Revenue Earning Investment by St Mirren

[Wendy Saintss]

 

12 hours ago, TPAFKA Jersey 2 said:

So obviously 300% (obvs 30% pa)  is a big number but these are institutional investments with massively risky strategies.  

 

6 hours ago, oaksoft said:

I must be missing something here. How does 30% p.a. return over 10 years give you a 3x equity multiple over 10 years when you include compound interest?

Ignoring the annual topup of a further £100k, I am working from the formula A = S(1+r)^n (A is the total amount in your account, S is the initial investment, r is the annual interest rate as a fraction of 1 and n is the number of years saved and I am assuming a single interest payment per year).

If I put 100k (S) into one of those accounts and r is 0.3 (for 30%) for 10 (n) years and leave it there, then A becomes just short of £1.4 million. In fact I seem to recall a rule of thmb that 14% interest approximately doubles your investment every 5 years so 30% will be well in excess of that.

Have I missed something?

 

You are correct oaky

(1 + 300%) ^ (1/10) - 1 = 14.87% per ammum

 

If I were one of these institutional organisations borrowing from TPAFKA Jersey 2, I'd be a bit worried!

Edited October 3, 2018 by Wendy Saintss

[oaksoft]

3 hours ago, TPAFKA Jersey 2 said:

No mate. The types of funds I deal with have two main measures of performance. Equity Multiple and IRR (internal rate of return). Equity multiple is just a straight calculation of “how much did I put in versus how much did I get back”, regardless of timescale. So in other words in the example I gave, the investor would have invested say £1m and got £3m back. IRR is a much more complicated calculation which incorporates the period of time that the investors money has been tied up for. At the outset investors only make a commitment to the Fund Manager for a certain amount. No money changes hands at that point in time. The FM will only drawdown that capital from investors in tranches as and when he sources investments. Those assets are then worked and sold off with the proceeds being distributed back to investors there an then. The length of time it takes to flip an asset varies massively and that’s what drives IRR.

The type of investment I think you are talking about, more of a retail type investment plan based on a portfolio of equities,  wouldn’t pay “interest” as such as it would be more geared towards capital growth than income. It would probably pay a modest dividend which the investor could choose to reinvest in the way you suggest. That say 5% growth that we were talking about though would mainly be capital growth and therefore wouldn’t be compounded. It would just simply be growth of your initial stake, and of course that 5% could just as easily be lost the following year, depending on the track record of the fund manager. The only portion that would be compounded would be the dividend portion and that would typically be a lot less than 5%. If equities oaid a dividend of 5% we’d all be investing in them. 

Wow with that first paragraph you lost me in a cloud of jargon. I am certain however that this is not what I am advocating.

I think you are wrong in your second paragraph. When you buy shares you don't just have capital growth. You also have dividend pay outs. I am calling this "income" but I'm not going to argue over names. The point is that both routes provide growth.

The compound bit comes as follows:-

If I invest £100k on day one and achieve 5% capital growth on my shares plus an average equivalent of 5% dividend (both of which are entirely at the low end of expectations and pretty modest, I will be sitting at the end of year 1 with somewhere around £110k. I am then going to re-invest all of that. After year two if I see another 5% capital growth plus another 5% dividend payout then that will be 10% total on the compounded £110k not the original £100k. If this is not compound interest in all but name then I'm at a loss. Again, I am happy with the arithmetic but my naming conventions are probably crap so follow the gist here rather than the specifics.

Of course in addition to the £10k I made after year 1 and re-invested, I am additionally adding another £100k investment for a total starting pot of £210k at the beginning of year 2. At the end of that year I'll be sitting with £231k. None of this sounds exciting unless you let time work its magic over 20 to maybe even 30 years.

At the end of that, providing you have competent people investing for you, you'l have a huge pot but I don't know how to formulate my earlier equation to include the addition of £100k each year.

[Wendy Saintss]

13 hours ago, TPAFKA Jersey 2 said:

In terms of the types of Funds I lend to, an exceptional return would maybe be a 3x equity multiple over maybe a 10 year cycle.  So obviously 300% (obvs 30% pa)  is a big number

 

4 hours ago, TPAFKA Jersey 2 said:

. So in other words in the example I gave, the investor would have invested say £1m and got £3m back.

If you got £3m back from a £1m investment then that would equate to a 200% return

£1m * (1 + 200%) = £3m

or

£3m / £1m - 1 = 200%

 

This would equate to 11.6% per annum

(1 + 200%) ^ (1/10) - 1 = 11.6%

Edited October 3, 2018 by Wendy Saintss

[oaksoft]

19 minutes ago, Wendy Saintss said:

Investing £200k per year at 5% compound interest would give £6,943,850 after 20 years, assuming the £200k was paid in advance.

