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Investing in Alpacas is similar to other investments. An interesting
concept is "Alpaca Compounding". As you will see below, the longer you
wait to sell your Alpacas, the more valuable they become. If
you equate the female Alpaca to a "machine" used in the creation of
product, your Alpaca will generally create one new Alpaca each year, and
there is about a 50% chance that each birth will create another "machine"
which has a 50% chance of creating yet another "machine". At
the end of 5 years, you have most likely created 3 "alpaca manufacturing
plants" for each original Alpaca that you purchased.
This is a complicated topic, and we welcome the opportunity to talk to you
further.
Based on the assumptions on the previous page, your investment, after
ordinary expenses, would be as follows.
| Year |
Gross Value |
Current Expenses |
Cumulative Expenses |
Value After Expenses |
| Starting year |
$65,500 |
$5,540 |
$5,540 |
$59,960 |
| 1 year later |
$76,500 |
$7,395 |
$12,935 |
$63,565 |
| 2 Years Later |
$103,000 |
$10,590 |
$23,525 |
$79,475 |
| 3 Years Later |
$141,000 |
$16,430 |
$39,955 |
$101,045 |
| 4 Years Later |
$187,500 |
$23,525 |
$63,480 |
$124,020 |
| 5 Years Later |
$258,500 |
$27,655 |
$91,135 |
$167,365 |
If you decided to liquedate your entire herd at the end of this time, and
you did not have any sales expense, you would receive $258,500. Not bad
for a $50K investment. Your herd would consist of 10 bred females plus 5
juvenile females ready for breeding the following year.
You then would be able to deduct the cumulitive expenses of $91,135 .
Plus, you can deduct your original purchase price of $50,000 resulting in a net
profit of $117,365. The majority of this would be taxed as CAPITAL GAINS!
Of course, you could begin selling some of your investment sooner, in which
case your expenses would be reduced, but so would your potential profit.
If you kept the investment longer, you would realize even a greater profit
based on the Alpaca Compounding principle. You also may find that one of
your male offspring is good enough to be a Herdsire, allowing you to reduce
your breeding expenses and possibly make money from breeding fees. An
additional advantage is that you may go to Alpaca shows and events which would
also be considered an investment expense. If your Alpacas do well in the
show ring, their value increases dramatically.
Also, you may consider keeping your investment and selling all or a portion
of your 2 year old bred females each year. If you sold the expected 5
females produced each year that they became breeding age, you would have
ongoing income for years 6 and greater of $92,500 with expenses fixed at about
$27,500 giving you an annual income of $65,000 also taxed as CAPITAL GAINS
without having to reduce your alpaca herd.
Again, it's important to understand that despite historical averages, the
prices of Alpacas could either rise or fall, and you may have situations where
one of your investment animals does not conceive promptly or looses her baby
either before or after delivery, in which case the time that it takes to meet
your goal would be increased. Be sure to seek professional advice on any
investment that you may make.
Don't forget, unlike most investments, Alpacas are FULLY INSURABLE against
accidental death or theft.
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