Investing into a business -Expected monthly return?

Discussion in 'Growing and Managing a Business' started by daytrader, Jul 13, 2013.

  1. daytrader

    daytrader
    uix_expand uix_collapse
    Active Member

    Joined:
    Jul 29, 2009
    Messages:
    1,678
    Likes Received:
    216
    If you are to invest in a JV, how much % of your capital you want to receive every month. Lets say if you invest $100 and I will just give you $5 a month will this be enough to simply make you invest with me?
     
  2. shane

    shane
    uix_expand uix_collapse
    New Member

    Joined:
    Jul 7, 2013
    Messages:
    13
    Likes Received:
    8
    It depends. The % return expected depends on the risk involved. If there is a higher risk of losing my investment, I would expect a higher return. You also have to look at other companies in the same industry - if they are giving a higher return, why would someone invest in your company and get a lower return instead of one of the others? There are too many variables to give you an exact answer but that is basically how the investor's thought process works - maximize return and minimize risk.

    Regards,
    Shane
     
    • Like Like x 1
  3. daytrader

    daytrader
    uix_expand uix_collapse
    Active Member

    Joined:
    Jul 29, 2009
    Messages:
    1,678
    Likes Received:
    216
    Lets say you won't lose any of your investment and if you want to quit any moment you can and get your $100 and your interest. will the $5/month enough?
    A written document agreement might be needed for assurance of course but I don't want to exceed $5/month after all you need not to do anything but wait.
     
  4. TimeRider

    TimeRider
    uix_expand uix_collapse
    Active Member

    Joined:
    Apr 6, 2008
    Messages:
    2,761
    Likes Received:
    416
    This would be fair If we can get back the amount we invested at any time. Some questions, How many people will you be putting inside this JV? And this is the business you are running and is there something called partnership or can we earn from your business? I don't think we will just get the 5% monthly of our investment? What if your company goes on loss?

    People still fear to invest their money in Online Business as nothing can be safe in it as you don't know the person you are working with personally and people are getting scammed everyday. How will you deal with this?
     
  5. ArcSine

    ArcSine
    uix_expand uix_collapse
    Member

    Joined:
    Jun 2, 2010
    Messages:
    233
    Likes Received:
    187
    Ownedbox, attracting investor capital means furnishing sufficient documentation showing details such as...

    • The specific nature, structure, and planned operations of the venture.

    • Cash flow projections showing that the promised returns are indeed achievable and realistic, with such projections supported by compelling evidence as to their reliability.

    • A specific investor-return schedule or program, explaining to the investors how much return they can expect, and the timing and duration of the payouts.

    • A description of the venture's primary managers, including their experience, background, expertise, etc. (for purpose of giving the investors a further means by which they can assess the likelihood of the venture's success potential).

    If these matters (along with the other items usually addressed in a typical business plan) are furnished, then the return you mention might indeed be attractive to a potential investor. Indeed, it might even be more than you need to offer...it all depends (as already mentioned in previous posts) on the investors' risk perceptions. The 5% / mo. return you mention might be sufficient, excessive, or insufficient, to attract investors; which one depends entirely on the specifics of the venture itself, as carefully and meticulously explained to the investors in the aforementioned documentation.

    Of particular interest in this case is the assertion that an investor could cash out at any time. This is very unusual in most early-stage ventures, as it would be fatal to most kinds of start-ups to have to sell off assets prematurely, just when the venture is in the fragile fly-or-crash stage. That's why many new ventures require their investors to agree to some sort of lock-up period, during which they agree to keep their capital committed.

    To support that liquidity-on-demand promise, the investors would need to see exactly how that could be made possible (e.g., a certain amount of the investor money is kept in a low-risk, escrowed money fund, under the control of a trustee who's instructed to maintain it for the benefit of the investors). This of course leads to the logical question: If you could return the capital at any time upon the investor's demand, without damaging the venture's operations, why did the venture need it in the first place? You can count on investors asking that one, and you need to have your response and detailed explanation in place before they do.

