People have become creative in how they invest for their retirement. In this week’s video Betty has taken charge in financing her retirement future. Betty decided to breed Alpacas as a way to fund her retirement. A once unimaginable method quickly became a viable option to prepare for Betty’s retirement. In this week’s reflection, team B will identify a capital improvement and discuss ways the improvement will improve Betty’s business. Capital Improvement
The initial investment of $56,000 to purchase the alpacas proved a good investment for Betty. To continue the success, capital improvements, “the addition of a permanent structural improvement or the restoration of some aspect of a property that will either enhance the property’s overall value or increases its useful life,” can be made to increase value (N.A., 2015). An example of a capital improvement for Betty’s alpaca business is the addition of a new barn with the two new baby alpacas born and desire to continue growing the number of animals on the farm. Each barn typically houses seven to ten alpacas to keep them protected from environmental elements. Benefit of Capital Improvement
Betty’s investment of another barn would increase the number of alpacas that she can house and bread, thus increasing her return of investment. Another benefit to this capital improvement plan is that the more barns she is able to build over time can make her business very profitable. In this video, Betty mentioned that she had used half of her 401k; a capital improvement plan would give her a systematic evaluation of overtaking incorporating multiple barns into her business plan. Once she does this, Betty will no longer have to fear about dipping into her 401k to survive after retirement. A capital improvement plan for any business allows business owners the opportunity to plan a schedule and identify options for financing the plan (N.A., 2015).
N.A. (2015). Investopedia. Definition of Capital Improvement. Retrieved from http://www.investopedia.com/terms/c/capitalimprovement.asp#ixzz3WUSsCsJJ