The Beginner’s Guide to Investing in Business

Investing money in successful businesses is a great way to grow your net worth quickly. If you can pick up the skill of selecting a company with good growth prospects, it’s possible to make substantial profits.

The most common method of investing in companies is via the stock market, although there are innovative new methods for people that don’t want to get involved in traditional investing.

Below, we explain the basics of how to invest in growing businesses.

Buying Shares

Large businesses offer investors the opportunity to buy shares in their company. This essentially makes you a part-owner. If the company is successful, demand for these shares will rise, meaning the price will go up and you’ll be able to sell them at a profit.

Some companies also pay dividends of their profits to shareholders once or twice a year. The more successful the company is, the higher these dividends will be.

Shareholders also have the ability to vote on matters affecting the company, such as takeovers and director salaries.

You buy shares in a company using a stockbroker. Stockbrokers fees are typically charged as a percentage of your investment.

Equity Funds

Buying shares in one or two companies can be risky, as you’re reliant on the success of these companies for your investment to grow. If the company becomes less successful after you’ve invested in it, the value of your shares will drop.

A less risky investment strategy is to put money into equity funds. These funds are created by experienced fund managers, who put money into hundreds of different companies and pay investors their fair share of the profits.

There are two types of equity funds: passive funds and active funds. With the latter, fund managers put more effort into chopping and changing the companies that are invested in. The management fees are larger for these types of funds, but the profits tend to be higher.

It’s the diversification of this product that makes it a safer investment. The more companies that your money is spread across, the less chance there is that you’ll see a wild dip in the value of your investment. You can buy these products through investment brokers or fund supermarkets.

How to Invest in Start-Ups

Start-ups and smaller companies are unlikely to be listed on the stock market during their formative years, but this doesn’t mean you’re unable to invest in them.

In fact, investing in a start-up with a successful future is arguably the best way to make huge profits, because the cost of investment is lower than for established businesses and there is far more room for growth.

It’s a double-edged sword though, as unestablished companies are far more likely to fail. In fact, 50% of start-ups fail within two years. If this happens, your money will be more or less be gone.

The traditional methods for investing in start-ups include: 

  • Using crowdfunding or venture capital platforms
  • Through your IRA or self-directed 401K
  • Attending pitch events
  • Approaching the founders directly

Traditionally, the deal involves trading money for stock, just as you would do in the stock market.

Moneysling Makes Investing in Business Easier Than Ever

Moneysling is a useful platform that easily connects investors and start-ups. There is are no investment limits and you don’t have to be an accredited investor or venture capitalist to get involved. The connections don’t necessarily have to involve money either. Investors can offer their time, experience, or whatever resources the start-up is looking for.

What’s more, Moneysling doesn’t take a cut of any deal that occurs between investors and business. Click the link to learn more about how Moneysling can help you invest your money with ease.