Early Investment Opportunities: How To Get In On The Ground Floor

You may not know this, but the average millionaire has seven different streams of income. Why? Because they know that one of them might dry up at any time. They diversify their resources and investments to protect their financial future.

One way to build your wealth is through investing in early stage companies or stocks that are likely to grow exponentially in the future. For instance, a $100 bet on Amazon during its early days could have netted you $14 million. If you invested in LinkedIn during its startup phase, you could have increased your investment by 261,900 percent.

Numbers like these are inspiring, but the sad truth is most startups fail. Therefore, being an early stage investor requires a high risk tolerance and the ability to identify the right early investment opportunities. Here are some tips to help you do exactly that and get in on the ground floor with these types of investments.

What is Early Stage Investment?

Prior to launch, a startup requires early stage investment. Also referred to as seed capital, early stage investment is the first initial stage of investment in which startups receive just enough money to provide proof of concept or become profitable.

If the business proves itself viable and can successfully get off the ground, then investors can move on to series A, B, and further funding rounds. At this point, you can begin seeking out other early investment opportunities.

Where to Find Early Stage Investments

Unless you have the inside scoop and a friend or family member with a viable startup in need of direct funding, the best way to find early stage investments is by finding angel syndicates, venture funds to invest in or being part of a group like Urban Capital Network.

Angel Syndicates

Angel groups or syndicates allow you to invest a smaller amount of about $25,000 (if they are not a crowdfunding site). However, they require a four to five-year commitment before you may begin seeing a return on your investment.

Each angel syndicate has its own membership process and format. Some require a larger investment commitment than others and offer direct funding opportunities in addition to seed stage funding.

Angel groups are available in most major cities. On the national level, the Angel Capital Association is a non-profit providing seminars, conferences, and educational resources for those seeking early investment opportunities.

Venture Funds

Venture funds typically require a greater capital investment but less of your time. These professionally managed investment funds accept limited partner investors and on average require a $250,000 minimum commitment for up to four years.

Venture funds usually charge a two percent fee to manage your money. Meanwhile, profits made from the fund’s investments are typically shared with limited partners according to an 80/20 split.

Like angel groups, venture funds are located in most major cities, but most can be found in Silicon Valley and the Pacific Northwest.

Urban Capital Network

The Urban Capital Network is a fantastic network of people and partners. Although there are many networks for all kinds of investors, UCN is trying to make it easier for more people to invest.

UCN has enhanced the public’s access to investing with their forward-thinking and easy-to-use investment process.

Through UCN people are able to get more access to early investment opportunities. The network is packed with only viable investment opportunities that are vetted for their potential. Because of this, both beginners and experienced investors can get access to various early investment opportunities.

How to Spot The Next Big Thing

In many ways, the next big thing is already here and all around you. If you think about it, not long ago, people thought Amazon and Netflix couldn’t possibly get any bigger. However, they continue to grow at impressive rates.

Other areas of interest still considered the next big thing include streaming video, e-commerce, digital payments, and software-as-a-service. Each of these has been around for a while, but their adoption rates continue to grow, proving there is plenty of room for growth and both existing and new investment ventures. In other words, they are still the next big thing.

Nonetheless, when thinking about the next big thing, it’s important to expand your vision. According to several sources, here are some innovations on the verge of becoming the next big investment opportunity:

  • Artificial intelligence
  • Virtual and augmented reality
  • Online DNA analysis
  • Autonomous driving
  • Immune system engineering
  • Large-scale desalination
  • Reusable rockets

The key is finding the right opportunity or investing in an angel group or venture fund targeting startups in these burgeoning fields.

Risks Involved with Early Stage Investments

Despite the possibility for staggering gains of up to 1,000 percent or more, investing in early stage opportunities is a risky business. The majority of new products or companies simply fail to make it, so investing in startups takes a high risk tolerance. It takes someone willing to take a risk and lose their entire investment in the hope of a big payoff.

That said, there are several different types of risk associated with early stage investing, including:

Loss of Investment

Obviously, the biggest risk of investing early in opportunities is losing all of your money. Many startups fail completely or manage to survive with little to no growth ad profits. In these cases, you will most likely lose your entire investment.

