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There’s no reason on earth why anyone would consider having their money returned plus a mil a “bad investment,” even if they are a VC looking for 100x unicorn r
by gnu8 8y ago
There’s no reason on earth why anyone would consider having their money returned plus a mil a “bad investment,” even if they are a VC looking for 100x unicorn returns.
- fatihdonmez 8y agothere's also opportunity cost which you're missing. Average VC can invest limited number of startups. Instead of buffer They could invest some other startup which eventually exit with 100x
- kgwgk 8y agoThe reason is called opportunity cost.
- jedberg 8y agoI would. The whole point of a risky investment like that would be to get a better return. 10% per year is something I can get almost risk free, if I'm starting with $2MM.
- nodesocket 8y agoTell me about this 10% per year risk free investment? Owning S&P historically has returned 8% annual, by no means is risk free.
- jedberg 8y agoReal estate. There are plenty of multi-unit dwellings in the country with a 10% IRR. If you have a few million cash to buy one, you'll get 10% a year on the rent fairly risk free, depending on the market.
- timavr 8y agoFamily for 30 years in rental property business. Anything which involves rent is by far not risk free. Very cycle driven, heavy on litigation and management has to be perfect to make returns.
- jedberg 8y agoI’ve been doing real estate for about 25 years and haven’t seen much risk at all. Biggest risks have been vacancy and maintenance. Vacancy is solved by setting the right rent and maintenance is a 10% reserve fund. Also I said “almost risk free”. :)
- kgwgk 8y agoI don’t know what country you are talking about, but in many places there was a huge decline in real estate prices one decade ago. That would seem a big risk...
- charlesdm 8y agoReal estate is also illiquid. Would you prefer 10% IRR in property, or 8% IRR in the public market? I would personally pick the second.
- charlesdm 8y agoUse some moderate leverage I guess, i.e. 130% of capital.
- rcarrigan87 8y agoRisk-adjusted return