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generouslyteenagealpaca-blog · 6 years ago

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What kind of coverage do I need for my motorcycle insurance during storage months? It has a lien on it.?

"What kind of coverage do I need for my motorcycle insurance during storage months? It has a lien on it.?

I kind of already figured that I need to keep the full coverage. I guess what I wanted to ask is what parts of the coverage can I take off while the bike is in storage? Or can I just set all of it to the minimum? My coverage by the way is 140 a month.

BEST ANSWER: Try this site where you can compare quotes: : http://averageinsurancecost.xyz/index.html?src=tumblr

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im 18 (just) been drivin a year on mums policy no smashes no points no nothing i just sold my car and i been looking at honda crx's insurance turned round and said NO!!! grrr kill them. but yeah i got 1.5k to spend on a decent car with low insurance group? any ideas? cant really find a website that compares speed and insurance group, any ideas welcome thanks in advance!!!""

Cheap Car Insurance for my first car?

My dad owns it but hes giving it to me technically he wants me to pay insurance and I want something cheap, the majority of insurances say im underage to be reliable for it. I'm 17, is there a cheap insurance for my little chevorlate cavalier car?""

I am 19 and own a 1978 camaro in Michigan what would be the cheapest insurance company?

Will insurance points carry over to another company?

I have 9 insurance points. My mom is wondering if she signs me onto her policy, will the rates go up dramatically, or will they still be reasonable?""

How much would insurance cost for a 1990 pontiac firebird?

I am 17 and a new driver but I was going to buy a 1990 firebird and I was wondering what the average price I would have to pay for this car

Car insurance for teens?

i want to get a 2004 spyder eclipse two door, and i'm on my parents insurance (farmers insurance) because i'm 17, and was wondering if anyone knows about how much it will be a month.......""

What should i do to proof '' Health Insurance '' in Student Visa?

Hello, I am applying for a student visa, to study in Germany, one of the requirements in the Visa is to proof of '' Health Insurance '', And the another is Financial proof, I can understand the second one, But Can you tell me please WHAT SHOULD I DO TO PROOF HEALTH INSURANCE? thanks, in Advance:)""

What will my insurance company do about my car?

Last night we had server thunderstorms. There was golf-ball sized hail for about five minutes. I was parked on top of the garage. My windows are fine, but there are dents all over my car and my right side-view mirror is broken. My car is still in my mother's name, and the insurance company is State Farm. My parents are on a cruise right now and are supposed to be getting back tomorrow. I also go to UT and out-of-state school. I've heard other people on campus are getting new cars from their companies and others are just getting windows replaced. I haven't talked to anyone yet since the car is not in my name. My car is a 2001 chevy caviler. I don't know any of the details of the insurance policy.""

What is the california vehicle code for insurance?

Can you put a relative from another state on your insurance plan?

I live in North Carolina and my Dad lives in Texas. I am going to college close to my mother who current ly insures me. I am not going to have a car for probably 2-3 years, and will literally never drive my moms car when I am at home, but my mom is paying a large amount of money to be on her plan. The insurance people said that you have to be more than 100 miles away from her to be taken off because there is resonable doubt I would drive. I was wondering if state laws allow for me to be insured by my dads plan in Tx, if so, would it cost a lot to be on his? If thats not possible, is there anyway to be taken off my moms or to not be insured at all?""

How does car insurance work for teenagers?

Im 18 and I took Driver`s Ed last summer, so I know that was supposed to save some cash when it came to the insurance. I also heard that depending on the engine of the car, the insurance changes. How do you determine the insurance on a 6-cylinder and an 8-cylinder car? Thanks""

22yo motorcycle insurance?

I have a 125cc motorcycle and im 22 with my m2 and driver training but the cheapest insurance i could find is $2500 a year!!!!!!!!! Does anyone have anything better for a young guy???

How to get TD auto insurance quote in Ontario?

