How the rich get richer

Discussion in 'Off Topic Chat' started by skieur, Jan 12, 2008.

  1. skieur

    skieur TPF Noob!

    Joined:
    May 14, 2007
    Messages:
    5,076
    Likes Received:
    202
    Location:
    Canada
    Can others edit my Photos:
    Photos OK to edit
    Interesting item that I learned. If as a individual you have some money to invest like $50,000 or so, you go to the bank for example and they will give you an average of less than 5% return based on mutual or other funds with some risk involved. You could even make less than a 5% return in the short term. GICs are more secure but again the interest rate is lower.

    However if you have $1,000,000 or $2,000,000 to invest you graduate to a different level of investment so-to-speak. There are companies that will guarantee to maintain your original capital and pay you an 8% to 9% return on you investment.

    Then of course there are the even richer. The personal portfolio of the head of a major pension fund is giving him 24% return on his investments.

    I wonder what the average rate of return on investment is for those with several million to invest.

    skieur
     
  2. lostprophet

    lostprophet No longer a newbie, moving up!

    Joined:
    Feb 10, 2006
    Messages:
    11,770
    Likes Received:
    109
    Can others edit my Photos:
    Photos NOT OK to edit
    That's between me and my bank
     
  3. Sideburns

    Sideburns TPF Noob!

    Joined:
    Aug 14, 2007
    Messages:
    2,796
    Likes Received:
    0
    Location:
    Windsor, Ontario
    Can others edit my Photos:
    Photos OK to edit
    Banks are really not the most lucrative of markets to invest in.
    Stocks, and commodities are what the REAL wealthy invest in. Or at least the savvy business person.
     
  4. nealjpage

    nealjpage multi format master in a film geek package

    Joined:
    Sep 16, 2005
    Messages:
    3,479
    Likes Received:
    1
    Location:
    Oregon
    Can others edit my Photos:
    Photos OK to edit
    I invest in cameras.
     
  5. jstuedle

    jstuedle No longer a newbie, moving up!

    Joined:
    Jun 30, 2005
    Messages:
    4,889
    Likes Received:
    14
    Location:
    S.E. Indiana
    Can others edit my Photos:
    Photos NOT OK to edit
    If you just won the lotto and have 5 Mil to invest, but you want ZERO risk, then invest in Municipal bonds. You will have a about 200,00 anual income forever with zero loss of capitol. This is an investment for one who wants to leave a job and never worry about stock trades, banks or much of anything. There are many ways to make several times this annually, but with the risk associated with it.
     
  6. Skyhawk

    Skyhawk TPF Noob!

    Joined:
    Nov 7, 2007
    Messages:
    48
    Likes Received:
    0
    Location:
    Dallas
    Can others edit my Photos:
    Photos OK to edit
    Yep. Only business we do with our banks (other than checking/savings/etc) is short term CD's. Everything else is through either UMB Financial or Twentieth Century.

    What the original poster is referring to for those who invest seven-figures or better is often referred to as "venture capitalism." You put money into a venture such as a new business, startup, expansion, etc and then you share/reap a certain (favorable) percentage of the profits.

    Also--and always--pays to keep your thumb on various opportunities. When American Airlines stock fell below $4/share and everyone was SURE they were going to file bankruptcy, we bought a lot of stock. Pooled pretty much our combined bonus checks for 2002 and a significant portion of our salaries for that year.

    Not too long ago, we sold it when it hit $40/share.

    Both my wife and I grew up very poor and we learned to save, save, save. Even after we started making comfortable salaries, we continued to live like we were poor starving college students. We drove old cars (still do), bought a small house compared to those our co-workers bought (we have no children--don't need a huge house), kept our vacations simple and paid off all credit cards.

    After all our debts were paid off, we continued to make those same "payments" to investment accounts. When we paid off a car (we refuse to lease), we kept making the same car payments to a savings account. When it was time to buy a new used car, we already had almost enough to pay cash, and our down payment put US in the driver's seat in terms of financing rather than the car dealer.

    Now we're just shy of AARP membership age and can pretty much retire anytime we want.

    Our best friends in New York City gave us a lot of excellent financial advice about saving and being spendthrifts right after we got married.

    My friend's favorite line is, "You don't have to be rich NOW in order to be rich in twenty-five years."

    Lotta truth to that.

    Jeff
     
  7. mrodgers

    mrodgers No longer a newbie, moving up!

    Joined:
    Dec 13, 2007
    Messages:
    1,662
    Likes Received:
    7
    Can others edit my Photos:
    Photos OK to edit
    I make so much money on my returns, I'm afraid to claim it to the IRS. I think I make around $0.10 - $0.15 a year on my savings account.......

    One year, I nearly made a whole buck!
     
  8. astrostu

    astrostu Guest

    Yeah, seriously. My interest-bearing checking account makes 0.007% interest per year. :grumpy: I make more money on the $1.91 in my Roth IRA that's in a money market account (the rest is in mutual funds, but for some reason I get dividends and they go to a money market).
     
  9. Alex_B

    Alex_B No longer a newbie, moving up!

    Joined:
    Aug 30, 2006
    Messages:
    14,491
    Likes Received:
    206
    Location:
    Europe 67.51°N
    Can others edit my Photos:
    Photos NOT OK to edit
    well, but this is just normal, of course you get people look better after your money, if their personal profit is higher. if you invest more money, their profit is much higher in case they give you a good return of investment.



    BTW, if you take some higher risks, then even with 50 000 20-30% are within reach.
     
  10. nealjpage

    nealjpage multi format master in a film geek package

    Joined:
    Sep 16, 2005
    Messages:
    3,479
    Likes Received:
    1
    Location:
    Oregon
    Can others edit my Photos:
    Photos OK to edit
    I participate in a deferred compensation deal through work. I enrolled a few months ago and contribute $50 per check. Something happened last month. I got my statement and i actually lost money!!

    Damn high-risk investments!
     
  11. Fangman

    Fangman No longer a newbie, moving up!

    Joined:
    Aug 16, 2006
    Messages:
    2,489
    Likes Received:
    126
    Location:
    Ely England
    Can others edit my Photos:
    Photos OK to edit
    I invested in education for my tribe - hopefully giving them the start I had if not better. I was lucky had mine for free - Grammar School and scholarship to Med School. Now now available so I never knew what savings were - I reckon I bought a fair slice of an Independent School and Uni with five kids . . . But was all was worth it.
     
  12. skieur

    skieur TPF Noob!

    Joined:
    May 14, 2007
    Messages:
    5,076
    Likes Received:
    202
    Location:
    Canada
    Can others edit my Photos:
    Photos OK to edit
    Just to correct a misconception, I was talking about high rates with minimum risk. The 8% to 9% return also came with a guarantee that the principal amount invested would remain the same.

    My observation was that it seemed that the more you invested, the higher the rate of return seemed to be which is rather interesting. One would think that if you can get an 8 or 9% return on 1 million with no risk, why can you not get the same return on say 50,000 or 100,000?

    Related to the middle man/broker/bank person or whatever, if he is making a profit on giving you an 8 or 9% return on investment, is he making much more of a profit on only giving you a 4 1/2 % return. Considering the phenominal bank profits and their ability to write off large losses on occasions, on has to wonder.

    skieur
     

Share This Page