Illiquidity

Another risk is illiquidity of your investment. Even if your chosen investment opportunity does prove successful, it may take years to exit your position and see your money again.

Dilution

As an early stage investor, you also run the risk of dilution. Since startups tend to have several rounds of funding to continue raising capital, new investors may also receive a share of the equity. This means the issuing of additional shares, which dilutes the ownership percentage of current investors.

Bottom Line on Early Investment Opportunities

Getting in on the ground floor of an investment opportunity can yield tremendous gains and explode your wealth virtually overnight. However, it might take several years to get to this point, if you get there at all.

The fact is most startups fail. To succeed as an early stage investor, you need a high risk tolerance and the right opportunity.

The good news is there are plenty of opportunities out there. With the right due diligence and risk appetite, you can discover the next goldmine and reap the rewards.

Understanding Startup Financial Projections: What You Need to Know

Entrepreneurs prepare financial projections to convince investors to provide funding for startups. Investors use them to determine the potential for a new company’s profitability. Budgets, forecasts and proformas mean the same as projections, and they serve the same primary purposes.

But an investor must understand that projections are just that, projections. So investors have to take future projections with a grain of salt and as a guide when making investment decisions.

Understanding the Importance of Startup Financial Projections

Investors examine startups in the same way that doctors study x-rays. They reveal the health of an organization’s financial status without regard to outward appearances. An explanation of factors that predict a startup’s chances for success gives you a basis for evaluating the safety of your investment.

As an investor, you surely want to know the income and expenses that a startup expects to experience. Payroll or rent occur as fixed expenses, among many others. Variable expenses may include the costs of selling goods, materials and marketing, among other essential items. Startups can estimate revenue by citing the potential market for a product or service.

Learning What Financial Projections Do and How They Work

When you review a startup’s business plan, you can expect to find three projections that outline the risks you face as an investor. For example, the information contains a balance sheet, cash flow statement and income statement. When you examine financial projections, you gain insight into the potential for an entrepreneur to succeed in running a business.

The value of projections comes to you as an understanding of your potential for return on investment. They show you what the business owner thinks may happen based on facts or imagined outcomes. In addition, the information needs to provide answers to questions you may have about the reliability of your investment. For example, most investors want to know what startups plan to do with a loan or equity investment they get from you. In addition, you need to know how and when they plan to pay it back or give you a return on your investment.

Examining the Components of a Startup Financial Projection

As an investor, you can expect to receive many funding requests. A systematic review lets you examine each one on a consistently factual basis. In addition, it provides a basis for comparing competing proposals. Finally, the projects that startups prepare and submit for review give you the information to accept or deny the opportunity to fund a new company.

Projections can give you a business model concept that includes goals and objectives. As factors that affect the finances of an organization, they reflect income tax planning, investments and insurance.

Reviewing the Income Statement

An income statement for an existing startup that needs additional funding for expansion or relocation can provide a yearly or quarterly report. Some startups may decide to give up equity to investors as opposed to a loan.

As an investor, when you review the statement you can judge a company’s future performance based on the income reports. As one of the vital pieces of information in the statement, it must amount to more than the costs a company incurred. In addition, it must provide the return on investment that you deserve in exchange for equity in the company.

The expense lines show you how much the company spent to create the goods or services it sells. Businesses include the cost of sales in the first expense line, and it covers everything needed to make the product or service. Operating expenses include expenditures for obligations that do not relate to production.

Checking the Balance Sheet Figures

A balance sheet tells you the most basic information that can help you decide to provide funding or not. It gives an accurate description of the assets a business owns and how much it owes. In addition, it reveals the amount of money that other investors have provided. Finally, as a statement of financial position, the balance sheet gives you a summary of a company’s status at a specified date.

Examining the Cash Flow Statement

A cash flow statement gives you a view of how much money a company receives and how much goes out. As a result, you can use it to predict the future of a company that wants you to fund their enterprise. The information that the cash flow statement must provide includes cash that comes from a company’s operations. In addition, it reflects investing activity and money that a company receives from financing projects and activities.