I am a new driver in Ontario with G2 licence. Never had insurance before. Got my G1in Oct. 2012 and G2 in Oct 2013. I am 33 years old married male. I have completed drivers' certification course. I don't have any ticket or any conviction. I am going to buy new 2013 Hyundai Sonata GL. I shopped online and with brokers too. All are quoting me around $320 - 350. I haven't heard anything from TD yet as they wanted me to give them written application to get a quote from them. (I don't know why?). I know TD gives cheap quotes, but I need to know an estimate. After submitting written application, I have to wait 3-4 weeks to hear from them. Can anyone be able to tell me how much will be TD's quote? (at least an estimate?) Thank you in advance!!!""

""I'm under GEICO in NJ. If every member of the family is insured, how much cheaper w/ safe driving course?

Three members in the family. How much cheaper will insurance get if we all take the Safe-Driving Course?

How Long Is A Car Insurance Quote Good For?

wanted to know

Does www.canyonlandsaz.com have the best auto insurance rates?

What is the cheapest form of auto insurance?

Why should the government force us to buy car insurance?

If its wrong for the government to force us to buy health insurance, is it also wrong for the government to force us to buy car insurance? I mean.... in both cases, if you don't have insurance and something goes wrong somebody else is going to have to pay for it.""

What kind of coverage do I need for my motorcycle insurance during storage months? It has a lien on it.?

https://www.linkedin.com/pulse/spalding-michigan-cheap-car-insurance-quotes-zip-49886-lisa-lowman/"

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retirementmillionaire · 7 years ago

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This ‘Obama Retirement Account’ Is Dead – Good Riddance

Seventy million dollars… down the drain.

The government wasted a massive amount of money with President Obama’s myRA retirement savings account. This week, the Treasury Department finally shut it down.

Good riddance.

The myRA accounts were structured like Roth IRAs, but with far fewer earnings for savers. The savings in a myRA could only earn the Treasury rate of return, which was extremely low. MyRA investors would have earned around 2% per year since the January 2014 launch.

In the meantime, the S&P 500 stock market index earned more than 40% with dividends reinvests (for 10.4% per year) – more than four times the myRA return.

As I wrote a few years ago in my Retirement Millionaire special report, “Double Your Returns in Just One Hour a Year,” these accounts simply won’t do for folks saving for retirement…

Missing out on the returns of stocks and bonds makes it difficult to build up a nest egg, especially with the constant threat of inflation. The promise was that these accounts could help folks with low income get started saving – but apparently they weren’t interested.

All told, about 20,000 folks opened myRA accounts… And participants only contributed $34 million. That’s right… the government spent $70 million to get folks to save $34 million.

Spending $2 to save $1 never works out in the long run. And another 10,000 folks opened an account and never contributed a dime.

If you did have a myRA, you can roll your assets over to a Roth IRA – a far better choice for retirement savers. Smart IRA and 401(k) decisions can mean the difference the between living a comfortable retirement filled with abundance… or just barely getting by in your old age.

If you don’t have an IRA or a Roth IRA, you’re leaving money on the table…

Opening one is as easy as opening any other brokerage account. You can do it with any broker. I like TD Ameritrade and Fidelity, but I’ve also heard good things about Interactive Brokers. Of course, we don’t have a financial relationship with any broker – we work for you.

When registering, you simply select either a traditional IRA or a Roth IRA as the account type…

A traditional IRA most benefits people who expect to be in a lower tax bracket when they retire than when they are working.

A Roth IRA works best for people in the opposite situation. If you expect that your taxes will be higher as a retiree than as a working person, a Roth is perfect for you.

We often recommend opening both a traditional and a Roth IRA if you are unsure what your tax situation will be in your retirement. That way, you get the benefits of both methods.

Alternatively, a more advanced strategy is to convert a traditional IRA to a Roth. You won’t need to pay income taxes on subsequent withdrawals, but you will need to pay a lump-sum tax when you do the conversion. This can get tricky, so we recommend talking with your financial planner about your options.

