[dsacco]

> This is one thing most people don't understand. If someone is selling you a financial instrument with >6-7% annual returns, it's as ridiculous as someone selling you a time machine or the cure to death.

That's actually pretty achievable using market neutral strategies. Considerably higher is also achievable, you just can't really access them unless you have a lot of capital. However, 6-7% per month would be much more suspicious and should be an immediate red flag.

[ikeboy]

In my industry (e-commerce, sell on Amazon FBA) my biggest bottleneck is funding and I'm able to generate triple digit yearly returns on capital. It's gotten to the point I sometimes carry a balance on credit cards at 20% rates just to get more inventory.

But of course it's not quite comparable, it's extremely time / labor / logistics intensive, it's hard to put large amounts of money to work, and risk is high (can diversify across different products and categories but will always be some risk).

If you make 20% ROI and turn inventory every 2 months, that's a 120% return per year and very doable. A popular factoring company in the space, Payability, is charging an effective ~200% APR on funds (2% of gross sales for an average of one week to advance 80% of net, simple factoring math). That should give you an idea of the kind of returns people are making on capital, if the companies that finance them can ask for and get triple digit effective interest rates.

But it's not something you can put $100 million into. If you look at the bigger companies doing this, they have much lower returns (e.g. etailz sells ~150 million a year, profit of 3 million, they carry inventory in the 15-20 million range - so something like 20% net ROI per year).

If someone told me they were making 6-7% per month selling inventory direct to consumer, I'd consider it average, probably room for improvement.