At the heart of every human being irrespective of nations, cultures, social status, religious affinity, and several other pluralities lies the desire to live rich every day of their lives beyond the fundamental pressure of existence. However, this is a reality only to a minority few with more than 80% across the globe wallowing in penury. This article therefore is aimed at showing you the best way to invest money, in order to flow into that kind of a living enjoyed by a minority of the world’s population. This article will espouse on the various types of investment, the best ways to invest money alongside its associate components for a deeper understanding on how to get rich through investment. The essence of this is to enable you zoom into the breadth and depth of investment thereby making you rich all round and in all seasons. A lot of interesting and enlightened facts which you would not like to miss out are explained explicitly in this article. It carries startling revelations that will usher you to that long desired place of living the purpose driven life that you have always dreamt of.
What is an Investment?
The term investment is as old as the human society itself. Way back in the stone age, ancient age, middle age before the advent of the contemporary times, the term investment has been operational. This is factual because there exists the bourgeois class scattered across the globe that picked steam since the fourteen century because of the concept of investment in application but whose spheres of influence are still very active right up-till-date. Their successors who took after them also kept the trend of riches ongoing through keeping to the principles of investment. As each century passes, the investment patterns changes and this is where a whole lot of us have to pay keen attention. We have moved from the pre-industrial age, industrial age and the post-industrial age where we now belong. As such, anyone who sees himself/herself a wealth creator, as well as living a rich life each passing day must be updated to know the best way to invest money or what to invest in.
An investment can thus, be defined as an asset or item that is purchased with the hope that it will generate income or will appreciate in the long run. In the business sense, an investment is the purchase of goods that are not consumed today but are used in the future to generate wealth. In finance, investment is a monetary asset purchased with the idea that the asset will provide income in the future or will be sold at a higher price for a profit. That is, the term investment can be used to refer to any mechanism used for the purpose of generating long term income. In the financial sense, this constitutes the purchase of real estate properties and bonds. Furthermore, the erection of building, production of goods in order to stimulate other goods or other facility used to produce goods can be seen as different types of investment. This implies that, taking an action in the hopes of raising future revenue such as deciding to take on additional studies with the objective to assimilate more knowledge and improve skills in the hopes of producing more income can all be regarded as various types of investment.
Moreover, investing involves the purchase of assets with the intent of holding them for the long-term. From the meaning of investment explained here, one can attest to the fact that to live a daily rich life as well as to go beyond oneself by stretching out to others, is a matter of; first choice, second mindset, third commitment, fourth delay gratification and fifth prudence. As simple as these five words appear, yet they have the potency to bring you to the place of viability.
Additionally, an investment bank is primordial due to the fact that it provides a variety of services designed to assist an individual or business in increasing chained wealth. This does not incorporate traditional consumer banking. On the contrary, the institution stresses on what to invest in such as trading and asset management. Financing options could also be made available for the purpose of assisting with these services. Having laid this foundation, this article explains subsequently the best ways to invest money, how to invest money or the types of investments. It should be made abundantly clear here that to be ushered to that place of consistent daily viability is a choice you have to make. This choice is followed by principles that have to be applied to get you there. It is often said by many that knowledge is power. This is true but incomplete. The reason is because knowledge is only power when appropriately applied. This explains why we have unnumbered knowledgeable people around us who look wretched. The following sign poxes will teach you how to get rich through investment.
Types of Investment: Angel Startup
Angel investors are wealthy individuals or groups of individuals who invest money or equity financing in startup or early stage micro enterprises. This is seen as one of the best way to invest money since investors often made available private equity or second-round funding for progress, profitable micro businesses who need funding to get up and to grow. In other words, these are investors who invest in early stage or start-up companies in exchange for an equity ownership interest. Angel investing in start-ups has been speedy. High-profile successes like Uber, WhatsApp and Facebook have encouraged angel investors to make multiple bets with the hopes of getting outsized returns. This is very pertinent to note. The few examples cited here on Uber, WhatsApp and Facebook are most strategic. This is because, these all continental technological innovations in the domain of digital communication have since their inventions been on a tremendous upsurge rather than on a de-acceleration. This means that the financial sponsors and investors coined as Angel to the startups of these giant networks are cruising on sweat less dividends. And this is considered wise investment that stimulates exponential returns. Angel investors all have one element in common, however, they will only invest in micro businesses in which they think they can earn a high return on their investment-perhaps as high as 20% - 40%. Three of the most famous companies that got their starts with angel incentives are; Startbucks Inc, Amazon, and Apple respectively.