Assessing Startup Financial Projections

Your position as an investor lets you assess the future value of your investment based on the current data that a borrower requests. When you examine the cash flow projections, you can see where a company expects to get the money they reflect. Sources may include loans, receivables, credit lines and others. The income statement helps you evaluate a company’s potential for growth. Finally, the balance sheet can let you review the rate of return that you may expect from your investment.

Summarizing the Process

While evaluating the risk of investing in a startup may seem complicated, the financial projections can make it seem less so. An income statement with a balance sheet, along with a cash flow statement, provides the essential information to help you make an investment decision. Of course, you may choose to review much more information, but these three pieces of information provide what you need to know.

How To Invest In Startups And Make Money: A Guide For The Average Person

Startups, or new companies bringing a novel concept to market, are what makes the economy so dynamic. These upstart companies infuse the market and society with exciting new ways of doing things.

Some startups come up with new methods and applications for existing products and services, ingeniously solving problems for consumers in the process. Others introduce products and services that nobody has ever seen before.

While some startups fail to get off the ground, others have a tremendous impact and earn significant profits for investors and shareholders.

If you’re looking to make bold investments with significant risks but higher-than-average rewards, then startups might be the perfect option.

Once you’ve done your research and learned about the process, you could invest in a company on its way to becoming a true financial force. These are the types of investments that can significantly change your fortunes.

Why Investing in Startups Is So Important

Investing in startups is an important step for an ambitious investor to take. It marks a departure from standard, safe investments, bringing you into new territory where both the risks and rewards are greater. For many eager investors, this is an exciting place to be.

The main reason to start investing in startups is the opportunity for greater financial returns.

Investing in startups can earn you more money than you could ever hope to make with stocks, bonds, or other standard investments. If the startup becomes a major hit, you could see your financial fortunes change quickly.

This is what stands out for investors hoping to strike gold.

Investing in startups will also bring you into the exciting world of new products and technologies. By their very nature, startups are generally on the cutting edge of their industries. Being involved in such a project will put you at the forefront of a rapidly changing society. This will probably be an exhilarating experience, and you’ll learn a lot along the way.

How to Invest in Startups

Regular investors can get involved with startups through a crowdfunding platform. Typically available through a website, these platforms offer ordinary people a way to invest their money in the companies they believe in. Each platform accepts certain companies to fundraise on their site, and most curate their offerings to ensure only legitimate, worthy ventures appear.

Before getting started on these platforms, it’s important to understand SEC guidelines. Non-accredited investors can only invest a certain percentage of their annual income or net worth in startups every year. You should apply these regulations to your own financial situation to get a handle on how much money you can put toward your new project.

What to Look for When Investing in a Startup

Deciding to invest in startups is only the first step. From there, you need to decide which companies are worth your investment. This step requires a fair bit of patience and research. You don’t want to rush into a commitment with an unworthy company.

First of all, you should consider investing in a field you’re familiar with.

You’ll have a much easier time judging the company’s prospects if you understand the ins and outs of the industry. You should also look for a company with a passionate, enthusiastic team. These are the startups with the necessary energy to succeed.

Finally, take some time to consider the company’s potential market. The project will only prove successful if there are plenty of potential customers available.

What Are the Risks of Investing in Startups?

Investing in startups can bring substantial rewards, but it’s also an inherently risky endeavor.

Far more companies fail than succeed, and it’s important to keep this sober reality in mind as your start to plan your investments.

You might not see any substantial returns, and you could even lose the money you initially invested. That’s why you should never invest money in startups that you can’t afford to lose. Stocks, bonds, and savings accounts are much better places for essential savings.

Where to Find Startup Opportunities

Most small-time investors look for startup opportunities directly on a crowdfunding platform website. These platforms do a good job of presenting companies with all their essential attributes. From there, you can use the web to conduct further research.

Try perusing a few different crowdfunding platforms like SeedInvest or StartEngine to find investment opportunities. Additionally, you can also leverage an investment firm like Urban Capital Network to make sure you’re considering a wide variety of candidates.

It’s never a good idea to invest right away in the first company that catches your eye.

