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Summary: In order to get money back on an investment to break even, the investor has to be honest with himself about how long he is willing to ride out a negative factor on an investment. Learn about the risks involved in investing with help from a registered financial consultant in this free video on analyzing investments.
Patrick Munro's affinity for investing and financial matters began more than 20 years ago with business education and service throughout the ranks of the banking, insurance and...read more
"This is financial advisor Patrick Munro talking about how to explain a break even analysis. When an individual places dollars into an investment, there is risk involved. And many times if the risk is set into motion and the investment is well thought-out, there's a reward as an outcome. However, if an individual puts that money, as a result of the risk, into the investment, and the investment begins to drop off as a result of the risk, it's a situation where the investor will find themselves facing time. The coefficient of time to get their money back to break even. So one has to analyze the investment for the risk that's there. The investor also has to be honest with themselves about how much time they would be prepared to ride out a negative factor on the investment just to get back to even, never mind making any profit. And this is how a financial adviser would explain a break even analysis. This is financial advisor Patrick Munro."