Today, investing, without a doubt, is one of the most profitable legal ways to earn money. Unfortunately, such an occupation requires the presence of seed capital, which, of course, is quite difficult to raise. For this reason, a few years ago, such a business was available only to people who have on their accounts amounts with many zeros after one. But now the situation has changed a bit. Due to the growing number of Internet users, the network audience is attracting more and more attention of financiers. New services are being created that allow combining small amounts of many users for their subsequent investment in a large project. Thanks to this method, even private investors who do not have substantial capital can enter the financial market. Due to this, businessmen who need a sponsor now have much more choices than ever.
What is investing?
Investing involves the transfer of equity to assets for the purpose of subsequent passive capital appreciation. The objects of the process are usually property as well as intellectual values. Do not confuse this concept with business, since here participants do not directly work with their investments, but can only enter and withdraw them, if such is provided for in the contract. The only exception may be the case when the organizer invests in his own enterprise, thus closing the chain. Also, this concept often means a loan from a private investor, issued with or without collateral.
Personal and economic investments
Despite the fact that the concepts of personal and economic investment are very close, there are certain differences between them. The second investment involves an increase in assets in the form of equipment, as well as other things and objects needed in production. Personal sponsorship, such as a loan from a private investor, is more like a bank deposit, where a profit is paid monthly or at the end of the term. Such investments can be made both in private activities and in the enterprise. In the latter case, they will acquire properties similar to economic injections of funds.
Differences between investing and investing
It should be understood that investments can only be called such investments in which the cost of the sponsored object is constantly or in increments. Also, they will not be savings aimed at reducing or repaying debt. Otherwise, such a process will not be an investment.
Types of Investors
When looking for an investor, it is worthwhile to understand that in each of the areas there are narrowly focused specialists who know perfectly how their funds will be used. For this reason, it is recommended that you familiarize yourself with their views. There is a separation according to many criteria, ranging from the type and object of investment to the time frame of the process.
Individual investors
Individual private investors are people who invest their money in so-called securities. Most often these are shares of various enterprises. It is worth noting that an individual will be called an investor not only in the case of buying securities with personal funds, but also receiving them as an inheritance, gift or as a result of an exchange.
Such investments were popular in the early nineties, when all residents of the post-Soviet space became the owners of vouchers - privatization checks.Nevertheless, the failed domestic experience in buying shares in the United States acquired a completely different character. There he remained very popular today.
Unfortunately, this type of investor requires high costs for an advertising company and is suitable only for large enterprises.
Corporate Investors
There is another type of investor called corporate. For them, investments are not the main activity, but rather serve as an additional method of earning, which helps to increase financial flows. The principle of work here is based on the fact that corporations allocate temporarily surplus funds to purchase securities or other assets. Enterprises usually invest in liquid stocks, that is, those that quickly pay off. They allow capital not to stand idle and increase the company's funds. For this reason, searching for investors among corporate clients makes sense only to a rapidly developing business.
Income and risk
Profitability and investment risks almost directly depend on each other. Financial investments relative to profit, can be divided into four categories. The first is a non-profit investment. Of course, any investment is made for profit, but here it can be expressed not in monetary terms, but in a positive social or environmental effect. Next are low-, medium- and high-yield investments. These types are mainly distinguished by their risks, often increasing in direct proportion to profits. In order to easily receive money from a private investor, first of all, it is necessary to determine one of the above categories. This will save time by cutting off the wrong type of depositors.
Liquidity ratio
An essential factor by which private investors can decide on investments is the degree of their liquidity. The highest level is held by investments, converted into a monetary equivalent for a period of one month. This is followed by medium-liquid investment. This type takes time frames within six months. In turn, the low-liquid form requires much longer periods than the previous one. There is also the concept of "illiquid investments." It means that this type of investment cannot be realized without additional support.
Type of ownership
Investment areas of influence also have a separation regarding forms of ownership. The most common is the category formed mainly by individuals or legal entities. The following is an area created exclusively by institutions that are sponsored from the state budget at various levels. There is also a mixed category, in which finances are invested by both state and private investors.
