[Dus10]

Would investing a small amount of money ($6000~), and getting an 8% return in the way of a 30~ year annuity sound good to you? I am going to be writing a business plan and I will be looking for investors. Basically, I am looking for about 9 investments of $6000~ in an LP that I would be the general partner. All investors would be limited partners and would be bought out over time. It would be similar to the way a mortgage works. Does this sound like it would work? 8% is pretty good for such a small investment.

[Karen]

It could work, just make sure you address all the legal issues since you are dealing with several people.

8% is not bad on a $6000 investment.

Karen

[GSchubert751]

depends on how long the investment is. 8% of 6000 is 480 if you get that over a year thats ok return.

[Dus10]

Like I stated before, it would be amortized like a mortgage (a reverse anuity). So it would be over 30 years, but they can pull out sooner if they wish (as long as a suitable replacement investor is found, or I buy out their investment myself). You can do a search on google for amortization tools. For the first year, they would be paid $528.31, where $50.12 would be the amount of their prinicpal they have been returned, and $478.19 would be the amount of Interest they would have earned. The amortization tool I use is a spreadsheet for excel. They are great. It lets you know on every payment, what is prinicipal, what is interest, what will happen overall if you make an early payment, etc. And that is how they would be paid, because that would be part of the contract.

[edit] Also, they would never compound interest, so they could take their earnings and put them in a savings account or an IRA or something. It is still very good though, because you are getting a return that more than doubles inflation. This would be a good investment if you have a child and you want to save money for college.[/edit]

[deleon]

I think it also depends on the risk involved. I mean 8% with a solid bank deposit would be excellent, but the same return with a higher-risk investment would, well, be less excellent

A lot of banks offer 7-8% for a long-term deposit (6-12 months I think) in Australia too.