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Why Do Investors Ignore Cash Sitting Idle In Their “Return” Calculations?

November 7, 2011 by PeterGreijn

Bryan, you have a formal education in financial matters that recognizes the “use of funds” and the “velocity of money” that impacts the investment returns. Most real estate people are not as financially astute, IMHO. The short of it is that ignoring stagnet funds can make the buesiness appear to be more successful than it is. At current rates paid on deposites, there is an ecomoic negative return.

It also requires returns to be viewed on a weighted time line and if you were to consider the economic impact of opportunity costs missed, many are not doing as well as they should be.

So, while a few of us can consider such aspects, it’s not worth the analysis.

I enjoy a good dinner party anyway…

BiggerPockets Forums

Filed Under: Investing Tagged With: calculations, Cash, Idle, Ignore, Investors, Return, Sitting, Their

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