Dear Dave,
In 15 months I’ll be able to buy in as a shareholder of my firm, about 1.5 percent of the company. I make $100,000 annually, and it will cost me three times my income, but it could increase my income by as much as $40,000 a year. I know that you discourage single-stock investing, but do you think this is a good idea?
Mark
Dear Mark,
This sounds more akin to a partnership than a stock. Basically, you’d be a minority shareholder in the business. That means zero power. Whatever money you put up could be lost, because the people running this business could decide to close up shop and you’d be powerless to stop it.
To me, this is way too scary. You’d be making a $300,000 investment that has no liquidity and that you can’t sell on the open market. I’d want to see at least 30-percent return on my capital in a situation like this, so I wouldn’t risk my money.
Keep your good job, but politely decline this shareholder offer. That’s my advice.
—Dave
* Dave Ramsey is America’s trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books. The Dave Ramsey Show is heard by more than 11 million listeners each week on more than 550 radio stations and digital outlets. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.