Opening an IRA will save you tens or even hundreds of thousands of dollars over just a decade or two of retirement savings. That’s the real benefit…

When you put money in a traditional IRA, you get a tax deduction for the initial deposit, and the government defers taxes on the money until you withdraw it, typically sometime between ages 59 and a half and 70 and a half.

Deferring taxes saves more than you think. If there are two people, each with $10,000, and one invests in an IRA while the other invests in a trading account and pays taxes, we can see the power of not paying taxes. After 30 years, the tax-deferred account will be worth $996,964. The taxed account will be worth $791,347. That’s more than $200,000 extra just by avoiding taxes.

If you’re not yet a Retirement Millionaire subscriber, learn about a special “One-Day Cash Event” that could get you cash in your mailbox before Thanksgiving… The last time the government did this (in 2012) you could have collected separate, one-time payments of $1,383… $2,844… and $3,620, while barely lifting a finger. Click here to learn how to get your “bonus check.”

If you’re a subscriber, read “Double Your Returns in Just One Hour a Year” right here.

Here’s to our health, wealth, and a great retirement,

Dr. David Eifrig and the Retirement Millionaire Daily Research Team

August 2, 2017

P.S. Want more of Doc’s insights delivered right to your inbox? Sign up for our free e-letter, Retirement Millionaire Daily right here.

#Obama #myRA #IRA #investing #Retirement Millionaire #doc eifrig #Roth IRA

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fesahaawit · 8 years ago

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Wealthsimple Review

Hey guys!

Just got wind that one of the more popular Fintech companies in Canada (Wealthsimple) opened up here in the U.S., and if my spidey senses are on point as they usually are, I think it’s going to be another great company to contend with in the investing space.

Outside of Vanguard, of course ;)

If you’re just starting out with investing and/or want a little more hand holding and automation, Wealthsimple may be worth looking into for you.

I’m not much of a Canadian connoisseur, but I’ve been following along their journey ever since they launched a killer blog which I am now GLUED TO (see below), and from all the awards and press they’re getting I definitely think they’re onto something.

Here are some of their latest blog posts – I dare you not to click on them! :)

Jon Hamm Would Like to Buy a Time Machine

Spike Lee Tells Us Why He Never Feels Bad Asking for Money

The World’s Most Famous Sword Swallower on Becoming the World’s Most Famous Sword Swallower

I’ve since watched more and more Canadian bloggers talk about them over time, and then start moving their own money over as well. Most recently, my good friend and Rockstar Finance helper, Cait Flanders.

She just moved $50k over from fellow Canadian company, Tangerine (they had higher fees and weren’t as transparent w/ their funds), and she was finally convinced to *automatically* start investing for the FIRST TIME ever in her life too (Cait!!!). I think she’s seen since seen the light though, after seeing the projections Wealthsimple showed her if she keeps it up ;)

Anyways, enough of an intro…

Here’s what they’re about, and why they’re worth a look in my opinion.

What Wealthsimple Does

In a nutshell, Wealthsimple is a financial company that helps you build a portfolio of low-fee funds (ETFs), without charging you an exorbitant amount to do so. Then they’ll manage it all for you, help you grow it, and offer advice along the way.

So pretty much a “robo-advisor”, just without any minimum balance requirements and set up to be as simple as possible. They won’t charge you for trades or rebalances or account transfers (in fact, they will PAY any of the fees you might incur from moving over your money elsewhere!), and their main mission is to get people of any age and net worth to feel comfortable investing.

Here’s more of the corporate speak off their website if you prefer that version :)

“We provide world-class, long-term investment management without the high fees and account minimums associated with traditional investment managers. We invest your money in a globally diversified portfolio of low-cost index funds modeled after the same Nobel Prize-winning research used by the world’s savviest investors.