Reasons for investing
Rarely does anyone have a question about the reasons for investing, since the answer is almost obvious. Those who already have sufficient amounts for investments, want to get even more. But to the question: “Why do we need to increase our cash reserves?” - everyone should answer for himself. For some people, increasing finances becomes something like a game, a peculiar way to make themselves known to the whole world. For others - a means of earning entertainment and travel. Also, do not miss the opportunity for investors to pursue intangible goals and invest all their profits in charity events. There is an opinion that making money is easiest for the second, and especially the third type of people. You can completely disagree with him. The basis of any business is a clearly defined goal, and since all three types of it become profit, the result will depend only on the professionalism and perseverance of each of the people.
In the modern world, a person who wants to achieve success does not stop at the norm of five working days a week. A growing number of people, especially in the CIS countries, are no longer working for retirement, realizing that their existence will be more like survival. Now it’s worth thinking in a new way and organizing a cloudless future for yourself. For this reason, even not too large private investors are ready to give large amounts of debt. Thus, both parties with due dexterity will be able to provide each other with good financial opportunities.
Where to find an investor?
Getting a loan from a private investor for a novice entrepreneur is the key to business success. To the question of where to find him, there is no single right answer. Searches must be carried out, connecting all available resources. The popularity of investments has led to the fact that now both private and state funds are opening in this direction. Potential investors may be citizens of the same state where the entrepreneur resides, or foreign individuals or legal entities. Private investors giving loans quite often turn out to be relatives, colleagues or friends. Trust relationships between the two parties to the transaction are optimal in terms of mutual benefits, ensuring the effectiveness of both business and investments. But if a private investor, without collateral giving funds, is not found among friends, the search will need to continue. Fans of paper business publications are advised to pay attention to the pages where thematic ads are published.
Private lending investors also place their banners on various finance related sites. By switching to such resources, it will be possible to familiarize yourself with the detailed sponsorship conditions directly on the network. Interesting for a small classic or network business will be sites that provide online lending. The disadvantage of such companies are high interest rates. For this reason, private investors giving loans without collateral directly in the network ensure business growth only in conditions of high liquidity of the enterprise.
Bank loan
Banks can also act as private investors, but, unfortunately, this type of sponsorship is not suitable for all enterprises. Only for not very large projects will this be an acceptable option. A bank loan secured by real estate is issued for a period of 3 months to 10 years and requires monthly repayment in equal amounts or according to the classical system, with interest on the loan balance. Its amount will be 0.8% of the estimated value of the collateral. Accordingly, like many private investors, banks give loans only to people with stable earnings, whose age ranges from 21 to 65 years.
Private loan
The need to use a loan from a private investor may arise for various life circumstances. But in any case, it is recommended to conduct an Internet search on sites that have been tested and have been on this market for a long time. Many resources have official Internet pages where you can immediately apply for financial support. In most cases, loans are approved, providing the ability to transfer money in various ways convenient for the client. A loan from a private investor has its advantages, since to receive it is necessary to provide only a passport and a phone number. Often, the financial history of the client at banks is not taken into account.
What you need to know when searching
Obviously, the first step of experts in relation to an enterprise in need of a loan will be a detailed analysis of its activities. Specialists will be interested in both profit and sales. During this process, business assets are carefully examined, and accounting and management reporting. When financing large-scale projects, there is a practice of dividing a loan between several borrowers. This is justified by the fact that a private investor, without prepayment, usually gives out amounts not exceeding 40 thousand dollars. If we are talking about more funds, the lender will require a security deposit. As it may be the property of customers.
One of the main conditions for investing is a clear and well-developed plan for subsequent work and business development. When preparing an application for a loan, you will need to describe in detail the direction of future spending of issued funds, since this is primarily what private investors will require. The security, if necessary, should be evaluated by independent experts specializing in this type of property. By presenting a sufficient amount of well-developed documentation, a future or existing company will attract investors on favorable terms without any problems.
