Standard return on investment

[spencerxi]

What is fair?

Is there such thing as a standard return % and time frame?

Investments would be in the 5 to 10 thou range

thanks

[jasaunders]

No, there is not.

[DIANNE]

Hi
AS you are looking for investment, I would like to suggest you to invest in real estate... It’s the best way to get good returns. From it you can earn some extra income too. If you can arrange more amounts you can do good investment.

[spencerxi]

Hi
AS you are looking for investment, I would like to suggest you to invest in real estate... It’s the best way to get good returns. From it you can earn some extra income too. If you can arrange more amounts you can do good investment.

That wasn't my question at all! Thanks for the tip, I'll get right on it.

[fishy1]

It depends on the risk of course, higher risk means higher reward. Personally, I'd keep away from real estate currently, the market is falling and predicted to fall further in pretty much all sectors.

[Sanjeevan]

ROI

"It depends on the risk of course, higher risk means higher reward. Personally, I'd keep away from real estate currently, the market is falling and predicted to fall further in pretty much all sectors"

Not only is fishy1 right there is also many things you have to consider not only the risk and the status of the investment its self but consider if your funds are available immediate or delayed this may if funds are immediate you maybe able to mediate your return on investment (ROI) to a higher %. Usually a rule of thumb in the private market of investors is the banks GIC and Mutual fund programs offer a secured 3%-12% return so most private investment offers 12% is fair starting ROI and the higher capital required and the riskier the portfolio and pitch you can get up to 60% ROI this is highest aloud by legal limitations.

[akula]

What is fair?

Is there such thing as a standard return % and time frame?

Investments would be in the 5 to 10 thou range

thanks

well, yes but not really...

the correct terminology for "standard rate" is either the "hurdle rate" or the "market rate".

the market rate is the long term return of indicies such as the S&P500. in other words, the market rate of return for equities is about 11%, the market rate for debt is about 5% and there are lots of other benchmark rates for other kinds of investments, such as tech startups, real estate, or hybrid securities

the hurdle rate on another hand is the rate of return that's required by investors to meet their cost of capital. for example, companies listed on nasdaq typically find that their cost of capital is 30%. this means that if the company's securities yield less than 30%, they will be dropped by people who bought them. in that sense, the "standard rate" of return (i.e. the hurdle rate) for anyone investing in these companies would be 30%.

from a start up perspective, it usually works like this. you are an entrepreneur (E) and you need 10k from an investor (I) to get your company off the ground. the investor has options - he can put his money into debt for a risk free return of 5%, or invest in a broad equities index for an expected return of 11% (subject to variance), or invest in a specialised index (such as China) for an expected return of 20% (with even higher variance).

alternatively, the I can give the money to E where the variance of projected returns would be even higher (because of the unique risk factors relevant to seed stage, unlisted securities). to compensate for the increased variance, the investor will have to have a hurdle rate which is higher than the market rate for listed equities. typically, this rate will be 40-50%, depending on the kind of startup we're talking about.

in that sense, in terms of selling returns, the challenge for entrepreneurs is to correctly identify the market rate of return for seed stage unlisted equities, find investors who have a hurdle rate that matches the market rate of return for these kinds of specialised investments, and then successfully pitch investors internal rates of return (IRRs) which match the investor's hurdle rate