It would be a bit less if paid monthly equivalent (as I assumed in my previous post)

Thanks. What formula are you using for that calculation?

I haven't worked out a general formula when you include a further injection of cash each year in additiona to everything else.

I should also say that the returns should be well above 5% if you include both capital growth and dividend payments and re-invest all of those as well although obviously you'd need to sell the shares to benefit from the capital gains.

[oaksoft]

2 minutes ago, Wendy Saintss said:

 

If you got £3m back from a £1m investment then that would equate to a 200% return

£1m * (1 + 200%) = £3m

This would equate to 11.6% per annum

(1 + 200%) ^ (1/10) - 1 = 11.6%

Well spotted.

[Callum Gilhooley]

6 hours ago, oaksoft said:

I must be missing something here. How does 30% p.a. return over 10 years give you a 3x equity multiple over 10 years when you include compound interest?

Ignoring the annual topup of a further £100k, I am working from the formula A = S(1+r)^n (A is the total amount in your account, S is the initial investment, r is the annual interest rate as a fraction of 1 and n is the number of years saved and I am assuming a single interest payment per year).

If I put 100k (S) into one of those accounts and r is 0.3 (for 30%) for 10 (n) years and leave it there, then A becomes just short of £1.4 million. In fact I seem to recall a rule of thmb that 14% interest approximately doubles your investment every 5 years so 30% will be well in excess of that.

Have I missed something?

 

4 hours ago, TPAFKA Jersey 2 said:

No mate. The types of funds I deal with have two main measures of performance. Equity Multiple and IRR (internal rate of return). Equity multiple is just a straight calculation of “how much did I put in versus how much did I get back”, regardless of timescale. So in other words in the example I gave, the investor would have invested say £1m and got £3m back. IRR is a much more complicated calculation which incorporates the period of time that the investors money has been tied up for. At the outset investors only make a commitment to the Fund Manager for a certain amount. No money changes hands at that point in time. The FM will only drawdown that capital from investors in tranches as and when he sources investments. Those assets are then worked and sold off with the proceeds being distributed back to investors there an then. The length of time it takes to flip an asset varies massively and that’s what drives IRR.

The type of investment I think you are talking about, more of a retail type investment plan based on a portfolio of equities,  wouldn’t pay “interest” as such as it would be more geared towards capital growth than income. It would probably pay a modest dividend which the investor could choose to reinvest in the way you suggest. That say 5% growth that we were talking about though would mainly be capital growth and therefore wouldn’t be compounded. It would just simply be growth of your initial stake, and of course that 5% could just as easily be lost the following year, depending on the track record of the fund manager. The only portion that would be compounded would be the dividend portion and that would typically be a lot less than 5%. If equities oaid a dividend of 5% we’d all be investing in them. 

 

33 minutes ago, Wendy Saintss said:

Investing £200k per year at 5% compound interest would give £6,943,850 after 20 years, assuming the £200k was paid in advance.

It would be a bit less if paid monthly equivalent (as I assumed in my previous post)

 

15 minutes ago, oaksoft said:

Wow with that first paragraph you lost me in a cloud of jargon. I am certain however that this is not what I am advocating.

I think you are wrong in your second paragraph. When you buy shares you don't just have capital growth. You also have dividend pay outs. I am calling this "income" but I'm not going to argue over names. The point is that both routes provide growth.

The compound bit comes as follows:-

If I invest £100k on day one and achieve 5% capital growth on my shares plus an average equivalent of 5% dividend (both of which are entirely at the low end of expectations and pretty modest, I will be sitting at the end of year 1 with somewhere around £110k. I am then going to re-invest all of that. After year two if I see another 5% capital growth plus another 5% dividend payout then that will be 10% total on the compounded £110k not the original £100k. If this is not compound interest in all but name then I'm at a loss. Again, I am happy with the arithmetic but my naming conventions are probably crap so follow the gist here rather than the specifics.

Of course in addition to the £10k I made after year 1 and re-invested, I am additionally adding another £100k investment for a total starting pot of £210k at the beginning of year 2. At the end of that year I'll be sitting with £231k. None of this sounds exciting unless you let time work its magic over 20 to maybe even 30 years.

At the end of that, providing you have competent people investing for you, you'l have a huge pot but I don't know how to formulate my earlier equation to include the addition of £100k each year.