Our cutting-edge technology helps you earn the best possible return on your money, while also lowering your tax bill. This means we do things like automatic rebalancing, dividend reinvesting, and tax loss harvesting—services that most people couldn’t afford until now or found too time-consuming and tedious to do on their own.

Our financial advisers are always available when you need them. They can help plan your financial milestones and answer questions you might have about potential risks or what sort of investment accounts you should have.”

And looking at some of their stats and recent awards, I think they’re accomplishing their mission:

They have over 20,000 clients now

Managing over $750,000,000 of their money

Was just named 2016’s “Best Financial Website” in the Webby Awards, as well as one of the Top 100 Most Innovative Financial Companies.

And have $50 million in backing from one of the world’s largest financial companies (Power Financial)

A Look at The Portfolios They Offer

So how and where do they invest everyone’s money?? They use a similar approach that other robo-advisors use, which is basing portfolios on “Modern Portfolio Theory” introduced by the Nobel Prize-winning economist Harry Markowitz. Who basically proved that you can minimize volatility (risk) and maximize reward (money!) by diversifying your investments.

And as a refresher, typically the younger you are the more aggressive you want to go for better shot of growing your pot (and having enough time to recoup losses from major crashes), and the older/more conservative you are the more you’ll want to skew towards investments set up to *preserve* your money more than grow it.

Though of course you also have to factor in a number of other variables like how comfortable you are with risk, what strategies you believe in, if you care about socially responsible funds or not, etc etc.

Here’s a look at the options they offer:

The Conservative Portfolio — You’ll see with this one *bonds* make up a bulk of the investments at over 70% because they’re the safest. But they also have the least returns, so those interested in growing their $$ over long periods of time probably want to shy away from this route (vs those getting closer to retirement and will soon be tapping their investments to live off).

The Balanced Portfolio — This one’s more even across the board, and probably the one most people start with when first dipping their toes into investing. You’ll get 50% stocks and 50%’ish bonds. Still wayyyyyy too conservative for my blood, but it is balancing more risk/reward than the previous option.

The Growth Portfolio — Then we have the one I’d personally put my money into if I weren’t all in VTSAX with Vanguard (which is even MORE aggressive as it’s 100% stocks ;)). With this portfolio of only 20% bonds and 80% stocks, your money is set up to grow much faster while at the same time lose money faster during all the downturns – which is a matter of *when* they’ll happen, not *if*. So again it’s EXTREMELY important to know what your comfort levels are and what you’re willing to risk or not.

Though keep in mind being “risky” with ETFs (which are GROUPS of funds – not just a single stock) already waters down the risk pretty heavily. So while you are still investing in stocks overall, it’s like investing in 100 different stocks vs just 1 main one like, say, Apple or Facebook. Which rise and fall much more sharply on any given day.

Lastly, we have the Socially Responsible Funds — these are the funds set up that prioritize the impact companies make on the world around us. For example, you won’t find cigarette or alcohol companies in here, nor maker of hairspray bottles :) Though I’m not totally versed in these, so good to check out what exactly these hold to make sure they align with your own overall goals. Pretty cool to see though how investing companies are catering to all types of preferences out there!

Okay, So Does Wealthsimple Cost?

Smart question – good job asking :) For the first year they will charge NO fees managing your money, as long as your portfolio is under $5,000. After that, they do start charging, but much less than you will see at other places (at least for *actively managed* funds – not doing it yourself).

Here are the two options they offer:

So it’ll cost more if you have less invested, and will cost less if you have more invested – pretty typical. If you’re already investing, check this with your own funds/firm and see how it compares?

As a reference, before I started managing my own investments I was paying anywhere from 1% to 3% in fees losing THOUSANDS over the years. And I’m a financial blogger!! (Albeit a pretty dumb one up until recently…). So wherever you put your money, just PROMISE ME you’re paying attention to all the fees you’re paying – they’re important.

Who Wealthsimple is For, and Who They’re Not For

Okay, so all that being said, here’s my personal opinion on who I think they’re for and who they’re not for. Since obviously not all Fintech is good for all situations (or people).

