Many people think investing is hard, and to be honest, it is most cases but only because they don’t know how to play the market. People often sell their shares when the market falls, the panic sets in and the only way to make yourself feel better is to sell at a low price. Learning the market isn’t hard but it does take time so if you’re not fully committed to the craft you will lose your hard-earnt money. The question is, what type of investor are you? If you don’t know that you are already failing, but here I will show you where you fit.
Much to peoples disbelief, governments set up laws to protect the average person from risky or bad investments by setting a prerequisite. A person must have a yearly income of $200,000+, or $300,000+ for couples. They may also be required to have a net worth of one million dollars. The problems is, that they also cut off the everyday joe from the best investments and restrict them to investing in the stock market or housing. Investments that usually fall under this are companies that are looking to go public and need a massive amount of money to do so. This can pay off massively for the investors, as the share price of the company may skyrocket. The risk is, that the company may also flop in the public market (like GoPro did) and you lose all your money, that is why there are laws in place to protect the average investor.
A qualified investor has a much better understanding of how to market works. Most people pay qualified investors to look after their investments for them – such as stockbrokers and analysts. This kind of investor is also known as an outside investor and they generally don’t have any connection with the company. They also have access to the same information as everyone else, but they just understand it better.
This kind of investor is mostly known for their understandings of tax and corporate law. They maximize their returns, but also use loopholes in tax laws to pay the least amount of tax on their returns. If you are serious about becoming an investor, it’s in your greatest interest to be under this category.
An inside investor is what it sounds like, people to who gets an offer to buy shares in a private company before it goes public. Most of the time, this is family members or close friends. This is not the same as an accredited inventor they often don’t know the business owners before investing in the company they also invest a far larger amount than the average inside investor.
The ultimate investor, is a business owner. They build a business from the ground up with the goals of taking it public, cashing in and selling it off. These people often spend years building up 2-3 business at any one time and sell off their shares as the company grows. They often start with ownership of 100% of the company and sell slowly until they receive an offer that they can’t refuse they simply sell and start of the next one.
Your goal should be to become a sophisticated investor or an ultimate investor. These skills do take years to develop, so you best be committed before you head down the path of becoming an investor.