Last time you posted asking for a high guaranteed rate of return you were already told that no such thing exists. With high reward there will come risk.
I would own 17% of their income from their very long term contracts. Similar to them selling me 17% of rent income for an existing long term tenant with a 99 year lease. And they are in final selection for another very long term contract that would add to it, if awarded. The investors selling shares just want to cash out to spend their money on boats or other stuff. 8.4% this year is actually underperforming but I expect the next few years to be much better.
Unfortunately the way it works is high reward = high risk. You may be able to average a higher yearly return with a stock index fund but you need a longer time horizon. You can’t guarantee 8.4% year after year consistently.
JP Morgan has a high dividend yield fund that averages 9.0%, but it is not risk free. [https://www.forbes.com/sites/investor-hub/article/best-monthly-dividend-etfs/](https://www.forbes.com/sites/investor-hub/article/best-monthly-dividend-etfs/)
Real question - where do you think return comes from? It doesn't just magically appear. Stocks make money because businesses make money, and that money gets returned to shareholders. Yield from savings accounts and bonds are just interest people are paying on loans.
Stocks can return 8-9%/year but it's not in a straight line, and it's certainly not risk free. Junk bonds can yield 8-9% but again it's not risk free, the risk of default is high.
The only thing relatively risk free is a savings account or treasury bonds/bills. And the yield on those won't be anywhere near 9%.
The money from this deal comes from long term contracts. I would just be buying 17% of their net profits. I understand their business very well. I know the majority shareholder very well too. I have been talking of buying in for years.
I don't know the first thing about stocks and trading. So if there was even a really well known fund that pays better, I would not know about it. I need to put money somewhere. I can't take the lump sum without paying a lot of taxes on it. I can defer the taxes and invest it but I have never done it that way before. Otherwise, I would just take the money and do something like buy more rental housing which is giving me returns that, according to the online historical calculators, easily beats the S&P500 with reinvested dividends for as long as I have been a landlord. I am looking for someone to say 'XYZ fund does exactly what you want for monthly income, has been so high for 20 years that it is low risk, returns higher than your current idea, and you can write a check and never think about it ever again'. I am thinking there isn't one for someone who does not want to learn about trading.
Buying 17% of your friend’s business is not a safe retirement plan. It sounds like they’ve done a good job convincing you, but ask yourself with a skeptical eye whether the deal they’re offering actually makes any sense. People in this sub have seen a lot of posters make awful bets, including with people they’re close with.
There was a time when investing for dividends was a good strategy for a lot of people. Those days are long gone & probably never coming back. So, I invest for total returns (dividend + capital gains).
It used to be expensive & difficult to sell stocks. Getting a dividend check periodically was much simpler.
Selling stocks is usually free & a lot simpler now. I have a few automatic transactions set up to run every month. Vanguard sells a little bit of certain funds & puts the money in my credit union checking account so I have money to pay my bills the next month. Easy. Convenient.
https://investornews.vanguard/total-return-investing-a-superior-approach-for-income-investors/
https://www.aarp.org/money/investing/info-2020/retirement-income-risks.html
https://www.investmentnews.com/lets-get-real-about-dividend-stocks-72238
https://www.etf.com/sections/index-investor-corner/swedroe-vanguard-debunks-dividend-myth
I retired at 57 years old. Investing doesn't have to be complicated or costly to be successful; simple & inexpensive is most effective.
I invest 100% in total-market, index-based, low-cost mutual funds. Specifically, I use mostly Vanguard's
Total Stock Market,
Total Bond Market,
Total International Stock Market, &
Total International Bond Market funds.
I've been investing this way for 35+ years. It's effective, simple, & inexpensive.
www.bogleheads.org/wiki/Getting_started has some great free resources to learn about investing. After a few hours reading the articles, and, especially, watching the Bogleheads Philosophy videos, most beginners can learn how to get better results than most professionals. Bogleheads is named after John Bogle, founder of Vanguard.
My asset allocation (ratios of the funds mentioned) is based on my need, ability, & willingness to take risks. Market conditions are not a factor. Vanguard's investor questionnaire (personal.vanguard.com/us/FundsInvQuestionnaire) helps me determine my asset allocation.
Buying individual stocks or sector funds creates unnecessary & uncompensated risk; I avoid doing so. Index funds are boring, but better for making money. If I wanted to talk about my interesting investments at parties or wanted a new hobby, I might invest 5-10% of my portfolio in individual stocks. As it is, I own pretty much every publicly-traded company in the world; that's interesting enough for me.
All of the individual stocks & sector funds are being followed by thousands or millions of other investors. Current prices reflect their collective knowledge of future expectations for each one. I'm a member of the Triple Nine Society, but I'm not smarter than all of them. If I found a stock or sector that looked like a bargain, the most likely explanation would be that the others know something I don't.