Tips to Make Money When Investing in Startups

Finding success with startups is all about developing the best possible strategy. You don’t want to rush into such a risky endeavor without doing your homework. Here are some tips to consider as you get started.

Don’t Invest Too Much

Be wary of investing every last dollar that the SEC guidelines allow. It’s always best to start small with such a high-risk type of investment. You’ll also learn as you go, so it makes sense to save your heftier investments for later in your startup career.

Diversify Your Investments

In any type of investing, it’s never a good idea to put all your eggs in a single basket. This is certainly the case with startups. By investing in a few companies at once, you give yourself a greater chance of picking a winner.

Be Patient

Even successful startups take a while to start turning a profit. When you invest in a new company, you can’t expect to see returns right away. Remind yourself that this is a long-term move when you first make the investment.

Final Thoughts on Investing in Startups

Startups offer exciting opportunities for eager investors with lofty ambitions. While there’s no guarantee of success, you never know when a major windfall could be just a few months away. The best way to improve your chances is by developing a sound strategy and putting it into action.

Why You Should Consider Self-Directed IRA’s/401Ks

It is never too early to think about funding your retirement. You want to have enough set aside to enjoy your post-career life.

Traditionally, people have turned to IRAs and employer-sponsored 401k funds to grow their retirement funds.

These vehicles may be fine for the average investor, but some people prefer to have greater control. If you enjoy being in charge of how your money grows, a self-directed 401k or IRA may be the right choice for you.

What is a self-directed IRA?

An SDIRA is an investment product similar to other IRAs. It comes in both regular and Roth varieties, giving investors options of when to pay the taxes on the income. However, a self-directed IRA provides greater freedom for investors.

In a self-directed arrangement, an appointed custodian administrates the fund, but the owner makes the investment decisions. Investors must take a hands-on approach to their retirement funds. The fund custodian’s job is to buy and sell according to the directives of the investor.

These retirement products have access to a wider variety of investment options. While traditional funds work with stocks, bonds, and CDs, a self-directed vehicle can include investment opportunities such as real estate and commodities.

The Benefits of an SDIRA

People who enjoy investing and following markets may see several benefits from a self-directed 401k or IRA. They are free to do market research and follow through with investment decisions. For some investors, this arrangement offers a welcome sense of control and oversight.

Including alternative investments is another positive attribute. Long-term real estate investments can provide a stable base for growth. Higher-risk investments like commodities and cryptocurrencies may allow short-term gains that will outpace the stock market.

At the same time, an SDIRA provides the same tax benefits as traditional IRA products. For example, withdrawals from a Roth SDIRA do not incur income tax in retirement.

The Risks of an SDIRA

The potential risks of self-directed funds relate to the independence and flexibility they offer. The fund administrator merely holds the fund on behalf of the investor. They are prohibited from offering advice, so they cannot protect you from bad investments. Some investors will work with an independent financial advisor as they make decisions about their funds.

Cashing in investments can represent another challenge. Typical investments like stocks and bonds are relatively easy to buy and sell. Most transactions happen in less than a business day. More complicated investments like real estate can delay the process. If you are trying to sell a rental property, there is no guarantee of an immediate buyer.

Opening an SDIRA

An SDIRA is a specialized financial product and is not available from every broker. You will need to find a knowledgeable provider who is willing to serve as your custodian.

Once you have established your plan, the same contribution rules apply as with traditional IRAs. Currently, you can contribute up to $6,000 per year if you are under 50. People 50 and older can contribute an extra $1,000.

Getting the Most from an Self-Directed IRA

With a self-directed fund, diligence is critical. You are responsible for the success or failure of your investment strategy. Your research should begin with understanding the limits of the products offered by different providers.

Although self-directed funds allow for less common investment opportunities, custodians are not required to work with every type. If you are interested in using IRA funds to invest in precious metals, you want to confirm that your custodian works with that type of investment.

Self-directed fund owners should expect to pay more attention to their portfolios. With IRAs, the custodian manages the investments to protect investors from losses. You are responsible for maintaining growth and handling market downturns with an SDIRA.

Because of the higher risks involved with self-directed funds, these products may be a better fit for younger investors with more time to make up losses. As you near retirement, you will want to keep your money in a low-risk environment.

