The Truth About Return On Investment Alternatives

Return on investment with business ownership is typically higher than the return on stocks, bonds and real estate.

Since we've been involved in the sale of thousands of different small businesses of all kinds, sizes, and prices, over the last 30 years, we have a unique data base of in-house information about what the typical buyer experiences in "Return On Investment" (ROI).

We have reports available for review showing the typical ROI for buyers, based on the buyer's investment, the annual cash withdrawals by the buyer of the business after the acquisition, and the equity build-up benefits to the buyer.

It is not uncommon for such investments to return from 25% to 100% or more anually.

Case studies will be provided upon request.

To see these analysis and reports, simply register with this site by clicking on "Register with FNBC", above.

PUBLICLY TRADED STOCKS
Traditionally, a popular place for discretionary investment dollars, stock market investing has become a less predictable place to safely store and grow money. It has seldom been an "investment dream" for most investors, contrary to the hype and propaganda. Of course, there have been "get rich" success stories, too.

And, some of us know of someone who has had triple digit returns, at special times, in special circumstances. Sure, it's also fun and interesting to read about someone starting a company in their garage and a few years later having their stocks in the enterprise be worth billions.

CASHING OUT OF STOCKS
We all know what a wild "roller coaster ride" the stock market has been. Up and down hundreds of points is proof that the stock market is a scary place to be. 

If an investor would reduce his position in stocks by cashing in some part of these investments, perhaps even gaining thereby some tax advantage by taking the capital loss, many people will conclude that this may a good time to reduce the percentage of investment dollars in stocks

ALTERNATIVE STOCK INVESTMENTS
The key to cashing out is what we do next with the money. Perhaps giving up on and cashing out of poorly performing stocks and reinvesting in other indexes or segments of the stock market, or in funds which might appear more likely to hold value is one alternative.

LONG TERM HOLDING STRATEGIES
Some advisors preach that "long term holding" of stocks is a wise strategy. We've always felt that the "buy and hold" approach has been misunderstood and miss-used by investors.

We are also convinced that the confusion has been created and perpetuated by the stock investment/mutual funds "experts" we read about in the national financial publications.

Throughout the history of the stock market, buying and holding good stocks for a lifetime, in solid, public "blue chip" companies, with consistent profit performance, competent management, strong market positioning and, perhaps, reliable dividends, was the way much true discretionary dollars/wealth was accumulated in this country.

Buying and holding equities in solid, profitable, well managed public companies was the original true investment choice that "buy and hold long term" was designed for. And it has worked well as a stock investment strategy for some investors.

HOLDING LONG TERM, THE WRONG WAY
What has gone wrong with that good advice is that it has been promoted to us as also a good strategy for investing in less worthy stocks.

Although the investing public had been similarly miss-led many times before recent times, it was sometime in the 1990's, especially, that the stock market industry "experts" became enormously successful in convincing huge quantities of ordinary people that it was safe and smart to "invest in and hold onto" stocks in companies with weak or non-existent profits and/or inexperienced or questionably competent management, speculative, "proforma-driven" record-keeping, and the dot-com and telecommunications and internet "potential" (some would now say… madness).

TRILLIONS OF DOLLARS LOST 
We now know that investing in those long-shots wiped out huge amounts of the retirement and savings resources of millions of Americans, when the performance of those companies inevitably couldn't live up to the hype.

Shamefully, the stock market industry convinced lots of people that they should "hold onto" those stocks, even when it was painfully obvious that holding on was incredibly risky.

That's the sin the stock advisors committed; failing to apply the reliable "buy and hold" strategy and convincing us to apply that strategy to high risk stocks. It's not the "buy and hold long term" philosophy that's wrong, it's in applying it to holding poor investments long term.

LOW YIELD ALTERNATIVES
Diverting stock investment cash-out funds to bonds, bond funds, CD's, money markets, and other low risk instruments deserves consideration, even with their brutally low yields. A low yield might look pretty good to an investor who has been "in the red" with stock investments recently.

HOW ABOUT REAL ESTATE?
You could cash out and invest in rental real estate, residential or commercial, which traditionally delivers approximately a 10% pre-tax return on original investment. Full time professional real estate investors seldom do any better than 10% ROI annually, on a consistent, year after year basis.

Some of them talk about "cap rates", appreciation and many other aspects of real estate investing, but, the definitive, impartial reports available say that real estate investors typically strive for achieving a 10% or so annual ROI, and consider themselves successful if they accomplish that goal.

INVESTMENTS WITH REASONABLY LOW RISK
C.D.'s, bonds and money markets are brutally low yielding. If you can average 5% or so annual pre tax yield, that's about as good as these instruments have historically produced. Much of the time, C.D.'s and money markets are even lower yield.

Of course, the great thing about these investments is that they generally also have low risk. So, everyone should probably have some of their portfolios invested in such low risk instruments. But not to the point of exclusivity, or inflation will erase most gains.

WATCH OUT FOR INFLATION
In fact, inflation is likely to rise, perhaps dramatically, over the next several years, as the US government "force feeds" the economy, and as businesses raise prices to cope with unusual times.

Also creating pressures for increased inflation is the fact that we've experienced such a long period of low inflation, which inevitably should return to annual 3% or so realities.

Therefore, low yield investments barely stay even, or, perhaps, throw off a percent or two return over inflation. With future dollars buying less value, when you cash in investments that have had low annual yield. It's possible these low yield investments could actually "go backwards" in value, over time.

WHAT TO DO NEXT...
Thankfully, for the sake of our country and economy, not all investors will be traumatized beyond reason by national events.

Plenty of wise, prudent, entrepreneurs will decide to expand and invest st this time. These investors and business owners are usually just as well-read, informed and concerned as timid folk, but feel more comfortable and confident in the present and future of our economy and our country.

We're talking about normal, every-day Americans, who choose to ‘stay the course', and continue engaging entusiastically in every day life.

Not just "captains of industry", but you and me, continuing to show up for work every day, taking care of whatever needs attention, including having the confidence and trust to be active consumers, home buyers, investors and small business entrepreneurs.

After all, we main-street Americans are truly the "heart"of the system. We've managed and struggled and coped with plenty of challenges throughout our history and prevailed. It's a basic in our culture.

In fact, some respected "old timers" in business tell us that many entrepreneurs do better in an economy with challenges, compared to "easy" times. Many risk takers, buyers, sellers and owners of businesses practice more energetic entrepreneurism in tough times.

They lower their costs, invest more aggressively, increase their marketing efforts, get "lean & mean" in the way they manage their investments and businesses. They also position themselves for the next wave of opportunities, and look to themselves for the solutions to their challenges, compared perhaps to the complacency which usually accompanies "no-brainer" economic conditions.


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