I prefer mutual funds, but ETFs could also work well. The differences are usually trivial for a long-term investor, especially if they're the Vanguard funds I mentioned above. Actually, the Vanguard funds I mentioned above have both traditional mutual fund shares & ETF shares; they both represent a piece of the same fund.
The funds I use comprise Vanguards target date funds and LifeStrategy funds; these are excellent choices for many investors. Using the component funds allows some flexibility that can have tax benefits, but also creates the need for me to rebalance them periodically. Expense ratios are slightly higher than for the components but are well worth it for many investors.
Other companies have funds similar to the ones I own that would work well. I prefer Vanguard because they've been the leader in this type of investing for decades & because Vanguard's customers are also Vanguard's owners.
I hope that helps! I'd be happy to help w/ further questions. Best wishes!
If I take my pension as an annuity I can get the same monthly dollar amount except it will cost about $100,000 more than this deal. So 75% invested in this deal = 100% in an annuity.
Only you (or at least should) know the details of the specific "business investment" that you are talking about and how safe it is. I am at least somewhat doubtful, how "safe" an investment is that guarantees an 8.4% annual dividend without diluting your investment.
Regardless of how safe you perceive or evaluate this option, I would also be hesitant to tie up a substantial portion of my wealth (and your future livelihood from what I can gather) in a single private (or even public for that matter) investment. The person who is trying to sell you this investment may have very convincing facts that you believe would limit your downside in the event of a business disaster. But think outside the confines of the explained possible worst case scenarios. There have been many "sure things" that ended up at zero value. If your investment in this goes south for whatever impossible reason, and you will be left with zero, will you still be ok?
As explained in other posts, on the open market you will have a hard time beating 8.4% on a recurring basis and retain your initial investment at the same time.
You may find these links helpful:
- ["How to handle $"](/r/personalfinance/wiki/commontopics)
- [Investing](/r/personalfinance/wiki/investing)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Last time you posted asking for a high guaranteed rate of return you were already told that no such thing exists. With high reward there will come risk.
Are there investments that beat 8.4%? Sure. Can they do that on a guaranteed basis without risk of loss? Nope.
If you show me a fund and guarantee me I will *never* make less than 8.4% every year with no losses I’ll put all my money in it right now.
Madoff figured that most people would.
How does owning 17% shares of a business translate to guaranteed returns?
I would own 17% of their income from their very long term contracts. Similar to them selling me 17% of rent income for an existing long term tenant with a 99 year lease. And they are in final selection for another very long term contract that would add to it, if awarded. The investors selling shares just want to cash out to spend their money on boats or other stuff. 8.4% this year is actually underperforming but I expect the next few years to be much better.
I know this might come as a surprise to you, but businesses lose deals and go bankrupt everyday.
Unfortunately the way it works is high reward = high risk. You may be able to average a higher yearly return with a stock index fund but you need a longer time horizon. You can’t guarantee 8.4% year after year consistently.
JP Morgan has a high dividend yield fund that averages 9.0%, but it is not risk free. [https://www.forbes.com/sites/investor-hub/article/best-monthly-dividend-etfs/](https://www.forbes.com/sites/investor-hub/article/best-monthly-dividend-etfs/)
Real question - where do you think return comes from? It doesn't just magically appear. Stocks make money because businesses make money, and that money gets returned to shareholders. Yield from savings accounts and bonds are just interest people are paying on loans. Stocks can return 8-9%/year but it's not in a straight line, and it's certainly not risk free. Junk bonds can yield 8-9% but again it's not risk free, the risk of default is high. The only thing relatively risk free is a savings account or treasury bonds/bills. And the yield on those won't be anywhere near 9%.
The money from this deal comes from long term contracts. I would just be buying 17% of their net profits. I understand their business very well. I know the majority shareholder very well too. I have been talking of buying in for years.
Sounds like you've already found your "safe and guaranteed" income. Why are you asking Reddit for other options, of which there are none?
I don't know the first thing about stocks and trading. So if there was even a really well known fund that pays better, I would not know about it. I need to put money somewhere. I can't take the lump sum without paying a lot of taxes on it. I can defer the taxes and invest it but I have never done it that way before. Otherwise, I would just take the money and do something like buy more rental housing which is giving me returns that, according to the online historical calculators, easily beats the S&P500 with reinvested dividends for as long as I have been a landlord. I am looking for someone to say 'XYZ fund does exactly what you want for monthly income, has been so high for 20 years that it is low risk, returns higher than your current idea, and you can write a check and never think about it ever again'. I am thinking there isn't one for someone who does not want to learn about trading.
