I am a big believer in using index funds along with 401Ks, etc for investing. However I am expecting a good amount of money to come in the next year with the sale of an invention and a business. I was thinking about taking this money (maybe as much as a few million) and leveraging up by buying another business with a niche. My understanding is this business would return 8-15% annually due to it's niche no matter where the economy is at. It would take very little work for me to own/oversee as long as I have the right staff in place. Plus it would stay profitable for many years.
Here is the breakdown of my example. If I took the money (2 million) and invested it in the stock market, I could earn maybe an average of 5-7% annually going forward. So 7% on 2 million is $140,000 per year.
If I took the money and bought the business, I would use the 2 million as a down payment. Then I would have to take out a loan for 6 million to cover the remaining cost. With a 8-15% return, it would take possibly 8 years to pay off the loan. Then I would be earning that amount in profit.
What would you guys do? I am 37, not married with no kids. Living a high end life is not that exciting to me. Although I would like to travel a good bit and do some more volunteering. Is it worth the risk which I think is minimal? Although the stock market is still a risk as well.
Here is the breakdown of my example. If I took the money (2 million) and invested it in the stock market, I could earn maybe an average of 5-7% annually going forward. So 7% on 2 million is $140,000 per year.
If I took the money and bought the business, I would use the 2 million as a down payment. Then I would have to take out a loan for 6 million to cover the remaining cost. With a 8-15% return, it would take possibly 8 years to pay off the loan. Then I would be earning that amount in profit.
What would you guys do? I am 37, not married with no kids. Living a high end life is not that exciting to me. Although I would like to travel a good bit and do some more volunteering. Is it worth the risk which I think is minimal? Although the stock market is still a risk as well.