Who Wealthsimple IS for:

Anyone new to investing and just wanting to get started

Anyone who doesn’t want to spend the time researching on their own

Anyone who doesn’t want to spend time managing any of their funds

Anyone who’s spending exorbitant fees having other people/companies managing their portfolio

Who Wealthsimple is NOT for:

Anyone who wants to manage their own money

Anyone who wants the bare minimum fees due to managing their own money

Anyone who prefers picking individual stocks or other investing strategies like dividend investing (Wealthsimple only gives options for ETFs)

Anyone who isn’t comfortable managing their money online or via apps

Basically, you need to know yourself and your goals way before giving Wealthsimple, or any company for that matter, your business. My goal on this site is to show you a variety of avenues to help you pick the one that best fits :)

Other FAQs

Is money insured with them? Yup. Wealthsimple accounts have SIPC coverage up to $500,000. It doesn’t mean your money is safe from losing money, but it is protected if anything should happen to Wealthsimple. (I.e. they can’t use your money)

Is their technology safe? Yup. Similar to other apps/financial companies, they use state-of-the-art security measures when handling financial information.

What type of accounts can you open with Wealthsimple? Personal brokerage, Roth IRAs, Traditional IRAs, and SEP IRAs.

Do they have an app? Yes, for both Apple and Android – here are some screenshots:

(The shots feature Canadian retirement accounts above (RRSPs are like our 401(k)s I believe?) but the app works and looks the same in the U.S. version)

In Summary

Wealthsimple is the new kid in town, and they want to help you invest your money simply, no matter how little (or much) you have. And so far they look promising – but of course ultimately it only matters what YOU think :) My job is to just share the stuff I think is worth consideration…

You can learn more about Wealthsimple, and sign up, here: Wealthsimple.com

(Budgets Are Sexy readers receive a special $50 bonus when you open and fund a new Wealthsimple account, and another $50 bonus if you end up transferring enough to qualify for Wealthsimple Black. Just make sure to click & use that link above if you want it as it’ll track that you came from here)

If you’re one of our sexy Canadian readers, use this link instead :)

(Same bonuses apply)

******** PS: Did I tell you they had a good sense of humor too? :) The above is part of one of their older campaigns, haha… You might have caught their Super Bowl commercial “Mad World” too.

PPS: This post was in partnership with Wealthsimple, and just like with any other companies we love and promote on the site, the links above to them are affiliate links. Meaning we get compensated if you end up using them to sign up. You’ll also get a nice bonus as well, but regardless we only share stuff we think can help you or your wallet. Your trust and readership is much more important than a few extra bones, which you hopefully know by now :)

Wealthsimple Review posted first on http://ift.tt/2lnwIdQ

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heliosfinance · 8 years ago

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Wealthsimple Review

Hey guys!

Outside of Vanguard, of course ;)

If you’re just starting out with investing and/or want a little more hand holding and automation, Wealthsimple may be worth looking into for you.

Here are some of their latest blog posts – I dare you not to click on them! :)

Jon Hamm Would Like to Buy a Time Machine

Spike Lee Tells Us Why He Never Feels Bad Asking for Money

The World’s Most Famous Sword Swallower on Becoming the World’s Most Famous Sword Swallower

Anyways, enough of an intro…

Here’s what they’re about, and why they’re worth a look in my opinion.

What Wealthsimple Does

Here’s more of the corporate speak off their website if you prefer that version :)

And looking at some of their stats and recent awards, I think they’re accomplishing their mission:

They have over 20,000 clients now

Managing over $750,000,000 of their money

Was just named 2016’s “Best Financial Website” in the Webby Awards, as well as one of the Top 100 Most Innovative Financial Companies.

And have $50 million in backing from one of the world’s largest financial companies (Power Financial)

A Look at The Portfolios They Offer

Here’s a look at the options they offer:

Okay, So Does Wealthsimple Cost?

