4 ms·

Why not?

• chad_strategic 11y ago
  Because as soon as you can get a risk free rate of return, (savings) then why would someone invest in a half brained start up that has a low probability of any return, when you could get a risk free return. The FED has reduced interest rates to drive spending in startups, lending, housing market, and the stock market. But don't worry, .5% is only a start, we have a ways to go before Unicorns start to starve.
  • dragonwriter 11y ago
    > Because as soon as you can get a risk free rate of return, (savings) then why would someone invest in a half brained start up that has a low probability of any return, when you could get a risk free return. Because startups, while they may have a low probability of return, have a high potential upside, whereas low-risk (and essentially zero-risk, like US government debt) investments have fairly locked-in maximums as well as minimums. Sure, the higher returns in low-risk investments, the better returns have to be in high-risk investments to justify choosing the latter over the former with the same risk sensitivity.
    • chad_strategic 11y ago
      You should look into the probability of those high returns. The media likes to remind you of the Facebook / twitters/ google, but those are just one in thousands. Something like ~90% of startup fail. http://www.forbes.com/sites/neilpatel/2015/01/16/90-of-startups-will-fail-heres-what-you-need-to-know-about-the-10/ http://www.forbes.com/sites/neilpatel/2015/01/16/90-of-start... So you have a one in ten chance. If you pick a startup that fails, I doubt you will be able to reclaim any of your investment. It's not like you can get liquid, when things start to go in the wrong direction. Pick wisely.