Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Can I profit with an 8% cost of funds?
Old 11-07-2015, 08:32 PM   #1
Recycles dryer sheets
Snidely Whiplash's Avatar
 
Join Date: Apr 2009
Posts: 178
Can I profit with an 8% cost of funds?

A family member has made available several million dollars at an 8% cost (interest only) over a very long term (years). I'm wondering if there might be a relatively easy / minimal risk way for me to profit with access to money with those terms. And I thought if anyone might have any ideas, this would be the place.
__________________

__________________
"Adversity does not build character, it reveals it." - James Lane Allen
Snidely Whiplash is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-07-2015, 08:48 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,927
Will there be problems if you don't pay it back? I can't see any low risk way to earn more than 8%....heck I can't see any medium risk way to earn that much.
__________________

Fermion is offline   Reply With Quote
Old 11-07-2015, 08:54 PM   #3
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Eagan, MN
Posts: 3,383
Yes. take as much as you can, and go to Las Vegas. The Roulette wheel will give you a 1-1 return if you bet black, or red. Hopefully you can avoid the '0' and '00' that are green.

Once you win a few times, you can pay back the debt. It's really that easy.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline   Reply With Quote
Old 11-07-2015, 09:00 PM   #4
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 43,360
Anything I can think of is either high risk, illegal or both.
__________________
Numbers is hard

Although rare, it is possible to read something on this forum you don't agree with and simply move on with your life

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 11-07-2015, 09:04 PM   #5
Thinks s/he gets paid by the post
zinger1457's Avatar
 
Join Date: Jul 2007
Posts: 1,595
Sounds like the family member could use the help of a good financial adviser. Handing over large sums of money to other family members to invest for them is a recipe for disaster in so many ways.
zinger1457 is offline   Reply With Quote
Old 11-08-2015, 05:58 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 4,185
Not sure I understand your question.

Are you saying that they will lend you several MM at 8%? If so, that sounds like a deal for them. For you...not so much.
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Old 11-08-2015, 06:29 AM   #7
Thinks s/he gets paid by the post
 
Join Date: May 2014
Location: Utrecht
Posts: 2,322
Are we talking USD 8%?

If principal needs to be returned and it needs to be legal, no. If either of those criteria can be relaxed, sure.

Plenty of ways.
Totoro is offline   Reply With Quote
Old 11-08-2015, 06:50 AM   #8
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,927
If you had access to $500m then I could make a pretty guaranteed greater than 8% return but it won't work with less. A mining company where I have purchased some junk bonds (12.5% coupon) has the bonds trading at 44% of par (so essentially they are paying 28% or so).

The company is struggling, like all mining companies are (they mine copper and gold) however they do make just enough to cover the interest payment, taxes, and other expenses. They have about $200m cash on hand, and $900m in bonds, with the common stock worth $100m. They have revenue from the copper and gold of around $380m a year with a operations cost of $270m a year.

Ok, so the plan is to slowly buy up the bonds at 40% to 50% of par with a good portion of the $500m while setting up a few entities to also buy up the common stock. When you own 25% or so of the common stock and 80% of the bonds, announce a plan to refinance the bonds at 8%. You will have turned the $500m into about a billion.
Fermion is offline   Reply With Quote
Old 11-08-2015, 09:35 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
calmloki's Avatar
 
Join Date: Jan 2007
Location: Independence
Posts: 5,603
In thirty odd years of buying and running rentals I think the only time we borrowed for less than 9% to buy property was when we financed our home to get a better rate than "commercial". Don't know that it would scale well - we were very hungry and willing to do a lot of work to make the borrowed money pay off. Investing millions in one fell swoop and hoping to do little work? Probably pretty tough, but I'd be doing hard money loans like mad and banking the 2-4% difference.
calmloki is offline   Reply With Quote
Old 11-08-2015, 12:18 PM   #10
Thinks s/he gets paid by the post
growing_older's Avatar
 
Join Date: Jun 2007
Posts: 2,659
So you are providing the "risk free" return of 8% for a long term loan. No thanks.
__________________

growing_older is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
(FAQ archive): Invididual Stocks vs. Funds/Active Funds vs. Passive Funds Nords Early Retirement FAQs 0 10-22-2007 03:07 PM
House profit saving virginia Young Dreamers 8 04-08-2006 10:34 PM
Easy Way To Find The Profit ag4gt Other topics 0 06-23-2005 06:40 AM
"non profit" healthcare providers racking up the dough cute fuzzy bunny FIRE and Money 7 06-09-2005 10:13 AM
Pension funds and Profit Taking Tadpole Other topics 6 01-10-2005 10:57 AM

 

 
All times are GMT -6. The time now is 06:45 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.