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Rates of Return

Don't Think Small On Investment Returns

Don’t think small, high rates of return can be achieved with good investments with minimal risk. These types of investments usually take longer to mature. High rates of return in short timeframes are the riskiest. So how much is a good rate of return? 5%, 7%, or 10% per year?

A Sample High Rate of Return

A moderately safe investment in property (with appropriate research by you) works similar to this :-

Buy a $400,000 property, 10% deposit plus fees comes to roughly $60,000 and you start with $40,000 net equity after the fees. For the sake of illustration after one year the property goes up 10% to $440,000. In one year you have made a gross profit of 100% on your deposit money or 67% on the total invested. Even if the property went up 5% you still made 50% on your deposit money. If it went up 10% the second year the new value would be $484,000 which would net you $124,000 gross or 310% on your initial $40,000. Of course there were $20,000 purchasing costs and selling costs plus taxes, but I think you get the idea.

Don’t think small, but know your risks – property downturns do happen.