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38yo and longing for FI
Old 01-27-2012, 02:21 PM   #1
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38yo and longing for FI

Hi. I am a 38 years old, married with two young boys. This is my first time posting on the site. A little about my financial situation. I started my own business about 4 yrs ago and things are going really well right now. At this point I have a net-worth of just over 3.7M am hopeful to be over 4.5M by the end of the year. I am currently pulling in over a million a year, but feel that the future of my business model is under threat due to legislation and other forces outside my control. Unfortunately, selling it is not really realistic as I don't think I could get any reasonable offers. I have no debt other than my mortgage which is a 10 yr fixed at 3.25% (about 380k left on it), so I'm in no hurry to pay that off. I live well below my means, as I know that the sunny days won't last forever.

Now about my investing style, I absolutely abhor the stock market! I don't understand why people feel like that's their best opportunity to get a good return. About 80% of my investments are in private equity deals, commercial real estate opportunities. The other 20% (401k, 529) which make up my stock portfolio are almost exclusively in commodity based investments, precious metals, energy, agriculture, as an inflation hedge. I own no bonds, as I believe they make no sense for me, especially with serious inflation looming around the corner.

The bottom line for me is this.. I only want to invest in things I have some control in. I have zero control in anything on the stock exchange. I might as well throw darts at a dartboard. If you work on wall street, fine, I can understand being in the market. I do not want to be an outsider playing an insiders game. I can understand that some of you may think that my portfolio is too risky. I will say this, though, the biggest asset we have is time, not money. And I am not a fan of the Dave Ramsey's or Suzie Ormans of the world. Ramsey didn't become a multi millionaire by paying down debt and making 3% a year over 30 years in mutual funds. Who really cares if you're the richest guy in the nursing home? To me, wealth, real wealth, really only comes from entrepreneurial pursuits. That is why, such a large portion of my portfolio is in private equity deals. I realize that many of the investment vehicles that have been open to me are not available to everyone, and that I am very fortunate. I hope none of this comes across as rude, and i realize everyone has different financial goals and needs, and different ways of reaching their goals. I would love some feedback regarding my views. Many thanks.
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Old 01-27-2012, 02:43 PM   #2
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I would love some feedback regarding my views. Many thanks.
I don't agree with a number of them, but you appear to have it all figured out for yourself. There are many roads to financial success and what's right for one person is totally wrong for another. Congratulations if you've found what works for you.

Best of luck in your investments and continued business ventures.
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Old 01-27-2012, 02:55 PM   #3
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You say that you are longing for FI. By the end of the year you'll have $4.5m. That would be FI for most on this site - congratulations.
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Old 01-27-2012, 03:08 PM   #4
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Anyone who is pulling in a mill or more a year can invest their money any way they wish...

Just saying that the vast majority of people out there can not... there is NO way they ever could.... so the Ramsey and Orman style (I don't really follow them, but hear enough to know that for a lot of people following their lead is better than some others) is the best way to go....


What would you think a business that can pull in $1 mill is worth You said you could not get a good offer... just wondering what you think one is... BTW, do you have employees etc. or just you?
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Old 01-27-2012, 03:09 PM   #5
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Thanks for the kind words. I will say this though, with greater success in business, comes much greater stress. (Lawsuits, tax season, employee issues, etc.). Sometimes I feel like I have a giant bulls' eye on my back. Despite the stress, however, I do enjoy what I do. Maybe I'll consider ER in 5-10 yes.
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Old 01-27-2012, 03:18 PM   #6
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I have two other partners who started the business with me. The business made over 5M in profit last year. We have roughly 25 employees. I'm questio able that our business can maintain it's profitability going forward. To answer your question TexasProud, the business is only worth what someone would pay for it. I'm not sure how many buyers there are out there. Truth be told, I would be happy to sell it for 10mil, take my share, and walk off into the sunset. Maybe start up a new company. But, it's definitely hard, especially when you have relatonships with employees, are friendly with their families, etc.
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Old 01-27-2012, 03:22 PM   #7
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At this point I have a net-worth of just over 3.7M am hopeful to be over 4.5M by the end of the year.

...

...And I am not a fan of the Dave Ramsey's or Suzie Ormans of the world.
Suffice it to say that you aren't in their core demographic...
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Old 01-27-2012, 03:40 PM   #8
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I have two other partners who started the business with me. The business made over 5M in profit last year. We have roughly 25 employees. I'm questio able that our business can maintain it's profitability going forward.
Your business is worth the present value of its future profits. Are your partners in a financial position to buy you out and operate the business without you?
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Old 01-27-2012, 03:57 PM   #9
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I have two other partners who started the business with me. The business made over 5M in profit last year. We have roughly 25 employees. I'm questio able that our business can maintain it's profitability going forward. To answer your question TexasProud, the business is only worth what someone would pay for it. I'm not sure how many buyers there are out there. Truth be told, I would be happy to sell it for 10mil, take my share, and walk off into the sunset. Maybe start up a new company. But, it's definitely hard, especially when you have relatonships with employees, are friendly with their families, etc.
Last time the (manufacturing) company I worked for was valued, the rule of thumb was 7 x earnings, and that wasn't far from the eventual JV $ we went through. But it depends on what industry among other things...What's your business worth - really? (not that it's this simple, just for those who don't get involved in company valuation).
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Old 01-28-2012, 08:41 AM   #10
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How much do you need to live your FI life? If you have enough today, maybe the next step is to define your work exit and retirement entry plan.
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Old 01-29-2012, 06:23 PM   #11
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If I had your net worth I'd be on a beach in Tahiti right now. Why long for what is already in your hands?
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Old 01-30-2012, 01:23 PM   #12
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To me, wealth, real wealth, really only comes from entrepreneurial pursuits.
Real wealth is living in gratitude, IMHO. That said, one of the fastest way to accumulate (or lose) a lots of MONEY is entrepreneurship.
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Old 01-30-2012, 04:56 PM   #13
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Real wealth is living in gratitude, IMHO. That said, one of the fastest way to accumulate (or lose) a lots of MONEY is entrepreneurship.

Completely agree.
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