October 6, 2016

Financial Planning: Are your investment expectations realistic?


Would you place money in an investment if you were told you have:
(1) a 75% chance of not getting all of your money back, and 
(2) a 37.5% chance of getting NONE of your money back?

Photo Credit:  eastbaytimes.com

As recently reported in my local newspaper the East Bay Times, that is the average track record for venture capital investments into startup companies.  Which demonstrates the importance of prudent thinking and unemotional, realistic expectations before you invest.

9 comments:

  1. Wow, never thought the failure rate was that high.

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  2. So many of these startups are led by people with no business know how, playing with other people's money. No wonder most of them fail.

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    1. I read an article about just that concept recently, can't immediately recall in what publication. It highlighted how often startup founders are so focused on the product or concept that they often have no plan for realistic execution of the company, nor will they listen to advisors who try to provide prudent advice, advice that at times (or perhaps, often) conflicts with the founders' beliefs. In other words, they tend to surround themselves with like-minded yes men.

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  3. For the startups, always easier to play loose with money when your spending someone elses money.

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    1. Yes, it is definitely different when the money comes from your personal savings and credit lines. Different ball game entirely.

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  4. Speaking of hedge funds, interesting how much time Hillary Clinton has spent with them when she claims to be the savior of the middle and working classes.

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    1. Yes, much of Hillary's campaign time has been spent on ultra expensive per plate campaign events with very wealthy people (donors). Not to mention all of the 6-figure speeches she has given to the Wall Street crowd.

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  5. Most startups that use other people's money have unrealistic expectations. Remember webvan.com, and pets.com led by the sock puppet?

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  6. Wish I could go out and play with someone elses $$.

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