Here are the two options they offer:

Who Wealthsimple is For, and Who They’re Not For

Okay, so all that being said, here’s my personal opinion on who I think they’re for and who they’re not for. Since obviously not all Fintech is good for all situations (or people).

Who Wealthsimple IS for:

Anyone new to investing and just wanting to get started

Anyone who doesn’t want to spend the time researching on their own

Anyone who doesn’t want to spend time managing any of their funds

Anyone who’s spending exorbitant fees having other people/companies managing their portfolio

Who Wealthsimple is NOT for:

Anyone who wants to manage their own money

Anyone who wants the bare minimum fees due to managing their own money

Anyone who prefers picking individual stocks or other investing strategies like dividend investing (Wealthsimple only gives options for ETFs)

Anyone who isn’t comfortable managing their money online or via apps

Other FAQs

Is their technology safe? Yup. Similar to other apps/financial companies, they use state-of-the-art security measures when handling financial information.

What type of accounts can you open with Wealthsimple? Personal brokerage, Roth IRAs, Traditional IRAs, and SEP IRAs.

Do they have an app? Yes, for both Apple and Android – here are some screenshots:

(The shots feature Canadian retirement accounts above (RRSPs are like our 401(k)s I believe?) but the app works and looks the same in the U.S. version)

In Summary

You can learn more about Wealthsimple, and sign up, here: Wealthsimple.com

If you’re one of our sexy Canadian readers, use this link instead :)

(Same bonuses apply)

******** PS: Did I tell you they had a good sense of humor too? :) The above is part of one of their older campaigns, haha… You might have caught their Super Bowl commercial “Mad World” too.

Wealthsimple Review published first on http://ift.tt/2ljLF4B

0 notes

ronaldmrashid · 8 years ago

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Just Say NO To Angel Investing

After 10 years, my $60,000 investment in a private gin company finally paid dividends. Initially, given the company was sold for about $49M after expenses and I had invested in the company at a $10M post money valuation, I was thinking I had made a ~3X return ($180,000). Since over time shareholders get diluted with subsequent funding rounds, I thought that was a reasonable assumption.

Well it turns out I didn’t even get a 1X return! Instead, here’s what I got:

Gross Proceeds: $98,425.88 Federal Withholdings: $0 State Withholdings: $6,523.82 Net Proceeds: $91,902.07

What the hell!? After almost 10 years, with $98,425.88 in gross proceeds, I only made a 64% return on my money. Further, I had ZERO liquidity and lost hope for years that I’d ever get my $60,000 back. Doing the math, I only made a 5.1% IRR.

So where did all the money go since the company was sold for 5X what I bought in for? Based on an internal document I received, we had to pay a lot of banker, lawyer, escrow, accounting, and general administration fees. We also had to pay severance packages to all the employees (rightfully so) who were made redundant when the parent company, Gruppo Campari took over. But there most be something else I’m missing, which I’ll investigate further in due time.

The positive part of this story is that I consider myself LUCKY to get any money back because most startups fail miserably. Before Campari announced the acquisition, I had already written off the $60,000 because shareholders had never gotten a dividend and the growth target dates kept on getting pushed out. My concern was the company would turn into one of those zombie companies with just enough growth to maintain EBITDA break even, but never enough growth to become an attractive acquisition target.

When the purchase price was announced, my write-off expectation transformed into greed. And now with the payout, my greed has turned into selfish disappointment.

Why You Should Not Angel Invest

Now that the stock market has gone up every year since 2009, everybody thinks they’re investing geniuses. I’ve got so many people asking me whether they should invest in some random, moat-less private business. You just can’t lose if you put money to work right? This is exactly what I thought in 2007 when I invested $60,000 in the gin company and bought a $715,000 condo in Lake Tahoe. Then the world came to an end.

