Can your bank outperform CityGuru-Drew Morrison in a five year period?

One investor recalls Drew Morrison’s pitch in 2010 how mutual funds were fast eroding along with the economy. According to Morrison, money invested in mutual funds and languishing in an IRA account could be put to better use if invested in an entrepreneurial pursuit where the returns were limited only by one’s risk tolerance.

Coming out of such a bullish economy as that of the 1990’s, most investors feared little like that of their savings eroding over time due to investment under-performance. This same investor was no different: Under-performance was more of her concern than Time itself.

Yet, today, she realizes the only thing worse than Under-Performance of an investment over Time—is an investment that does not perform at all over Time.

Even worse than the mutual funds of the day, as an investment performer, was the humble Bank Savings Account. But in some cases Father Time seems to work best with the most humble as our investor proves with the illustration below.

Comparing the fate of her IRA savings to what might have been since making her investment with Drew Morrison in 2010, she astutely demonstrates the importance of Time to any investor.

Assume you’re a new investor. You have $30,000 in a self-directed IRA account and you want to make the most of your money. You have a decision to make.

Hometown Bank
Offers you a Certificate of Deposit (CD) in return for your money. They will pay you 0.05% in annual interest, compounded on a quarterly basis in return for the use of your money for five (5) years.

CityGuru-Drew Morrison
Offers you a “ground floor” opportunity which he claims is already attracting the attention of larger companies who are certain to buy out his company at a premium price. But considering all this wooing from bigger companies, CityGuru shares are undervalued and poised for a phenomenal Initial Public Offering (IPO) that is likely to “happen soon”.

Admittingly, the term is uncertain, but considering so much buzz around Drew Morrison’s startup company, delay seems like folly. The pay-out is equally uncertain–but it is sure to far exceed anything you can make with a Bank. Sure, there will be a period of Time that you may not see any return—but the reward to risk ratio is worth it!

Your Investment Decision:
You may be new at investing, but you do understand the importance of doing your Due Diligence. Only, in this case, there doesn’t seem to be quite enough time necessary for full up Due Diligence. However, to prevent full exposure to risk, you decide to divide your investment funds. $15,000 is wired to Drew Morrison while the other $15,000 is used to purchase the Bank’s CD. Now, Father Time takes over.

Fast Forward Five Years:

RISK FACTORS CITYGURU, INC. THE BANK
Autopsy-Pay-Out
• Principal
• ROI/Earnings
• Total

• $0.00
• $0.00
• $0.00,
Pay-out still pending

• $15,000
• $4,230.56
• $19,230.56
Money in hand; ready for re-investment
Autopsy:
Return on Investment

0.00%
Unknown at worse; Speculative at best

1.3%
Not much; but guaranteed.
Autopsy:
Interest/Dividends

$0.00

$4,230.56
Autopsy:
Term

Indefinite
Another 5 years is very likely.

5 Years
Autopsy:
Liquidity

None
Funds were expended upon receipt


24 Hours or less;
Early withdrawal penalties apply
Autopsy:
Risk

$15,000 + any return

None.
$15,000 + return Guaranteed.
Autopsy:
Insured?

No

Yes, FDIC.
Autopsy:
Financial Reporting

None

Monthly Account Statements
Autopsy:
Accountability

None

Industry/Govt. Audits
Autopsy:
Lost Opportunity (*)

5 Years and growing

Subject only to Early withdrawal Penalities
(*)”Lost Opportunity” Costs refer to the period of time your money is unavailable to you due to illiquidity of your money to pursue bigger; better investments. Unless interest/dividends/earnings are sufficient, the costs of Lost Opportunities can be quite high.

The Hindsight of Today:
In the autopsy report above, our investor certainly did not make a fortune with her bank—but she did walk away with her money soon enough to try again in other investments that might prove to be more lucrative.

As with all investments, the past does not guarantee or imply future financial performance of any opportunity. The same can certainly be said of the CityGuru-Drew Morrison venture today. They cannot be judged by its startup infancy, and Drew Morrison certainly promises far more in the future to come.

For now the lessons-learned demonstrate that some things should never change with an investor. Regardless of the sense of urgency, no investment opportunity will pass you by so fast that you can’t perform a thorough Due Diligence. And, it seems too good to be true…well, you know the rest. Stop, take a breath and chat with Your Advisors

Use your virtue of patience on the time it requires to identify the right opportunity for YOU—rather than waiting on the opportunity to finally give your money back.

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