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As long as you have strong business idea and are committed to succeeding, you should have no problem matching up with an investor. They are everywhere, no matter what part of the world you live in.

A private investor can help in many ways. The most important way is by providing start up capital. This can mean the difference between your business being a thought or idea, and actually having a business that operates.

Another way an investor helps is by teaching you everything they have learned in business. All their skills and knowledge are yours for the taking. Remember that private investors are successful entrepreneurs themselves. They started where you are now, and have spent years perfecting their craft. Now they are ready to teach others all that they have learned. This can be more valuable than a university business degree!

An investor will give you access to his/her business contacts that they’ve built through the years. These relationships are priceless and should be treated with respect. Get to know these people, network with them, and reciprocate business you receive from them.

Business contacts and referrals are one of the most valued pieces to a business.

Why would a private investor want to do all this for your new business? For one thing, there are investors! They invest in businesses that they see as having great growth potential and profit. They want a return on their initial investment (the start up capital), so it makes sense that they will do whatever they can to help that investment succeed. It’s a win-win for both parties: you get your business off the ground and producing profit much quicker than if you did it on your own; your investor gets a nice return on their money by helping build your business. Think of what you can learn in the process!

So, if you have an idea for a business, or are just starting out, you may want to seek a private investor, or business angel, to help you along the way. It may be the difference between success and failure.

Types of Investment

Direct Investment

Your choice of investment types fall into two basic categories – direct investment in the shares of a particular company or its issued bonds or, in the case of government-issued bonds, its “gilt-edged stock”. The price of company shares, of course, will fluctuate as they are traded on the stock market and the dividends to which you are entitled as an owner of those shares will be determined by the performance of that particular company.

In the case of bonds issued by a company, or gilts issued by the government, however, you will be assured of the rate of interest on what is effectively your loan to that company or the government, and you will be assured of the full return on your investment once the bond or government stock reaches its maturity date. Because of these in-built certainties, there is a lower risk inherent in the investment in corporate bonds or government gilts, and the returns, therefore, tend to be lower than in the more volatile market for shares.

Both corporate and government bonds can be traded in the market, however, before they reach their maturity date. During this time, their price will be determined by the prevailing rates of interest in the stick market, compared to the rate attached to the bond itself.

”Collective” Investment

If you want to avoid putting all your eggs in the one basket of a particular company’s shares, it is possible instead to spread the risk of your investment by pooling it (with other investors) into a range of different investments. In this case, the pooled investment is managed by a professional fund manager, who makes decisions on the range and types of investment. Such collective schemes fall – again, broadly – into three different types: unit trusts, investment trusts and Open-ended Investment Companies (OEICs).

Once you have reached this level of investment decision-making, however, the vast range of unit trusts, investment trusts and OEICs available can open up a veritable Pandora’s Box of choices. In order to avoid making potentially very costly mistakes or rash investment decisions, therefore, this is the stage at which – if you have not done so before – you should consult an independent financial adviser.

Summary

Financial investment advice is wisely taken because of the sheer range of investment vehicles available:

• These fall into the two broad categories of direct investment or “collective” (pooled) investment;

• Direct investments include the purchase of stocks and shares or corporate or government (so-called “gilt-edged” stock);

• The principal types of collective investment are in unit trusts, investment trusts or Open-ended Investment Companies (OEICs);

• Whatever your personal intuition regarding the best investment type for you, however, the best financial investment advice is going to come from an independent financial adviser.

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