Here are the reasons why you shouldn’t angel invest:

1) You have ZERO edge. The other day I had sashimi and sake with a Sequoia Capital partner. Sequoia Capital is one of the best VC companies in the industry. It has made billions backing Apple, Google, Oracle, Paypal, YouTube, Yahoo!, and Whatsapp. The partner said Sequoia shoots for a one win, seven loss hit rate. In other words, to follow Sequoia’s ratio you’ve first got to be willing to make eight bets of similar size. Further, you’ve absolutely got to be willing to lose money on 87.5% of your investments and hope that one deal is at least a 10 bagger!

The best VC firms get all the first looks. They have some of the brightest people spending 50+ hours a week reviewing company after company. Oftentimes they see information about competitor companies that enables them to evaluate who will likely come out ahead. They also talk to their fellow VC industry colleagues about what other companies and other VCs are doing. In comparison, you and I get no looks. Instead, we only get the companies that have been rejected by the VCs. Talk about an unfair advantage.

2) Your money is more sacred than other people’s money. Being a VC is the best job ever because you get to make a $250,000 – $350,000 salary and make investments using OTHER PEOPLE’s money! Further, you can earn your base salary for 8-10 years before feeling pressure to prove any returns because that’s how long fund holding periods are.

As an angel investor, you’re putting your own money on the line. In order for me to follow Sequoia’s model, I would have to personally make an investment total of $480,000 at $60,000 each in eight unproven companies. Other VCs with worse returns have a 1:9 win:loss target, meaning I’d have to make a $600,000 investment to try and make money. Even if we’re allowed to invest only $25,000 per deal, most of us won’t be willing to risk $250,000 worth of capital in venture.

3) Your stake will be diluted away. As a minority investor, you have no say in management decisions or funding rounds. If the company starts getting desperate for cash, they may offer sweetheart deals to future investors at your expense. One such sweatheart deal is called liquidation preferences.

For example, assume a venture capital company has a 2X liquidation preference after investing $1,000,000 for a 50% stake in the company. The founders own 30%, and you, the angel investor, owns 20% after investing $100,000. If the company is sold for $2,000,000, you might think you’d be getting $400,000 back. In reality, you’d get $0 back because the VC gets paid 2X their initial $1,000,000 investment during the liquidity event. Meanwhile, the founders also get $0 back as well!

Just realize that whenever your private company raises a new round of funding, your stake will get diluted by 20% on average.

4) You have zero liquidity. Goodness forbid you need the money to cover an emergency during a typical 8-10 year holding period. So sorry! You will never get your money back unless there is a sale or IPO. And given ~90% of companies fail, and 9% of companies end up barely staying alive, you will likely never get your money back even if you waited 50 years.

At least with public investments in stocks and bonds, you can get your money back within three business days.

5) The returns aren’t even that great! For all the sexy talk about venture capital investing, for the typical VC and angel investor, the return is truly dismal. We’re talking median 0%-2% returns a year from 2001 until now. The mean (arithmetic average), however, is more like 8% during the same time period due to the massive success of the top VC firms.

Check out some great charts that demonstrate my point.

The top 20 firms (out of approximately 1,000 total VC firms) generate approximately 95% of the industry’s returns according to Wealthfront. Further, nobody can participate because the funds are way oversubscribed.

Here’s an old chart that shows how VC returns were awesome in the 1990s, and have since fallen to ~0% in the 2000s due to too much money chasing too few deals. The lines continue to hover around the 0% market up until 2017.

Here’s another chart showing that 64.8% of US Ventures return just 0 – 1X your money over a 10 year period. In other words, best case scenario for 64.8% of the VC funds, you only make a 7.15% IRR over 10 years with zero liquidity.

Three Saving Graces For Investing

Although my gross proceeds from my $60,000 investment is only$98,425.88, apparently I don’t have to pay the full federal taxes on my $38,425.88 gain under the Qualified Small Business Stock (QSBS) Act.

