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My question is this: Let's say i'm investing $10,000 into a business venture and it provides me a steady, growing rate of return through a quarterly dividend. At what point is it prudent to pull my original investment money out and spread it into another venture? -- Ramsees

It's prudent to pull the money out when you have - not "think you can find" - a better place to put it.

If you have severe doubts of the viability of the venture, a simple savings account may be a better place to put it. Likewise if you have an expected upcoming expense such that you'd really need to have the $10K highly accessible on short notice.

Keeping a certain amount of highly-liquid capital available for emergencies or unexpected opportunities is also a legitimate thing to do.

But "the market in general is doing even better" is not having a better place to put the money. First, identify what else - specifically - you'd like to put the money into. Which may be a broad-market index fund, but that's still a specific thing.
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My question is this: Let's say i'm investing $10,000 into a business venture and it provides me a steady, growing rate of return through a quarterly dividend. At what point is it prudent to pull my original investment money out and spread it into another venture? -- Ramsees

How many toothpicks does it take to fill this box?

See?

If you ask a question without providing sufficient information, the question cannot be answered. :)

Given the complexities of running a business and the specific variables associated with any one business, it explains another question: Why do consultants charge so much?

Rob
Rule Breaker / Market Pass Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
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Ramseesforever,

"At what point is it prudent to pull my original investment money out and spread it into another venture?"

There isn't really a defined time. There can't be.

You need to decide based on your specific portfolio of investments, your time line, your goals, etc. Some of these change from time-to-time.

If you are referring to Cramer's "Pull out your investment and play with the house's money" there is nothing that is more ignorant on his show.

There is no house when you are investing. The money invested is identical to the money paid in dividend and the capital appreciation. It is all yours.

If you are retired and have no new cash coming in, you use cash from sales and dividends to buy new companies. If you are working, you can add new deposits to that list.

Does that help you?

Gene
All holdings and some statistics on my profile page
http://my.fool.com/profile/gdett2/info.aspx
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If you ask a question without providing sufficient information, the question cannot be answered. :)

Didn't think it would be THAT difficult to answer, Rob, but that's fine. I guess I was looking for feedback based on the scenario presented. Should I take the mentality of never removing any of the profits and continually reinvesting my earnings? Should I take a percentage of my returns out and invest in other opportunities?

Ramseesforever
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Should I take a percentage of my returns out and invest in other opportunities?


Is conducting meaningful, quality analyses of the risk/rewards associated with these opportunities within your circle of competence?
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Didn't think it would be THAT difficult to answer, Rob, but that's fine. I guess I was looking for feedback based on the scenario presented. Should I take the mentality of never removing any of the profits and continually reinvesting my earnings? Should I take a percentage of my returns out and invest in other opportunities? -- Ramsees

Part of the problem is that you never presented a "scenario". There is no info to analyze.

But if you think there is enough info, I'm afraid I can't help you. Good luck.

Rob
Rule Breaker / Market Pass Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
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Part of the problem is that you never presented a "scenario". There is no info to analyze.

My question is this: Let's say i'm investing $10,000 into a business venture and it provides me a steady, growing rate of return through a quarterly dividend. At what point is it prudent to pull my original investment money out and spread it into another venture?


Ramseesforever
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Warren Buffett sayeth: "Never."
Why would you move from a growing rate of return to an unknown?
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My question is this: Let's say i'm investing $10,000 into a business venture and it provides me a steady, growing rate of return through a quarterly dividend. At what point is it prudent to pull my original investment money out and spread it into another venture?

You need to consider:
-How will the $10K be "pulled out?" In cash? Paid out at once or over time?
-What portion is the $10K of your overall portfolio and what portion of the amount you're investing in businesses (e.g., you're investing $100K in several businesses, and that's 10% of your one million dollars in all assets)?
-What amount of time can you spend vetting opportunities, and is the business/financial climate conducive to new opportunities?
-Are you trying to "build something" with the business, or are you just investing so the money has the best possible return?
-Are you passively investing in businesses in order to get a "steady, growing rate of return through a quarterly dividends," or are you contributing some business or management expertise to the venture?
-What is the "steady, growing rate of return through a quarterly dividend" and what is the likelihood of exceeding that in the new opportunity?
-How diverse or balanced is your array of businesses? Do you own interest in several kinds of businesses, or are they all IT companies? Or all consumer discretionary retail?

If the $10K of your example is one of ten similar businesses, you may do something different than if it's the only one. If you're getting a 2% dividend every quarter and it's growing, and there aren't any appealing opportunities, why sell?
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My question is this: Let's say i'm investing $10,000 into a business venture and it provides me a steady, growing rate of return through a quarterly dividend. At what point is it prudent to pull my original investment money out and spread it into another venture? -- Ramsees

My point is this: You cannot evaluate this as simply an income stream BECAUSE you are not accounting for any potential cyclic or macro economic needs from the business..... and it could not only eliminate the cash flow for a period, it may demand cash infusion to remain viable. That is realistic for any business.

If you ignore the idea that the business may NEVER need money or have a variable cash output, why not take all the money out now? Why not, your business doesn't need it based on the info to date?

I suspect I'm not the person you will want to discuss this topic with because we are approaching the problem completely differently and I doubt it will be resolved in a few notes back and forth. Good luck though!

Rob
Rule Breaker / Market Pass Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
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My question is this: Let's say i'm investing $10,000 into a business venture and it provides me a steady, growing rate of return through a quarterly dividend. At what point is it prudent to pull my original investment money out and spread it into another venture? -- Ramsees

It's prudent to pull the money out when you have - not "think you can find" - a better place to put it.

If you have severe doubts of the viability of the venture, a simple savings account may be a better place to put it. Likewise if you have an expected upcoming expense such that you'd really need to have the $10K highly accessible on short notice.

Keeping a certain amount of highly-liquid capital available for emergencies or unexpected opportunities is also a legitimate thing to do.

But "the market in general is doing even better" is not having a better place to put the money. First, identify what else - specifically - you'd like to put the money into. Which may be a broad-market index fund, but that's still a specific thing.
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