Is a self-directed retirement account the right choice for you?

Choosing a self-directed retirement vehicle is often a matter of personality. If you are someone who stresses out at the first sign of a volatile market, this type of investment is probably not for you.

However, if you have the time, interest, and risk tolerance to handle changing markets, a self-directed fund can be a thrilling financial venture.

Researching unique investments will allow you to learn more about the world of finance. You can carefully examine new businesses, follow emerging trends, and discover the challenges of the real estate market. At the same time, tolerating a higher risk can lead to greater returns and more funds to enjoy at the end of your career.

For the right investor, self-directed retirement funds are an exciting and profitable way to save for the future.

How To Find Venture Capital Investment Opportunities

In a robust capitalistic society, the relationship between new companies and their investors is a game of mutual risk and reward.

These new startups need capital to get off the ground.

For willing investors, the potential to get a massive return on the investment exists. The trick is finding the right investment.

If you are interested in venture capital investment opportunities, then you need the best information to guide the process.

What Is Venture Capital?

Venture capital is a unique form of financing. It comes from private equity sources.

In other words, it is funding from private individuals or companies.

Venture capital is focused on startup companies. These new companies are usually at a stage of extreme growth, which is why they need additional funding to realize rapid expansion.

Venture capital investments are typically made in exchange for an ownership stake in the startup. While such an investment has the potential to be extremely lucrative, it can also yield nothing.

Many venture capital investments fail.

Venture capital opportunities are often found in dynamic industries like information technology, biotechnology or clean technology.

Finding Venture Capital Investment Opportunities

Given the high levels of risk and reward, it is important to pick the best venture capital investment opportunities. However, finding these opportunities can be easier said than done.

Startups are being developed all over the world, and they represent a wide range of industries. Getting access to the information you need to make an informed decision is imperative.

Resources to Guide Your Investment Search

To guide your search for a viable investment, make sure you have access to several tiers of data. First, you need to be able to find these startup companies. There are numerous resources and news websites that talk about the hottest developing companies. Staying on top of the latest news can alert you to some of the best opportunities.

Before you invest in a company, you need to know its business model and how it intends to continue growing.

You should look closely at the company’s history, and you need access to its growth projections. This information is needed to decide whether or not the investment interests you. You can find this information when you leverage key networks and databases designed for investors and startups.

Urban Capital Network

Urban Capital Network (UCN) is an extraordinary resource. Although there are many networks for venture capital investors, UCN seeks to broaden access to such investments.

In this manner, UCN has essentially created a more democratic investment process.

This means that more people than ever have access to these investments, and the growth potential is substantial. All the investment opportunities on the network are vetted for their viability, making this a powerful resource for novice and experienced investors.

Angel Investor Networks

Angel investors are important players in venture capitalism. These investors buy up large portions of a company during its early phases.

Then, when the company has grown, the angel investor will sell his or her shares at a profit. Angel investments are seen as relatively short-term.

A network of angel investors seeks to connect investors to viable investment opportunities. It is important to remember the unique role of an angel investor before putting your name out there as a potential angel investor. However, if the scope of the role suits your interests and resources, then becoming involved with this kind of network is a smart idea.

Venture Capital Databases

For more standard venture capital investments, hooking up with a venture capital database can be a great option. These databases are designed for potential investors.

You can list your information in such a database. Then, startups will seek you out.

This can make it easier to sort through the possibilities since you only have to vet companies that reach out to you. When you put your information in the database, you will be expected to disclose some key details so companies know what kind of investor you will be.

Startup Databases

Startup databases look at the relationship between investors and companies from the other angle. When you peruse a startup database as an investor, you have the chance to consider each company for yourself.

You can expect to spend more time doing research when you leverage a startup database, but you will also have more control over what opportunities you want to pursue.

If you are new to the process, then this level of control can be overwhelming. However, many investors also find it empowering.

A Few Tips To Consider When Evaluating Investment Opportunities

Once you have access to the resources, you need to develop a process to evaluate your options. Consider the six following criteria to get started.