Beginning in 2015, for the first time since its enactment in 1993, Sec. 1202 allows noncorporate taxpayers to exclude from federal income tax 100% of the gain on the sale of certain qualified small business stock (QSBS), limited to the greater of $10 million or 10 times the adjusted basis of the investment.

To qualify for the exclusion, five criteria generally must be met:

1. The stock must have been directly acquired via an original issuance from a U.S. C corporation (Sec. 1202(c)(1))

2. Both before and immediately after stock issuance, the C corporation’s tax basis in gross assets did not exceed $50 million (Sec. 1202(d)(1));

3. The C corporation and shareholders must consent to supply documentation regarding QSBS (Sec. 1202(d)(1)(C));

4. The C corporation conducts certain qualified active trades or businesses (Sec. 1202(e)); and

5. The stock must have been held for more than five years (Sec. 1202(b)(2)).

Well what do you know? My investment in the gin company back in 2007 meets all these qualifications. All I have to do is pay California state tax, which I’ve done. But of course, there’s a catch. My investment needed to have been made after 9/28/2010. So in reality, I only get about a 43% tax savings (see chart), which is better than a dumbbell on a toe.

The other saving grace of this deal is a performance bonuses. If the gin company achieves several sales targets over the next several years, investors get to earn a 50% bonus on our returns equivalent. For me, that equates to an additional $49,213 of upside. I won’t count on it, but it’s nice to know it’s there.

The final saving grace is that locking up $60,000 saved me from potentially wasting my hard earned money on something wasteful like a fancy car or even more expensive vacation property. I had a lot more desires as a 29 year old than I do now.

Despite the QSBS tax benefit and upside bonus, I still don’t think anybody should angel invest. If you absolutely must, you can take 5% – 10% of your investable capital and make some unwise investments to help friends and family. Just expect your money never to return.

Related: Recommended Net Worth Allocation By Age Or Work Experience

Brushes With Angels Of Death

As I reflect upon my investment, I was foolish to invest $60,000 in a 28-year-old first-time founder with no experience in the spirits business. But he was my friend and I admired his drive and hustle. He told a great story: “We’ll do to gin what Skyy did to vodka and blow the category up!”

Now my friend, who is 38, is worth $5,000,000 – $7,000,000 before taxes and is taking a well-deserved break before starting a new venture. If you are a founder, and people are throwing money at you, take it! Just make sure there are no nasty covenants in place. It’s so fun to get rich off of other people’s money. No wonder I like real estate.

Money I thought I’d never see again!

To conclude, here are a couple more close venture investments I was so close to making:

Circa 2011, I could have invested $100,000 in a company called Triggit, a Facebook ad retargeting company that was growing like crazy. I played poker with the founder all the time and at one point, my investment would have been worth ~$1,000,000. I was kicking myself in 2014 for not taking the risk in a business I knew pretty well as an online media business owner. Then out of the blue in 2015, Triggit got taken under by Gravity4. Employees got zilch, and I’m not even sure the founders got anything.

Then there was a company called Bento Now, an Asian food delivery company I was considering investing $25,000, also in 2015. I wanted a deal in exchange for helping promote their product, but they said demand was too great for them to negotiate. It was run by an ex-blogger I knew who ended up raising ~$1.5M from several well known angels. Then one day in the fall of 2016, I was listening to the Gimlet Media Startup podcast and heard they had spent $70,000 more than they realized in one month! A few months later, the company shut down.

Given I didn’t lose $125,000, does that mean I gained $125,000 and can therefore splurge on whatever I want?! Please say yes! Venture investing is seriously risky business. Don’t risk anything you can’t afford to lose. With my “windfall” of $98,425.88 gross, I plan to do some more landscaping and add the rest to my Hawaiian dream house fund.

Related: Advice For Startup Employees: Sleep With One Eye Open

Readers, anybody have any positive angel investing outcomes they’d like to share? Please feel free to share the bad outcomes as well.

from http://www.financialsamurai.com/just-say-no-to-angel-investing/

#Financial Samurai

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