Reasons to Invest in a Company
While there are many ways to invest your money, investing in a company is among the most potentially profitable. Every investment carries some risk, and investing in a company is no different. However, investing in a company can be a good idea for a number of reasons, whether it takes the form of a stock purchase or an investment in a small business that isn't traded publicly yet.
The primary reason that most investors choose to invest in companies is to profit by waiting for the value of their investments to grow. The most common way to invest in a company is to buy stock, which represents a portion of ownership in the company. As the value of the company rises, or as demand for its stock rises, so too does the price of each share you own. Buying for a relatively low price and selling once the price rises is how stock market investments make money for investors.
Investing in a company can provide an ongoing source of income. This occurs when you invest in a company by buying dividend stock. Dividend stock is a type of stock that pays out a quarterly cash payment to owners for each share they hold. Investing in a company by buying dividend stock means you'll receive four payments each year, which you can use to pay your living expenses or fund other investments while you wait for the share price to rise until you want to sell.
Diversification of investments refers to putting your money into several different types of investments to spread out your risk and improve your chances of earning profits. If you already have investments in the form of savings accounts, real estate, collectibles and certificates of deposit, investing in a company is one way to diversify your portfolio. Even if you don't want to put much money into stocks or small businesses, placing some of your money in a company with the potential to grow is usually a good idea.
Control and Support:
Investing in a company also has the benefit of giving you some measure of control in the business, as well as a means of supporting its operations. In an initial public offering, or IPO, a company sells stock for the first time and allows investors to provide the cash that it needs to grow in new directions. Owning corporate stock also allows you to vote at the annual meeting, where important leadership and policy decisions are made. Investing in a small business may keep it afloat during its difficult first years, allowing you to fund a company you believe in until it can become sustainable and profitable on its own.
Why Invest with any Investment Companies?
With few exceptions, companies seek investments into their company to finance land purchases and the creation of master plans in an attempt to make the land more valuable. Land development is sought to be financed through a sale of equity in private offerings directly by a project entity. Financing of our construction activities is usually structured either through sale of warrants or various forms of debentures.
Companies only seek investments to originate and perform the projects under their management and control. This makes very sense, because companies can generate more profits.
As general rule of thumb using land investment as example, companies allocate approximately 80% of the proceeds for purchase an underlying asset (a land) and 20% of the proceeds for creating the master plans of development of such land into properties and communities, aiming to achieve the land value appreciation within 1-5 years. These companies believe this allocation of investment proceeds provides their investors with leverage, while creating grounds for their stock price to increase when trading on open market.
Are you putting your money to work for you?
Most conservative investment vehicles, including stocks and bonds just aren’t performing very well these days. On average, the stock market returned 8.8% per year between 1929 and 2011. However, investing in the stock market is extremely volatile: You can expect anywhere between -8% to +18% on any given year. To get a sustained 8% or higher return, you have to invest in 20-year chunks.
Most investors choose to ride out the volatility by combining stock investing with fixed income assets, most commonly bonds. Yet the returns are so low today that you’re really not making any money after taxes, inflation and management fees. And even the bond market isn’t safe, with the US dollar in flux and the EuroZone flirting with collapse.
An 8% Return, Guaranteed, Plus Equity!
What if you could get a guaranteed 8% return on your investment, plus equity? That’s what few companies are offering for select investors. When you invest in those companies, you must assure they are contractually bind to pay you at least 8% a year.
What Are the Risks?
Every investment opportunity with above average return involves some degree of risk. The question is: How much risk are you taking on? And does the added return offset the risk? When you invest your money, your must ensure your risks are minimal because you’re investing in the parent company and not any individual venture. A hand full of companies have a wide variety of enterprises across different industries. That means even if one business gets in trouble, the company as a whole can support and sustain that business. And even if one business faces trouble, you’ll still get paid, because your investment is with the parent company.
In short, invest with a company that you know you will get at least 8% and they will guaranteed such return on your investment and a 100% security in your investment. If you get that, it’s an absolutely killer investment opportunity.
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