  • Character: Consider the character of the business partners. This can be subjective, but you may be drawn to their experience, integrity, background and more.
  • Capacity: Look at what the company is capable of putting out. The capacity will be tied to your potential earnings.
  • Innovation: Focusing on true innovation can ground your search. Entirely new ideas have more potential to make inroads in the market.
  • Community Benefit: You have to consider the value of the business. If the business yields palpable benefit to the industry or the world at large, then it might be more viable.
  • Sustainability: The business should have a plan that outlines how growth can be managed over time. You do not want a hot idea that fizzles out fast.
  • Finances: Ultimately, investment is about the numbers. You want to look into the company’s finances to understand the risk and reward.

Final Thoughts on Venture Capital Investment Opportunities

Venture capitalism is an important part of society. If you want to be a part of that process and experience the excitement and growth, then you have to be prepared with the best resources. Use these resources to do your research, and you can make your first investment in no time.

Investing is a team sport – who is on your financial team?

Expertise is not as revered as it once was. From scientists to historians, a large percentage of society has become distrustful of these experts.

However, experts can be beneficial for those who choose to listen to them. No one wants to be the first person to get on a plane designed by a chef.

Personal finance is another of the areas in life in which it can pay off to listen to experts. Investing is a team sport, and you’ll want to have experts on your team.

Investing On Your Own

Before we dive into building an investment team, you can definitely invest on your own – if you’re comfortable with it.

One piece of advice that can benefit many Americans is the recommendation to purchase index funds. The Oracle of Omaha, Warren Buffett, told investors that purchasing a simple S&P 500 index fund is the best strategy for the vast majority of people.

Investing in index funds can be a great option for those who want to execute a do-it-yourself plan when it comes to investing.

This strategy can pay off with 10% returns on a regular basis. Some years will have higher growth; other years will have lower returns.

However, on average, the American stock market has returned an average of 10% over the long run.

While this strategy can build wealth over a period of decades, it’s not likely to give market-beating returns because you’re effectively investing in the market as a whole.

Amass A Team For More Investment Opportunities

Your financial team should have experts to help you beat the market.

You’re not guaranteed to achieve otherworldly returns, but experts can give you the scoop on some investments that are not available to the general public.

Hire An Accountant

An accountant should be one important member of your financial team. The right accountant can help you navigate a complex tax code and file your returns. She can also give you advice that can help you minimize your taxes in the short run and the long run.

Accountants can at times provide a good idea of how business financial reports function, and this can help you better navigate the world of investing.

Talk With A Financial Planner

A financial planner provides a more holistic service than many financial advisors. Some financial advisors tend to serve primarily as brokers. For this reason, you’ll probably want to look for a planner who serves as a fiduciary agent. This means that the advisor or planner will act in your best interest.

Those who do not serve as fiduciaries can use a suitability standard and recommend investments that are “suitable” for someone in your situation. What might be suitable for you might not be the best strategy for your individual circumstances.

An advisor who holds to a fiduciary standard will attempt to act in your best interest whether he or she gets a hefty commission. Many fiduciaries are fee-based advisors who charge a flat fee for their advice, and this alleviates the concern over commissions that some funds pay out.

A financial planner will also give taxation and long-term planning advice. This can involve recommendations for life insurance to protect your family’s financial standing should you or your spouse die early.

Additionally, financial planners will recommend retirement accounts that might work for your specific situation. Long-term care insurance can also make sense for many people. A financial planner can also give insight into estate planning so that your heirs are able to keep more of your accumulated wealth and so that less of it goes to the government.

While you can definitely cherry pick different individuals to invest with, perhaps the better opportunity is to invest with a team that provides various investment opportunities for you.

Investing Is A Team Sport – Be Part of an Investment Group

Involving yourself with these experts can help you improve your financial health over the long run. It can be a good idea to get started with some index funds if you’re beginning your investing journey, but if you want to move past this initial stage and really plan for the future, you’ll want to team up with other investors or companies that provide investment opportunities.

Peter Thiel is perhaps best known as the founder of PayPal. He’s also gained some notoriety recently for amassing a $5 billion fortune in his Roth IRA.