In this world, we have wise ideas or thoughts and for these wise ideas or thoughts to be refined for human consumption they require financial investment. However, most of those who have these buoyant ideas and thoughts do not have the finances to work on it. This depicts that seeking for where to invest for future increase, the area of angel startup has to be given serious consideration. This is veritable because those who invested to the development of Uber, WhatsApp and Facebook earning colossal profits.
At this juncture, a few questions on angel financing will be evoked as guidelines on how to invst money through this medium.
i). How much do angel investors invest in a company?
The typical angel investment is $25,000 to $100,000 a company, but can go higher. These figures are just a rough estimate and should in no wise discourage you. Once you have information on any stable startups, try to give it consideration. This is an ideal illustration of having your money working for you if prudently approached.
ii). What are the six most important things for angel investors?
Angels focus essentially on the followings:
- The authenticity, enthusiasm, commitment, and honesty of the founders.
- The advantage of the market being addressed and the potential for the company to become very big.
- An accurately framed business plan and any early evidence of obtaining traction toward the plan.
- Coherent technology or intellectual property.
- A concise valuation with rational terms.
- The capability of raising further rounds of financing if progress is made.
iii). What do angel investors like to initially see from an entrepreneur?
- A clearly articulated elevator pitches for the business.
- An executive summary or pitch deck.
- A prototype model of the proposed product or service (or at least renditions).
- Early adopters or customers.
Before we wrap up this phase on angel startup, it is rational to showcase where to find angel funding.
You can find your angel online or adjacent to home. If you want to commence your research online, you can take a look at an Angel soft, an angel investor network. For a fee, you can make a pitch online. It's also a good site just to look through and find out what you need to do to make a pitch. Many financial specialists, however, advice that you try to search for angel funding adjacent to your home. You could equally check your local Chamber of Commerce. Easily reached attorneys, bank accountants may know of angels in your area. Some angel investors like to be part and parcel in the company in which they are convicted to invest. They may, for instance, want a position in the Board of Directors. As a micro enterprise owner, you may use the expertise on your board and the access to another potential session of funding. One way to track local angel funding is to start at the website for the Angel Capital Association, which lists angel investors by state. Securing funding from angel investors is a tedious process. The odds are indicators that you will surely embrace success as you stay focus.
However, you may make excellent contacts for getting funding in the long run. You can meet people who may offer you rational business counsel. Even going through the process of delivering multiple presentations is invaluable for the long run. You may just preserve that angel funding that you need.
There are certain types of small businesses that angel investors prefer to invest in. They basically comprise of the hot, high growth industries of the moment and change from time to time as the economy and economic needs change. Therefore if the nature of your startup possesses any of the afore-raised features then you are urged to embarked on a rigorous search for angels to help you materialize it. Having analyzed this first step extensively, we can now progress to the second step.
2). Angel Business:
Business angels (also known as angels or angel investors) are individuals who use their personal wealth to provide capital to start-up and early-stage businesses in return for a share of the company’s equity. They tend to be entrepreneurial by nature and are prepared to take a high personal risk in the expectation that will in due course be able to secure a profitable exit and see a return on their investment. As well as capital, business angels may also bring valuable business and professional experience and may become involved in the company by taking a seat on the board. This implies that, being an angel does not only mean to wait and speculate a prospective startup to leverage investment for long term maximization of profit but also, it means to introduce a concrete business plan that is inspired by the angel as well as invested in by angel.
This projects slim line of difference between angel business and the preceding one already analyzed on startup. Startup requires angel to come it to enable them enter into full swing meanwhile angel business shows that the angel is the initiator of the business as well as its financing. In a nutshell, it shows that, the capital you have can be reinvested to produce for you more if and only if you can think within the prism. This takes us to the third step on how to get rich through investment.
3). Equity Startup:
Equity essentially means ownership. Equity represents one’s parentage of ownership interest in a certain company. For startup investors, this involves the percentage of the company’s shares that a startup is willing to sell to investors for a specific sums of money. As a company triggers business advances, more investors are openly willing to pay a larger price per share in subsequent sessions of funding, as the startup has already exhibited its potential for success. When venture capital investors invest in a startup, they are making available capital in substitution for a portion of ownership in the company and rights to its potential future returns. In doing so, investors are establishing a partnership with the startups they choose to invest in – if the company earns a profit, investors share profits proportionate to their amount of equity in the startup; if the startup does not work, the investors lose the funding they have invested and thus the term Equity Startup.
