How Much Equity Should An Angel Investor Get?
Firstly if you missed my first post on this subject on How Much Equity Should An Angel Investor Get? for beginners.
You'll find two classes of investors.
The first is the accredited investor.
These are high net worth individuals who have met a higher standard of accounting in their personal finances.
This is an expensive category and I don't consider them to be true investors.
They have all the right components but they are not true investors.
The accredited investor category gets as much equity as the average American household.
Their net worth is at least $1 million.
When you start thinking about the kinds of businesses they own,
you realize they are really investing to expand their capital and to buy businesses that are already making money.
Accredited Investors are pure opportunists.
Let's make them as much equity as the average American household. Let's say they have a net worth of $10,000. Now they own about 300 businesses. Their equity would be about $300,000. This is our angel investor.
Let's say Accredited Investors have a net worth of $30,000. They now have a conservative portfolio. They own just 20 businesses. Their equity would be about $10,000.
Now let's say they have a net worth of $100,000. They have a very conservative portfolio. They now own 300 businesses. Their equity would be about $100,000. This is our angel investor category.
You may have heard that the rich are getting richer. Well, this is because of the wealthy. The rich are in control of the wealth they have acquired.
They are in control of the money they are investing and as a result, the rich are getting richer.
The rich create companies, invest in these companies, and then earn some dividends on the investments.
There is a strong relationship between the stock market and the economy.
I'm an angel investor. I love dividend stocks. I love the dividend stocks that pay dividends every quarter. This lets you earn $100 per quarter. You've only got to turn on your power lamp once per quarter to earn $100.
This is a great opportunity for the angel investor because it's a great stock. This is one of the stocks to own from a long-term perspective.
Just like owning a home is a great place to earn a nice income, dividend stocks are a great place to earn a nice income.
You've just got to know how to select them.
The reason I love dividend stocks so much is that you can buy them at discount prices. Say a company pays a dividend of 5%. You can buy the stock for $10 and sell it for $15 per share.
That's like earning $5 out of each dollar you put in.
They pay out dividends at the end of every year and these dividends can be enormous. For example, one company paid out $12,500 in dividends last year. By selling a share, you got $12,500 more than you put in. That's huge.
Building A Great Nest Egg
Dividends enable you to earn a nice income. This is one of the many reasons I love dividend stocks. It's a great way to build a great nest egg.
Just remember, they have a short window to maximize their profits. If you buy them late, you may not get much of a premium for the stock. It might be worth less than a dollar.
If you buy them early, though, you can realize a premium per share. This is when you want to focus on quality. Quality dividend-paying companies have the potential to make huge profits in the short term.
Here's a simple formula for figuring out the best time to buy dividend-paying stocks: Buy high, sell higher. Remember, rich people, are in control of their wealth.
Disciplined And Patient
They choose how they want to spend their money. They also have discipline and patience. Rich people are disciplined and patient. The first rule is very important.
The second rule is more important because it enables you to make even more money.
Buy high, sell higher: The second rule states that you should buy stocks that are rising.
Don't worry if you have never seen this rule practiced before. You are not the most disciplined guy on the block. There's no need to become one. The rich and powerful are not disciplined.
The fact that you have never seen the rule practiced before is very important. You might assume that the rich have disciplined that rule.
Buy Low, Sell High
They don't. If they did, they'd have nothing to worry about. That's not their style. Their style is to sit on their money and forget about it. Buy low, sell high, that's their style.
That's their money management strategy. And it's working.
Now, the big question, “When should I sell?”
Sell high, sell higher: Sell high, sell higher is the second rule. This is the strategy the rich keep in mind while they are investing. They must sell high. Sell higher, they believe they have found bargains.
The next time you are shopping, remember, buy high, sell higher.
It should be easy, isn't it?
But for the easier option with everything done for you, While you just sit and enjoy the ride visit this site The Angel Business Club. It really is a great place to build a portfolio in some fantastic startup companies.