He bought shares of PayPal for pennies and then watched them grow for years. Because he stayed within the contribution limit for a Roth account, he can withdraw his billions on a tax-free basis.

You can’t buy PayPal for pennies a share today, but you can learn about cutting-edge investments if you’ve surrounded yourself with an investment team like Urban Capital Network that keeps up with great opportunities.

Interacting with a team like Urban Capital Network can allow you to ask questions that will help you make educated decisions. Not all of your choices will pay off like Thiel’s Roth IRA investment, but a few strategic small investments can wind up paying off in huge sums over time.

Surrounding yourself with a team that can make good recommendations will increase your likelihood of finding an investment that will pay off handsomely over the long run.

Many of the best investments are not even on the public markets.

That’s why you should want to be part of a group like Urban Capital Network so that you can surround yourself with a team of people who have knowledge of the pre-IPO market.

If you’re looking to work with a team that will help you achieve your goals and provide you with salient investing advice, be sure to contact us. We’re ready to work with you.

What it takes to have a diverse investment portfolio

You work hard, and taking your retirement plans seriously is just part of who you are. A well-managed investment portfolio can help you to achieve your retirement goals and more.

How do professional financial advisors create investment portfolios that can fund your child’s college education, the family’s dream vacation to Disney World, and your daughter’s wedding?

The answer is diversification.

A diverse investment portfolio is a balanced one that contains different categories of assets that help to reduce the risk of investing in a volatile, global marketplace.

What Does a Diverse Investment Portfolio Look Like?

As a goal-oriented investor, you probably believe that a diversified portfolio is one that maximizes profit. However, increasing high financial yields is not the main objective of diversification.

A diverse investment portfolio has a collection of asset categories that work together to reduce risk to the portfolio in its entirety.

You only have to look at the nation’s stock exchanges to know that financial markets can be volatile. Some market changes are easily predicted because they are caused by cyclical milestones. Others happen due to unexpected events such as a power plant meltdown or a regional crop failure.

By using a diversification investment strategy, you never have your nest egg in one basket.

How to Choose the Right Investment Strategies (and Which Ones to Avoid)

Every journey needs a road map, and your path to financial security is no exception. It requires an investment strategy that’s tailored to your particular situation, goals, and aspirations.

A person who has just started her engineering career at 23 years old needs a very different strategy than a middle-aged business executive who wants to semi-retire in five years.

Some common investment strategies include value investing and growth investing.

Value investing happens when you research a set of stocks and buy those that are underpriced. People who use the value investing strategy typically hold on to those discounted stocks for several years until their prices rise. This investment strategy was made famous by Warren Buffett.

Growth investing happens when you research stocks and choose to buy ones that are based on the growth potential of the issuing companies. A little-known company that has high-growth potential is an excellent candidate for a stock purchase if you want to use the growth investing strategy. Peter Lynch made this style of investing popular.

In the example of the 23 year old, newly-minted engineer, the value investing strategy may fit her better than the growth investing one. She has plenty of time to hold stocks and wait for them to rise in price before she needs to cash them in for retirement.

There are many investment strategies that people use to gain wealth. Some are generally not recommended by reputable financial experts due to their overly high levels of risk and speculative characteristics.

Here are some investment strategies that usually make the “Do Not Recommend” list for financial experts.

  • Derivatives
  • Futures and options trading
  • FOREX trading

Startups

When societies face economic turmoil, startups offer a glimmer of hope. In these cases, a business owner usually has found a way to meet a need after a financial crisis. This is also a period when investors may have a hard time finding a place to park their money that will bring them adequate returns.

Investing in a lucrative startup fulfills that need effortlessly.

YouTuber John Williams gives a recent example of this. He created a new company that matches investors with homeowners who will be financially impacted when the COVID-related foreclosure bans are lifted.

Real Estate

Investing in real estate is a time-tested way to grow your wealth while reducing risk across your portfolio.

Although you can invest in real estate by buying land, homes, or commercial buildings directly, many financial advisors recommend investing in real estate investment trusts or REITs. With a REIT, you’ll gain a share in the income that’s generated by the trust’s property portfolio.

Stocks

Stocks are usually the go-to asset to have in your portfolio when you need the highest growth over a long period of time. However, these high-growth assets present a higher risk than many other assets.

