5 ms·

Five years is a long time, a lot can happen in five years. I've made the mistake of not selling an asset fast enough, and that probably cost me $100k-150k (eas

Five years is a long time, a lot can happen in five years. I've made the mistake of not selling an asset fast enough, and that probably cost me $100k-150k (easily!). What might look great today might not in two years. 3-4x does sound reasonable for something that is: 1. Illiquid 2. Taxed as income -> less favourably than capital gains on stocks 3. Requires work, every, single, day > If I sold at 4x and then said, where can I put that money and get a nearly guaranteed 25% return, I don't think I could find that. That would be risky. Your SaaS business might get hit with a multi million dollar lawsuit tomorrow and go bankrupt because of it - nothing is certain. But you can definitely get 15-20% returns with proper risk management when investing with your own money. And if structured properly, those gains are capital gains, meaning you pay (a lot) less tax.

ryanwaggoner 11y ago
But you can definitely get 15-20% returns with proper risk management when investing with your own money. I wish to subscribe to your newsletter. Seriously, mind sharing some of your secrets for where you're finding these definite returns of 15-20% with proper risk management?
- charlesdm 11y ago
  As a simple example: the average return of the S&P500 over the last five years has been 16%. 2010: 14,82% 2011: 2,10% 2012: 15,89% 2013: 32,15% 2014: 13,52% 2015: 1,36%
  - exclusiv 11y ago
    Good points on the tax benefits, however the S&P historically is about 10% over the long haul. 16% over the past 5 years is irrelevant. I have no control in the S&P. I have control in my company. I'd rather rise or fail due to myself than say - the market did this. I max a 401k for tax purposes and do state muni-bonds for safe, decent tax-free monthly dividend income while I decide what current or new business of mine to invest the cash in. The market is basically tax-friendly gambling.
  - ryanwaggoner 11y ago
    That's six years, not five. And the annualized return (geometric mean, not mean) is 12.85%, not 16%. Worst of all, you picked a short outlier period to consider. If you instead look at the trailing ten years of Feb 2006 to Feb 2016, the annualized return is 6.3%, even with dividend reinvestment. And that's without accounting for inflation, making your real return closer to 4.5%. Bump up to look at the last 30 years and with dividend reinvestment and adjusting for inflation, you get about 7%. I think that's probably a realistic target to shoot for in the very long run (decades). Source: http://dqydj.net/sp-500-return-calculator/ http://dqydj.net/sp-500-return-calculator/
deleted 11y ago
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ryanwaggoner 11y ago

But you can definitely get 15-20% returns with proper risk management when investing with your own money. I wish to subscribe to your newsletter. Seriously, mind sharing some of your secrets for where you're finding these definite returns of 15-20% with proper risk management?

charlesdm 11y ago
As a simple example: the average return of the S&P500 over the last five years has been 16%. 2010: 14,82% 2011: 2,10% 2012: 15,89% 2013: 32,15% 2014: 13,52% 2015: 1,36%
- exclusiv 11y ago
  Good points on the tax benefits, however the S&P historically is about 10% over the long haul. 16% over the past 5 years is irrelevant. I have no control in the S&P. I have control in my company. I'd rather rise or fail due to myself than say - the market did this. I max a 401k for tax purposes and do state muni-bonds for safe, decent tax-free monthly dividend income while I decide what current or new business of mine to invest the cash in. The market is basically tax-friendly gambling.
- ryanwaggoner 11y ago
  That's six years, not five. And the annualized return (geometric mean, not mean) is 12.85%, not 16%. Worst of all, you picked a short outlier period to consider. If you instead look at the trailing ten years of Feb 2006 to Feb 2016, the annualized return is 6.3%, even with dividend reinvestment. And that's without accounting for inflation, making your real return closer to 4.5%. Bump up to look at the last 30 years and with dividend reinvestment and adjusting for inflation, you get about 7%. I think that's probably a realistic target to shoot for in the very long run (decades). Source: http://dqydj.net/sp-500-return-calculator/ http://dqydj.net/sp-500-return-calculator/

deleted 11y ago

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