Benefits of Starting Out As A Private Equity Angel Investor
What Does Private Equity Investor Definition Mean?
A private equity investor is someone who invests funds into a company. They are investors who make money from dealing with companies they have an interest in. And these investors can be individuals or firms.
What is private equity?
Basically it is private money that is used to invest into a company. It is money that the companies does not, or would not normally be able to raise through traditional methods like bonds, mortgages etc. That money is essentially the companies' own cash.
It can come from dividends or other cash flows. It is usually invested in shares. The reason that these investors are private is because they are not bound by any kind of fiduciary duty to the company they are investing in. They can do what they like with the money.
They can invest in any company, and for many private equity investors the value of the company is not the important thing. They are more concerned with the price of the company's stock.
Most private equity investors are private individuals, and their motivation for investing is often personal gain.
Their investments are often speculative or short term. One of the main reasons they do this is because they are in it for the long term. They want to earn good returns on their money, which makes sense because in the long term it is likely to grow.
To give you an idea, the total value of private equity invested into the S&P500 companies between 1980 and 2000 was about 20 trillion dollars. If every one of those people had put their money into every one of the 500 companies it would amount to over 20 billion dollars. That is how big the market is with private equity.
The problem with the private equity investors is that they often have to deal with businesses that are not strong, not profitable and not inclined to grow. That makes them easy to manipulate.
The benefit of starting out as a private equity angel investor is that you can invest in many different types of businesses without having to give up your normal lifestyle. What you lose is the comfort of knowing that you will always see the success story of a particular company.
The biggest benefit is that you will most likely invest in an earlier stage of a business' growth than when most other people.
It's the difference between buying meat at the local supermarket and eating at a fine restaurant.
An angel investor is basically a private investor who has made a career of investing in early-stage companies before they explode onto the scene. Because of this, he knows exactly when to step in to take a dollar from a startup that might otherwise remain stagnant.
Because of this, he will also be the first to advise you of a great stock trade when it is about to burst onto the scene. If he can do this, his advice becomes worth far more than any royalty check that comes your way.
How To Become A Private Equity Investor
One of the biggest problems with starting out as a private equity angel investor is that you will be buying too early to be profitable. That's because this is the long game and needs patience.
It is crucial to buy early or just before a stock market bubble bursts because that is when real money can be made.
The secret to becoming a private equity angel investor is to get yourself a list of companies that are getting ready to burst onto the stock market scene. You want to purchase them early. One of the best ways to do this is to follow an up-and-coming company.
Building Up An Investment Portfolio
You should be looking at building up an investment portfolio rather than having a portfolio that is 100% invested in one type of assets such as equity or fixed income.
You need to have a mix and match depending on what type of investments you feel will be most profitable. As a private equity angel investor, you should be looking at the different companies that the companies you are investing in offer and making note of the strengths and weaknesses of the company.
As a private equity angel investor, you are focusing on the strengths and weaknesses of the companies. The companies that will offer you the highest returns are ones that you think will grow in value.
For example, On the NASDAQ index, you can see how fast the price of Mcdonald's has risen over time. McDonald's rose from less than $3 to over $70 during the time period 1995-2005.
These companies are examples of companies that have grown rapidly. Because of their quick growth, investors have lost money in some cases when they bought them.
That is why most investors will look for companies that are still relatively cheap. These companies are great companies to add to your portfolio and make money from them.
It is important to have diversified investments.
In investing, you want to have money coming in from many sources. Investing in fast food companies, for example, might not be the best thing for your portfolio.
That is why diversifying your portfolio is important.
You want to have money coming from many different areas.
Your stocks are more likely to rise in value if you have money coming from other areas.
Since your money is coming from other areas, the stock prices are more likely to rise as well.
Diversify Your Portfolio
Investing in fast food companies might not be the best thing for your portfolio because of the high risk involved with them. You don't want to gamble your money away. Therefore, it is important to diversify your portfolio. You don't want to put all of your eggs in one basket.
You see, just because a few of the stocks are doing well does not mean they are not all going to do well. As you invest, you want to spread your money around.
It is important to think about this in terms of “when.” There is the time that you can invest, there is the time that you must not invest. The time you can buy stocks is finite. It is very important to know that you cannot buy all of your portfolio all of the time.
As a result, you will be able to make a much better decision when you make your investment decision.
Angel Investment Club For Beginners
There is one Angel Investing Club that anyone can join that does all work for members, Check out VC Crowd simply join at any membership level starting at around $100 a month, and with that every month you will get equity and shares added to your portfolio in three to five starts per month.
This way you're building up your portfolio in diverse startups and the club does all the due diligence and research in the companies they invest in. Here is an example of membership levels
They then allocate shares to members every month with the amount depending on your membership level
It is amazing how many businesses are about to get big updates.
When these become big, many investors will jump on board and you can snag those shares. You don't have to wait for the company to tell you they are getting ready to pop.
They are usually ready to pop anyway. That way you don't miss out on the most exciting part of a company's growth.
Another reason for doing angel investing is if you have a position in a stock that you don't want to sell because it is very steady, but are waiting for the company to suddenly be awesome. In that case, you can buy the stock at a very low price and sell it for a much higher price.
This is the perfect situation for an angel investor to profit.
Buying Stocks Before They Go Public
The ultimate way to make money as a startup angel investor is by buying stocks before they go public. The problem with this method is that startups are extremely risky.
But the truth is, there is a reason why people believe they can make money with startup equity. This is because they are right a lot. In fact, it can be a case of great advertising for a company. You see, people are drawn to cheap stocks because they see money flying around in that company.
Smoke And Mirrors
The problem is that this could not be further from the truth. Many companies have so many financial problems that the money that supposedly flows through the company is nothing more than smoke and mirrors. The truth is that companies have to go through a huge amount of effort just to break even.
People also believe that there is an endless amount of money in the equity market. The problem is that there is. The truth is that most people have not even gotten started in the stock equity yet.
The money that is available is locked up until it is eventually released to the market like IPO. The reason that people fail with the stock market is that they do not know when to get out.
The Equity Market
This is one of the greatest reasons why people fail in the equity market. It is a very fast-paced world out there. People just do not have the patience to wait for their stocks to appreciate.
The reality is that if you are able to grasp the idea of timing and do so correctly, then you can make money in angel investing.
To learn more about angel investing or to have it all done for you by the VC Crowd visit the link below and register for free and also join the weekly webinars and check out all the videos in the back office for some great education.
New members also get a free shares bonus after joining to get their portfolios started. This is shares in some fantastic companies. I will also put a video below on how it works from the club CEO.