Return On Investment:
Are you getting the most return on
your money for the risk you are taking?
Many investors believe that if their stock portfolio shows an increase in total dollars in the account they are increasing their net worth. The fact is, if you have invested heavily in stocks, you may not be doing as well as you think. The real truth is that the stock market has only had two very profitable periods, in real terms, from 1950 to 1965 and from 1983 to 2000. The chart below shows the performance of the Standard & Poor's 500 stock-market index by decade from 1950 to 2009.
Price Change | Dividend Dist. Rate | Total Return | Inflation | Real Price Change | Real Total Return | |
1950's | 13.2 % | 5.4 % | 19.3 % | 2.2 % | 10.7 % | 16.7 % |
1960's | 4.4 % | 3.3 % | 7.8 % | 2.5 % | 1.8 % | 5.2 % |
1970's | 1.6 % | 4.3 % | 5.8 % | 7.4 % | -5.4 % | -1.4 % |
1980's | 12.6 % | 4.6 % | 17.3 % | 5.1 % | 7.1 % | 11.6 % |
1990's | 15.3 % | 2.7 % | 18.1 % | 2.9 % | 12.0 % | 14.7 % |
2000's | -2.7 % | 1.8 % | -1.0 % | 2.5 % | -5.1 % | -3.4 % |
1950-2009 | 7.2 % | 3.6 % | 11.0 % | 3.8 % | 3.3 % | 7.0 % |
Phrases like "one dollar invested in 1926 would be $3,000 today" are often heard regardless of the fact that a 1926 dollar has little relation with a 2011 dollar. To evaluate properly how much can be earned through investments in a long period of time, the effect of inflation has to be extracted from the picture. The fact is, it is impossible to project how your stock portfolio will perform in the next year, let alone the next 20 years. One thing is clear; the real total return for the last 50+ years is less than 10%, therefore, if the averages are an indicator, you are not going to get a ROI of over 10%!
Returns are a function of risk; typically the higher the return the greater the risk. Thirty-year government bonds are low risk with returns in the 3-5% range. The overall stock market is a more risky but produces an 8-10% return. Small or new businesses are considered the most risky, which is one reason why venture capitalists require average returns of 25-30%.
Established retail businesses typically produce ROI ranging from 140% to 180% depending on location and who you talk to. Retailers are not anxious to discuss profit margins and ROI with consumers. The general feeling I had, when visiting with friends and acquaintances operating retail businesses was that, if the public became aware of the ROI needed to operate a successful business, customers would feel that they were paying too much for the product. Most consumers have no idea how hard it is to operate a profitable small business. Even though I operated a small HVAC contracting business for 20 years, I still do not consider myself an expert on the subject. I was busier keeping up with the technology changes in pneumatic controls than with developing better business plans. One thing is clear; operating the typical retail sales business will net a higher ROI than investing money in stocks or bonds. Reaping this higher ROI will require you to invest a substantial amount of time and effort, either operating the business yourself, or overseeing the operation of the business by the manager of your choice.
Let’s explore another type of business that appears to be the way of the future. In 2010, direct selling companies generated over $125 billion in revenue in 150 countries through more than 75 million men and women. From March 2009 to May 2011, the top 7 publicly traded direct selling companies averaged a 268 percent increase in stock price. There is no doubt in anyone’s mind that the direct sales industry is a solid sector of the economy!
WHY SHOULD THIS INTEREST YOU?
Read on and discover how you and every person you know can benefit from the tremendous opportunity of the rapidly growing direct sales industry.
Direct sales is not a new concept; Amway, Mary Kay, Watkins, Herbalife … - need I say more! How many people do you know that have said things like, “I sure wish I’d got into __________ in the beginning” (fill in the blank with any one of several direct sales marketing opportunities that made a LOT of money for a LOT of people). My point is this – the opportunity to make substantial income in direct sales has existed for a long time. One thing has changed; it is easier to make money in direct sales NOW than it has ever been! WHY??? There are better marketing plans available to affiliates and multi-media opportunities mean you can grow your business nationally and internationally, while sitting at your desk with a laptop!
Back to ROI. The company I currently work with has a unique, cutting-edge business plan like none I have ever seen before. This business plan offers me the opportunity to participate in nationwide multi-media marketing AND is currently expanding internationally! My ROI, calculated over a five year plan, consistently figures to be over 300%.
Anyone of average intelligence and a willingness to consistently follow a simple business plan can accomplish what my wife and I have done.
If I were to quit working with my direct sales business today, I would earn residual income for years to come without ever even thinking about direct sales again.
NO I’m NOT GOING TO STOP ANYTIME SOON, the thought that I will be able to pass on a true legacy to my grandchildren is too compelling!
Anyone of average intelligence and a willingness to consistently follow a simple business plan can accomplish what my wife and I have done.
If I were to quit working with my direct sales business today, I would earn residual income for years to come without ever even thinking about direct sales again.
NO I’m NOT GOING TO STOP ANYTIME SOON, the thought that I will be able to pass on a true legacy to my grandchildren is too compelling!
