To make a successful investment in a business, there are many parameters to consider. Whether it is for an investment in a stock business, or whether it is a bond investment, there are some rules you must follow to drive your investment opportunities to profitability. How to invest in a company? In which company to invest? Invest book answers all your questions about investing in a company. To find out the benefits of Invest book investing, visit this link.
- Invest in a company whose business you understand
This first rule is essential when you undertake a financial investment in a company. On an online platform, equity or bonds, you need to understand the business of the company. In addition to investing in projects that you like, do not hesitate to discover the company’s past, its market, and its ambitions. The Internet is an inexhaustible source of information on these companies raising funds. In addition, investment platforms such as Investbook implement an “Information Memorandum”, accessible after registration, which allows to fully discovering the activity of a company that borrows. Finally, you must choose to invest according to your own criteria after making your own judgment.
- Meet or discuss with the entrepreneur before investing
The business executive, and more broadly the team, is the key to a successful business. An investor who wants to invest in a startup in Equity will systematically exchange and challenge the founders. A dynamic and complementary team attracts investors.
During a bond issue, Investbook teams systematically meet the managers. It is also possible for investors to participate in “road shows”, this allows to provide clear answers to questions from investors. These Road shows are mainly exchange meetings where the project leader will present his company and his growth ambitions in the short and medium term.
- Know the project of the company you are financing and its growth ambition
When a company makes a capital increase or a bond issue, it wants to finance its development and accelerate its growth. However, not all SMEs have the same investment needs. You will then need to detect the growth prospects according to the resources of the company, to bring to this company a financial contribution related to its needs.
- Understand and analyze the financial health of the business
When investing in a company, the financial health of a company is scrutinized. Although financial knowledge is required, online investment platforms, such as Investbook, provide analytical documents in the form of a Memorandum of Information. This document will allow the investor to get a clear idea of the financial health of the company that raises funds but also all that surrounds the project, its market, its governance, its strategy, risk factors etc.
- Know your investment goals
Before investing money in a company, an investor needs to know his investment objectives. The types of investments differ according to the investment objectives.
To understand your investment objectives, four areas are to be studied:
- A search for short-term investments, or long-term investments? An investment in stocks or bonds has a medium-long term maturity, from 3 or 4 years on bonds and 5 or 7 years on equities.
- An investment search with unsecured return or guaranteed investments? Here again, you must ask yourself the fundamental question of your risk appetite. The riskier the investment, the higher the expected return. Crowd funding platforms do not offer guaranteed investments such as life insurance or guaranteed capital funds. Keep in mind that any high-paying investment is risky, including when you put your money in mature businesses. An investment includes the risk of a capital loss, if counterparty fails and is unable to honor its debt or its shareholders.
- An investment search with a known and fixed expected return or an investment with an unknown horizon and return? Investing in shares will allow you to become the owner of capital shares of a corporation, you will have a right to vote and can expect dividends and resale of your securities. However, when you invest, you do not know the date on which you can sell your securities or even the value of your securities in several years. Investing in bonds does not allow you to have a voting right but the conditions of remuneration and duration of your investment are fixed at the outset. When you invest, you sign up for a contract that sets the term, repayment terms and interest rate.
- Invest in a company to tax, or to look for yield and support French SMEs? Not all investments in companies are subject to the same tax regime. It will be necessary to determine if tax exemption is a priority in your investment choices. For example, bond investing does not offer tax advantages, but allows fixed and regular returns to be expected while supporting the development of an SME. Whether in bonds or shares, it is possible to participate in a project and monitor the development of one or more companies, but check the tax regimes if this is your main problem.
- Diversify your savings and build your investment portfolio
As mentioned above, any investment is risky. There is a key word for investors: DIVERSIFICATION.
- Diversification of savings:
an investor will have to diversify his types of investments to limit the risk. It is advisable to diversify your savings on several financial products, guaranteed investments to secure and protect the majority of your savings, through unsecured products but whose risk remains low, up to riskier investments for the part. your savings allocated to compensation and high returns.
- Diversification of the investment portfolio:
When you have chosen the types of financial investments you want to achieve, you will need to diversify your portfolio. In short, it is necessary to divide its investments available on several companies or on several projects to limit the risk. It is advisable to invest in at least 5 companies to start a diluted risk profile.
- Allocate only a portion of your savings
Never make an investment in a business with funds you would need in the short or medium term. You will only need to place a portion of your available savings that you do not need in the short term and whose eventual loss would not put you in an insurmountable financial situation.
- Follow the companies in which you have invested
Most of your investments will be in the medium term. During this period, you have the opportunity to follow the evolution of the companies in which you have invested. Regularly, check the accounts of the companies and analyze the activity of the last months. Investbook, on its online investment platform, offers all investors an annual and detailed monitoring of the companies financed. It brings you closer to SMEs and allows you to have a link in time. By participating in the support of the economic fabric on identified and accessible SMEs, your investments are concrete; your portfolio diversification becomes useful and participative.