Buying 17% of your friend’s business is not a safe retirement plan. It sounds like they’ve done a good job convincing you, but ask yourself with a skeptical eye whether the deal they’re offering actually makes any sense. People in this sub have seen a lot of posters make awful bets, including with people they’re close with.
There was a time when investing for dividends was a good strategy for a lot of people. Those days are long gone & probably never coming back. So, I invest for total returns (dividend + capital gains). It used to be expensive & difficult to sell stocks. Getting a dividend check periodically was much simpler. Selling stocks is usually free & a lot simpler now. I have a few automatic transactions set up to run every month. Vanguard sells a little bit of certain funds & puts the money in my credit union checking account so I have money to pay my bills the next month. Easy. Convenient. https://investornews.vanguard/total-return-investing-a-superior-approach-for-income-investors/ https://www.aarp.org/money/investing/info-2020/retirement-income-risks.html https://www.investmentnews.com/lets-get-real-about-dividend-stocks-72238 https://www.etf.com/sections/index-investor-corner/swedroe-vanguard-debunks-dividend-myth
I retired at 57 years old. Investing doesn't have to be complicated or costly to be successful; simple & inexpensive is most effective. I invest 100% in total-market, index-based, low-cost mutual funds. Specifically, I use mostly Vanguard's Total Stock Market, Total Bond Market, Total International Stock Market, & Total International Bond Market funds. I've been investing this way for 35+ years. It's effective, simple, & inexpensive. www.bogleheads.org/wiki/Getting_started has some great free resources to learn about investing. After a few hours reading the articles, and, especially, watching the Bogleheads Philosophy videos, most beginners can learn how to get better results than most professionals. Bogleheads is named after John Bogle, founder of Vanguard. My asset allocation (ratios of the funds mentioned) is based on my need, ability, & willingness to take risks. Market conditions are not a factor. Vanguard's investor questionnaire (personal.vanguard.com/us/FundsInvQuestionnaire) helps me determine my asset allocation. Buying individual stocks or sector funds creates unnecessary & uncompensated risk; I avoid doing so. Index funds are boring, but better for making money. If I wanted to talk about my interesting investments at parties or wanted a new hobby, I might invest 5-10% of my portfolio in individual stocks. As it is, I own pretty much every publicly-traded company in the world; that's interesting enough for me. All of the individual stocks & sector funds are being followed by thousands or millions of other investors. Current prices reflect their collective knowledge of future expectations for each one. I'm a member of the Triple Nine Society, but I'm not smarter than all of them. If I found a stock or sector that looked like a bargain, the most likely explanation would be that the others know something I don't. I prefer mutual funds, but ETFs could also work well. The differences are usually trivial for a long-term investor, especially if they're the Vanguard funds I mentioned above. Actually, the Vanguard funds I mentioned above have both traditional mutual fund shares & ETF shares; they both represent a piece of the same fund. The funds I use comprise Vanguards target date funds and LifeStrategy funds; these are excellent choices for many investors. Using the component funds allows some flexibility that can have tax benefits, but also creates the need for me to rebalance them periodically. Expense ratios are slightly higher than for the components but are well worth it for many investors. Other companies have funds similar to the ones I own that would work well. I prefer Vanguard because they've been the leader in this type of investing for decades & because Vanguard's customers are also Vanguard's owners. I hope that helps! I'd be happy to help w/ further questions. Best wishes!
Depending on how old you are, an annuity could get you close to 8.4%
If I take my pension as an annuity I can get the same monthly dollar amount except it will cost about $100,000 more than this deal. So 75% invested in this deal = 100% in an annuity.
What’s the payout percentage on the pension? Pensions and annuities are different things and different companies will pay you different amounts.
But the annuity is guaranteed and this business could fail at any time, taking all your money with it.
Only you (or at least should) know the details of the specific "business investment" that you are talking about and how safe it is. I am at least somewhat doubtful, how "safe" an investment is that guarantees an 8.4% annual dividend without diluting your investment. Regardless of how safe you perceive or evaluate this option, I would also be hesitant to tie up a substantial portion of my wealth (and your future livelihood from what I can gather) in a single private (or even public for that matter) investment. The person who is trying to sell you this investment may have very convincing facts that you believe would limit your downside in the event of a business disaster. But think outside the confines of the explained possible worst case scenarios. There have been many "sure things" that ended up at zero value. If your investment in this goes south for whatever impossible reason, and you will be left with zero, will you still be ok? As explained in other posts, on the open market you will have a hard time beating 8.4% on a recurring basis and retain your initial investment at the same time.
Spyi? Not saying you should, but seems to meet the criteria.
Thank you. I just looked at their site. Will do some more research on it.
You may find these links helpful: - ["How to handle $"](/r/personalfinance/wiki/commontopics) - [Investing](/r/personalfinance/wiki/investing) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*