 

11 minutes ago, oaksoft said:

Thanks. What formula are you using for that calculation?

I haven't worked out a general formula when you include a further injection of cash each year in additiona to everything else.

I should also say that the returns should be well above 5% if you include both capital growth and dividend payments and re-invest all of those as well although obviously you'd need to sell the shares to benefit from the capital gains.

I`ll bet my Brothel still makes more money than any of your schemes. 

[whydowebother]

I`ll bet my Brothel still makes more money than any of your schemes. 

If others were to join your investment, would they be sleeping partners ? Other than cash, will there be anything else injected to your scheme ? Would people be classed as playing away if they join you ?

I’d like to see your investment plan and projected returns

[Callum Gilhooley]

1 minute ago, whydowebother said:

 

If others were to join your investment, would they be sleeping partners ? Other than cash, will there be anything else injected to your scheme ? Would people be classed as playing away if they join you ?

I’d like to see your investment plan and projected returns

 

We`ll need to see cash up front and you get no guarantees anything will stand up in court if it goes tits up.

[DougJamie]

This really should be on The Rangers website as they have one every month

[Wendy Saintss]

31 minutes ago, oaksoft said:

Thanks. What formula are you using for that calculation?

I haven't worked out a general formula when you include a further injection of cash each year in additiona to everything else.

I should also say that the returns should be well above 5% if you include both capital growth and dividend payments and re-invest all of those as well although obviously you'd need to sell the shares to benefit from the capital gains.

Assuming payments are annually in advance its:

payment * (1 + interest) * (((1 + interest)^term - 1) / interest)

So, where the payment is £200k per annum and the term is 20 years you would get

200,000 * (1 + 5%) *  ((1 + 5%) ^ 20 - 1) / 5% = £6,943,850

 

Alternatively, just stick into a cash flow in a spreadsheet!

 

Edited October 3, 2018 by Wendy Saintss

[oaksoft]

2 minutes ago, Wendy Saintss said:

Assuming payments are annually in advance its:

(1 + interest) * payment * (((1 + interest)^term - 1) / interest)

So, where the payment is £10k per annum and the term is 20 years you would get:

(1 + 5%) * 200,000 * ((1 + 5%) ^ 20 - 1) / 5% = £6,943,850

 

Alternatively, just stick into a cash flow in a spreadsheet!

 

OK Thanks.

Yes, I'm using a spreadsheet but I still need to give a formula.

[Wendy Saintss]

3 minutes ago, oaksoft said:

OK Thanks.

Yes, I'm using a spreadsheet but I still need to give a formula.

Edited my post above, its £200k per annum obviously! And jigged my formula round to make it easier!

 

 

[TediousTom]

I have another

 

We could buy an old beat up van and send Cole Kpekewa, Cody Cooke and Jeff King out in it.  They could call it "man with a van".  Basically if you have anything needing picked up, taken to the dump etc then Kpekewa, Cooke and King could turn up and deal with it for a small fee. 

 

They could do garden clearances, even a bit of painting and decorating!!!!!

 

 

Edited October 3, 2018 by TediousTom

[St.Ricky]

3 hours ago, Kemp said:

Is anything happening with that?

I believe that Plans were recently announced to develop an area close to the M8 .. Don't know if this ties in. 

https://www.dailyrecord.co.uk/news/local-news/hotel-new-homes-could-transform-13299069

Sports Hub works well in Stirling. 

Swimming pool,  Ice Rink, Gyms,  Multi Use areas inside including Climbing Wall. 

Outside.. Various Football and Hockey Pitches. 

Cricket Ground. 

Football Stadium. 

Edited October 3, 2018 by St.Ricky

[DougJamie]

4 minutes ago, St.Ricky said:

I believe that Plans were recently announced to develop an area close to the M8 .. Don't know if this ties in. 

Sports Hub works well in Stirling. 

Was it Govan by chance...... Certainly needs a population transplant

[St.Ricky]

18 hours ago, oaksoft said:

OK I would put a minimum £100k per year into an investment scheme of stocks and shares for the club with all profits re-invested.

That £100k per year investment would be increased as finances allowed.

It would be a 10 to 20 year financial plan to eventually allow us to compete financially with the best in the country.

A very safe approach with deferred gratification and legacy at its heart.  Hard to argue with the sentiment or the logic even with the returns being open to discussion. 

Still possible to do without putting in an initial up front 

So.... How can we lever Grant and Soft Loan Funding to redevelop the Dome as some suggest into a mix of covered pitches and Bar / Restaurant / Meeting / Office Space? 

Ideas?

