Return on Investment

There are essentially two ways to invest in Alpacas. The first approach is to simply purchase the animals and begin raising them. The second approach is to purchase the animals and place them in the care of an established breeder. This arrangement for care and boarding of an animal on behalf of another is known as agistment.

Analyzing either method of investing in Alpacas requires making a set of assumptions. Determining the costs associated with raising the animals and how much they might sell for in the future are the basic elements used in projecting a return on the investment. The assumptions found here are estimates based on many breeders' experiences.

A major investment benefit of owning Alpacas is based on the concept of compounding. Savings accounts earn interest, which if left in the account, adds to principal. The increased principal earns additional interest, thereby compounding the investor's return. Alpacas reproduce almost every year, and about one-half of their babies are females. When you retain the offspring in your herd, they begin producing babies. This is "Alpaca Compounding." Tax-deferred wealth building is another "Alpaca advantage." As your herd grows, you avoid paying income tax on its increasing value until such time as you begin selling the offspring.

The following graph (NOT INCLUDED - SEE ACTUAL DOCUMENT) illustrates how a herd might grow in size over a ten-year period, assuming you begin with five pregnant females and two males. The herd growth depicted represents Alpaca compounding at work. The initial herd, beginning with seven animals grows to 126 animals in ten short years. Not many investments appreciate at the same rate.

There are two ways for an investor to turn the dynamics of compounding and tax-deferred wealth building into Alpaca investment profits. We'll call the first approach, "The Hands On Alpaca Investment." or the active management approach, and the second approach will be termed, "The Agisted Alpaca Investment."