    I'd like nothing more than to see you bring a new venture off the launch pad and watch that thing take off like a bottle rocket. Just be aware that when dealing with outside, unrelated investors, the "real world" imposes certain practical mandates (such as the aforementioned) which must be addressed.
     
    • Like Like x 4
  6. daytrader

    daytrader
    uix_expand uix_collapse
    Active Member

    Joined:
    Jul 29, 2009
    Messages:
    1,678
    Likes Received:
    216
    Thats a lot of things ArcSine.

    Forex I'm sure is not new to us and the profit depend on leverage and the lot size a trader is willing to put on the table. If one investor demands his capital at once, I can exit all trades I've made this very day, send it to him after withdrawing his funds and then back to trading business once again. It wont damage any ventures operation but the leverage would have to be adjusted.

    I have been in the business for almost 3 years now and I started to convince few of my relatives to invest with me, 3 of them quit months ago because they needed the money for whatever reason. I'm sure there will be no different if I do it online.
     
  7. Fergal

    Fergal
    uix_expand uix_collapse
    Premium Member
    Premium Member

    Joined:
    Nov 18, 2007
    Messages:
    10,575
    Likes Received:
    1,165
    That would be enough if I was confident that I would get my money back. One thing that would concern me is that I'm not sure how you can pay such a high return? Is the investment risky?
     
  8. daytrader

    daytrader
    uix_expand uix_collapse
    Active Member

    Joined:
    Jul 29, 2009
    Messages:
    1,678
    Likes Received:
    216
    Think of it as if you are lending me $100 with 5% interest. I don't think its a lot high though, none of your investment will be at risk as i will return it whenever an investor want. This will be a win-win for us because i will be using you investment and we get to divide the profit. I do hope I can have one online investor that will try me.

    If you are interested, don't hesitate to pm me.
     
  9. ArcSine

    ArcSine
    uix_expand uix_collapse
    Member

    Joined:
    Jun 2, 2010
    Messages:
    233
    Likes Received:
    187
    That clarifies the liquidity question perfectly; I didn't know beforehand the nature of the venture. It also modifies somewhat (greatly, in some cases) the points I raised earlier, as they assumed a traditional biz such as a retail operation or a restaurant, say. While the documentation appropriate for an FX fund differs substantially from what would be appropriate for a (e.g.) pub and grill, the docs are no less important.

    Of course, if you're looking to start on a small scale (friends and family) and build a demonstrable track record (important if pitching your fund to a broad universe of investors), you could get by initially on a much less formal basis, with respect to the documentation.
     
    • Like Like x 1
  10. Ted

    Ted
    uix_expand uix_collapse
    Member

    Joined:
    Jan 3, 2013
    Messages:
    182
    Likes Received:
    164
    What is the risk of loss of the initial $100 investment? There must be risk. And, it must be a substantial risk to return 60% in one year.

    I have a feeling that there is far more risk involved than you are thinking. I am sure of it.
     
  11. FaaastCash

    FaaastCash
    uix_expand uix_collapse
    Member

    Joined:
    Mar 21, 2013
    Messages:
    50
    Likes Received:
    6
    Hi Ownedbox, If you Invest $500, then you will Get 15% per Month + Your Capital in 6 Months. But I think it only depends on the risk involved.
     
  12. daytrader

    daytrader
    uix_expand uix_collapse
    Active Member

    Joined:
    Jul 29, 2009
    Messages:
    1,678
    Likes Received:
    216
    I'm not sure what kind of risk and how much i must return in case of loss.
    but for my offline investors I never give them risk because I just trade whenever there is no risk involve. when i say no risk i mean theres an obvious direction of the market. and if it goes against my open position in the market, i may loose. but of course I set up stop loss for every trade i make.

    how much are you guys willing to risk? i may agree returning 85% of your investment if for instance. if this sounds fair to you, you can pm me.
     

Share This Page