Worth remembering that we have formed a not for profit organisation with which we can collaborate. 

An additional plan to develop the area between the ground and the 7M8 Junction 29 was announced  recently. 

https://www.dailyrecord.co.uk/news/local-news/hotel-new-homes-could-transform-13299069

Edited October 3, 2018 by St.Ricky

[waldorf34]

3 hours ago, oaksoft said:

Wow with that first paragraph you lost me in a cloud of jargon. I am certain however that this is not what I am advocating.

I think you are wrong in your second paragraph. When you buy shares you don't just have capital growth. You also have dividend pay outs. I am calling this "income" but I'm not going to argue over names. The point is that both routes provide growth.

The compound bit comes as follows:-

If I invest £100k on day one and achieve 5% capital growth on my shares plus an average equivalent of 5% dividend (both of which are entirely at the low end of expectations and pretty modest, I will be sitting at the end of year 1 with somewhere around £110k. I am then going to re-invest all of that. After year two if I see another 5% capital growth plus another 5% dividend payout then that will be 10% total on the compounded £110k not the original £100k. If this is not compound interest in all but name then I'm at a loss. Again, I am happy with the arithmetic but my naming conventions are probably crap so follow the gist here rather than the specifics.

Of course in addition to the £10k I made after year 1 and re-invested, I am additionally adding another £100k investment for a total starting pot of £210k at the beginning of year 2. At the end of that year I'll be sitting with £231k. None of this sounds exciting unless you let time work its magic over 20 to maybe even 30 years.

At the end of that, providing you have competent people investing for you, you'l have a huge pot but I don't know how to formulate my earlier equation to include the addition of £100k each year.

Which one of you is Alan Wardrop our Director and Investment Advisor?

[waldorf34]

58 minutes ago, St.Ricky said:

A very safe approach with deferred gratification and legacy at its heart.  Hard to argue with the sentiment or the logic even with the returns being open to discussion. 

Still possible to do without putting in an initial up front 

So.... How can we lever Grant and Soft Loan Funding to redevelop the Dome as some suggest into a mix of covered pitches and Bar / Restaurant / Meeting / Office Space? 

Ideas?

Worth remembering that we have formed a not for profit organisation with which we can collaborate. 

An additional plan to develop the area between the ground and the 7M8 Junction 29 was announced  recently. 

https://www.dailyrecord.co.uk/news/local-news/hotel-new-homes-could-transform-13299069

The reason SMiSA went for GS  as partner was not just his initial investment  but he was going to increase the clubs income by coming up with positive ideas, we are still waiting!!

[Kemp]

11 minutes ago, waldorf34 said:

The reason SMiSA went for GS  as partner was not just his initial investment  but he was going to increase the clubs income by coming up with positive ideas, we are still waiting!!

Yep, we hear the odd "we would like to develop the ground" but I would have expected something to happen by now.

With the increased profile of being back in the Premier we should be making an ambitious plan to get funding to develop the whole area.

[Lord Pityme]

14 minutes ago, waldorf34 said:

The reason SMiSA went for GS  as partner was not just his initial investment  but he was going to increase the clubs income by coming up with positive ideas, we are still waiting!!

The fact that we are more than two years into BtB and not one single additional revenue stream has been developed should sound alarm bells to all..!

During my time at smisa I developed a number of potential additional revenue schemes that smisa, the club and the community could benefit from. Creating permanent jobs and training opportunities. All fell on deaf ears, including smisa schemes investing in their own cafe/bar through the £2 pot.

no one is interested! All they want to do is get their hands on smisa members funds, and pat them on the heid now, and then.

[pod]

4 hours ago, Kemp said:

Is anything happening with that?

No, because the council wants to knock down houses to built houses in the area. 

[St.Ricky]

1 minute ago, pod said:

No, because the council wants to knock down houses to built houses in the area. 

Is that the alternative plan that was announced recently?

[Cornwall_Saint]

Start a crowdfunding page to buy the club lots of Euromillions tickets every week. 

Lets say 3,000 Buddies chip in £1.25 each for the draw on Friday, then that's 1,500 tickets at no cost to the club. Any winnings go into a separate account and we only release the money every 5 years so it can build up.

That sounds a lot bloody simpler than what else has been said on here 

[St.Ricky]

28 minutes ago, waldorf34 said:

The reason SMiSA went for GS  as partner was not just his initial investment  but he was going to increase the clubs income by coming up with positive ideas, we are still waiting!!

So....let's come up with some!

[pod]

1 minute ago, St.Ricky said:

Is that the alternative plan that was announced recently?

Yes.