is to get a critical mass at a forum.
What i was simply trying to say is that this thread is about asking if people would be interested in a 20% guarantee. If you feel you can do the same (or similar) with property, then why not start a thread on that so as not to go off topic?
Well hypothetically if it were to be a 20% guarantee of some sort where you would not lose any capital, then the no brainer would be to gear up and borrow as much as possible (even at a 10% loan rate your still making 10% with OPM and not doing any work for it).
Sounds good eh
Sounds good eh
Julia
In Memoriam
- Joined
- 10 May 2005
- Posts
- 16,986
- Reactions
- 1,973
Wouldn't matter to me if it were 100% 'guaranteed' return. Still wouldn't hand my money over to anyone, especially via an anonymous internet forum.
(TH: that is a general statement, not specifically an expression of distrust towards you personally.)
Trembling Hand
Can be found on the bid
- Joined
- 10 June 2007
- Posts
- 8,852
- Reactions
- 205
Hehe.
Neither would I, But if someone finds one that is set up in the real world along the lines of doctorj's conditions at post 121 please let me know.
- Joined
- 27 February 2008
- Posts
- 4,670
- Reactions
- 10
why are you hypothetically offering this ? is it for your own enrichment ? is to help your brother man ? why?