Financial advisors recommend a mix of domestic and international stocks for investors who have a high risk tolerance and plenty of time to realize gains from their investments.
Bonds

Precious Metals

Precious metals such as silver, gold, and platinum have always been used to store value. When currencies suffer from inflation, gold and other precious metals retain their value. In fact, market trends show that a falling dollar is consistently followed by a spike in gold price.

Cryptocurrencies

While some investors have made a lot of money trading cryptocurrencies lately, many financial advisors exercise caution when recommending cryptocurrencies as part of a diverse portfolio strategy.

Cryptocurrencies are highly volatile but present investors with the potential for high yields. However, many of them have a speculative nature that’s off-putting to seasoned financial advisors.

Cash

Many people underestimate the investment power of cash until they are on the other side of a financial crisis.

During these times, financial advisors rebalance portfolios and use cash to purchase other investment assets at a discount. By doing this, cash helps to offset losses that investors incurred during the financial crisis.

These cash investments include money market funds and short-term certificates of deposit.

Final Thoughts on Creating a Diverse Investment Portfolio

As you stand in line at your favorite restaurant, you catch a glimpse of a silver-haired man smiling and having dinner with his wife. Her eyes sparkle as they share an inside joke. When you look at them, it seems as if they don’t have a care in the world.

That’s the look of financial security.

When you’re depending on your investments to achieve short or long-term financial security, you must begin with a diversified investment portfolio. If you’re ready to explore options, contact us today.

Urban Capital Network Closes It’s Initial Investment Round With Mercury Fund

HOUSTON, TX – Feb 27, 2020 – In its initial syndicated investment, Urban Capital Network (UCN) raises $1.4 million dollars to invest in Mercury Fund’s fourth early-stage venture capital fund.

UCN is a membership-based investment network focused on aggregating a broader range of investors and providing them with access to exclusive investment opportunities. Mercury Fund is an early-stage venture capital firm with over $300mm under management focusing on entrepreneurs and software innovation originating in the U.S. Midcontinent.

UCN and Mercury Fund have aligned to increase the pool of investors that have access to venture opportunities and expand the number of deal sources for Mercury Fund.  UCN aims to equalize access to these opportunities by partnering with well-established venture capital firms that believe more people should have access to premium early stage venture capital opportunities. UCN further levels the playing field by allowing accredited investors to invest in significantly lower amounts through syndicated deal structures. The partnership is a win-win for both firms and has a positive social-impact twist.

Heath ButlerFelix ChevalierDr. Eric Tait, and Lenny Saizan are the founders of UCN. Their motivation for creating the network is the creation of a two-step effort to create a more balanced investment ecosystem: first, the UCN team aims to expand and extend investment access to premium early-stage companies, thereby increasing the odds of success for this broader set of investors. Second, UCN has created a pathway for successful investments to foster and ignite reinvestment into underserved entrepreneurs with the aim of closing the gaps in innovation, employment, and wealth in urban communities.

“Our goal is to increase the number of investors that are often left out of high-return, high-growth investment opportunities,” said Saizan. “We believe the key to closing income and wealth gaps globally is to democratize access to opportunities across the investment ecosystem.”

The UCN founders have committed a portion of their earnings to The Innovation Center for Urban Entrepreneurship (iCUE), an affiliated nonprofit, to facilitate investing in underserved entrepreneurs and urban communities. In the fall of 2020 iCUE plans to launch a diversity and inclusion investment fund focused on enabling growth in underserved entrepreneurs by investing vital capital to support their success.

“UCN is a key strategic partner investing smart and diverse capital. UCN’s investment in Mercury Fund IV allows our firm to enhance our diversity and inclusion initiatives,  increase our access to deal flow, and expand our value-added mentor and talent networks,” said Blair Garrou, managing director of Mercury Fund.

UCN members have access to educational content, entrepreneur pitch sessions, an expert network, and the exclusive UCN deal book of investment opportunities.

For more information, visit www.urbancapitalnetwork.com.

Media Contact:

Misty Starks
Misty@mistybluemedia.com
832-283-7575