Employee equity ensures that everyone is on the team, everyone is partaking in the returns, and everyone is a shareholder. Investors buy equity in a company with money, but you will be benefitting from it through your investment based on time and effort. So it is important to reason constructively, as an investor would, about the progression prospects of your start-up. Experts’ puts it that anyone obtaining equity compensation should evaluate the company and offer based on his or her own unique analysis. This means careful examination at the company’s capitalization and valuation. Remember that only a handfull at the top are privy to the company’s capitalization table. Thus, unless you are a C-level executive, you most likely won’t get to see it. If you are a part at a venture-backed start-up, the most recent round of funding would have determined the company’s valuation. Request the company founders about valuation.
Next, consider that VCs often make 10 or more investments in different companies and hope for a big exit from one or two. That is to say, they assess the risk that most start-ups fail. And, unfortunately, so should you. While this doesn’t sound like good news, it just means that you need to have a big picture and consider the whole package when admitting a job. Laying hold on a potentially viable equity stake should not be your only reason to take a job. You must also be sure you’re getting meaningful career experiences and receiving benefits such as cash compensation and health insurance from the job.
The words stock, equity and shares have to be differentiated at this point in order to have a precision on how to invest money or the best way to invest money. The terms stock and equity are often used as though they have the same connotation. Stock is a generic term that defines unspecified amount of ownership interest in an enterprise. Shares represent the manner that an enterprise stock is divided. An enterprise’s stock can be divided into a potentially limitless number of shares, each worth exactly the same value. In a priced equity round, shares in the startup have an approximate price, and investors can buy equity in the company by buying shares at the price during that round. For example, when Ashton Kutcher and Guy Oseary made a joint &500,000 investment in Airbnb’s Series C Session, for an estimated 0.25% equity stake, they effectively purchased 0.25% of Airbnb’s shares. This implies that, considering there were 400 total shares, Kutcher and Oseary’s 0.25% stake would represent 1 share, or 0.25% of the company.
An important question to pose at this point is. Who can own equity in a startup company?
Often, startup founders, entrepreneurs, employees, and investors will own equity in a startup. Initially, founders own 100% their startup’s equity, despite the fact that they actually give away the majority of their equity over time to co-founders, investors, and employees. Venture investors choose to invest in startup companies (private companies) because they stand to make outsized gains if the company advances public, or if another liquidity event breakout, such as an acquisition by another company. Employees are often offered equity in the startup where they work as part of their compensation package; employees may elect to receive lower monetary compensation in exchange for a greater amount of equity in the enterprise. On the contrary, equity serves as incentive for employees to stick with the startup as it grows, as their shares typically vest. In a nutshell, understanding equity startup puts you on the vantage point of all seasoned viability. This takes us to the fourth and last step of this article on how to get rich through investment.
4). Startup Financing
You sell partial ownership of your company in exchange for cash is referred to as startup financing. The investors assume all (or most) of the risk if the company does not succeed, they have their money loss. But if the business succeeds, the investors would typically make a much greater return on their investment than interest rates. In other words, startup financing is far more expensive if your company is successful, but far less expensive if it isn't. Because investors take on a much higher risk than lenders, they are highly involved in your enterprise. This can be a mixed blessing. They will likely offer advice and connections to help grow your business. Let's take a closer look at the many options available for startups.
Friends and family: They are best sources for loans and equity transactions. They are indeed less complicated regarding your credit and their expected return on investment. Apart from family and friend, we have credit cards, bank loans, leasing, angel investor, private lending very strategic options for startup. With the appliance of due diligence you could use these options available for startup financially irrespective of the fact that Startup businesses often have a difficult time finding sources of start-up business financing for their initial financing needs.
Following the basis of arguments and evidence of facts presented in this article on how to get rich through investment, how to invest money, or the best way to invest money, if you review meticulously all the four pragmatic sign poxes evoked from pages two to seven of this article appropriately, then be rest assured you will be able to decide what to invest in in order to emerge rich all year round through your investment.