An asset management is the chance to make an exceptional return on a financial investment usually in companies in the early stages of their business development. The chance of a significant return on the investment improves greatly with companies that have a dedicated management team, well thought out operations and various competitive advantages. Basically, these companies are gems waiting to be found. To uncover these business investment opportunities, you must do the proper research.
To maximize your returns with these investment opportunities, you need to get in early before the investment community discovers them. Shares of young companies generally lack trading liquidity and it doesn't take a lot of buy orders before the share price starts climbing. That's when you start making an exceptional return on your investment.
A large number of young companies seek out investors in their company to acquire the capital to operate and grow their business. In those cases where large sums of capital are needed they will usually concentrate the efforts to locate investors to finding what are called Accredited Investors who are defined as:
|(1) Bank, Broker, Insurance Company, Registered Investment Company, Small Business Investment Company, State Plan, Private Business Development Company, or Small Business Investment Company.|
|(2) An employee benefit plan with total assets in excess of $5 million; or if a bank, insurance company, or registered investment advisor makes the investment decisions.|
|(3) A Partnership, Corporation, Charitable Organization or Other Entity Investor with assets exceeding $5,000,000.|
|(4) A director, executive officer, or general partner of the issuer of the securities being sold or offered.|
|(5) Any entity in which all of the equity owners are accredited investors.|
|(6) Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of this purchase exceeds $1,000,000.|
|(7) Any natural person who had individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same level of income in the current year.|
|(8) Any trust, with total assets in excess of $5,000,000 not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person.|
There are many important terms relevant to investment opportunities. A few of the more useful terms helpful to gain a good understanding of the concepts and acquire the knowledge need to engage in the practice follows:
Private equity is shares issued by a private company and are available for purchased by investors. A private equity offering is made because the company is still in the early stages of developing its business. Investing in a company at this stage is a greater risk but if the private company succeeds and goes public with stock that consistently increases in value and price, the pay off could be several times over the initial investment. Funds for a private placement usually comes from wealthy individuals, investment firms, pension plans and endowment funds.
To generate returns from a private equity investment, you need to pick the right companies. These companies tend to have growing sales, a strong commitment to constantly improving operations and a competitive edge. These corporations have a better chance of surviving and prospering.
You should always take into consideration the effects of taxes and inflation when considering an investment opportunity. After all, even though you may earn a certain percentage of return on your investment, the actual return will have to be reduced by taxes and increases in the cost of living or inflation thereby lowering the percentage of the investment that was earned. The money made on an investment is considered income and is subject to Federal Income taxes and in some areas State Income taxes. Historically inflation has been acceptably low and current conditions and government controls should allow that to persist into the future.
Return is largely a function of risk; in general, the higher the possible return, the greater the risk. Another way to express this is that the greater the chance of loss is the higher the possible return on the investment. There is always risk and the wise investor will take steps to reduce the risk and gain the highest possible return on the investment. Reducing risk will maximize the return.
The SEC or the Securities and Exchange Commission is a very important governmental organization to know about when involved with any type of investment opportunity. The following is an overview of the SEC including the purpose. function and assistance the investor can obtain:
The purpose of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. As more and more first-time investors turn to the markets to help secure their futures, the investor protection purpose of the SEC is more important than ever.
The world of investing is fascinating and complex, and it can be very profitable. Unlike banking , where deposits are guaranteed by the federal government, stocks, bonds and other securities can lose value. There are no guarantees. The best way for investors to protect the money they put into the securities markets is to do research and ask questions.
The laws and rules that govern the securities industry in the United States derive from a simple and straightforward concept: all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it. To achieve this, the SEC requires public companies to disclose meaningful financial and other information to the public. This provides a common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular security. Only through the steady flow of timely, comprehensive, and accurate information can people make sound investment decisions.
The SEC works with all major market participants and oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. The SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud. Crucial to the SEC's effectiveness in each of these areas is its enforcement authority. Each year the SEC brings hundreds of civil enforcement actions against individuals and companies for violation of the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them.
To help support investor education, the SEC offers the public a wealth of educational information on its internet website, which also includes the EDGAR database of disclosure documents that public companies are required to file with the Commission.
With any investment opportunity , however it is promoted, a wise investor should always take it slow, ask lots of questions and get information in writing.
Investing is all about making money over the long term. You expect to profit from your investment decisions as the funds increase in value. Success with investment opportunities requires many different personal qualities with patience being very important. It has shown that the best investors achieve success by buying and holding, letting the magic of compound interest take effect.
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