Private placement investing gets a lot of recommendations in financial circles these days. It’s no wonder with the economy being the way it is. But before you jump in with a private placement organization, there are some questions you really need to ask, both for your security and theirs. Not every company is the same, and it’s important to list the different answers that companies will give to the following questions and make an educated decision from there. All private placement investors could benefit from asking these questions.
What Risk Factors Are There?
This is perhaps one of the biggest questions you need to ask every private placement firm that you are considering. If they can’t tell you straight up what their own risks are, then how can you trust them at all? Don’t take their word for it when they try to spin that there are no risks at all. This is not true for anything in life, let alone investing. A good firm will tell you what you should watch out for and what you stand to possibly lose. Of course, they will then still spin their benefits, but knowing the risks is just as important as knowing how much money you could make through them as well.
How Will I Get Paid?
Again, not every company is the same in this department, especially depending on where their capital comes from. Some pay their investors on a regular basis according to the calendar. Others cannot pay until a deal is sealed, real estate is sold, or some other capital is accrued that could see a lot of time in between payments. Private placement investors need to know how they’re going to get their money and when. Don’t go in with vague promises. Get it in writing, and stay on top of it.
How Do You Gain New Investors?
This is one you don’t really have to ask the company or firm, but deduce on your own. How did you hear about this private placement? Was it through an unsolicited email or cold call? Think before agreeing to invest with a stranger. It’s probably a scam, and you’re going to be taken for a ride. A good investment is usually passed through word of mouth. Your financial adviser, friend, or whoever you trust can help you find companies to invest in and let you make a decision from there.
Private placement investors are always in a precarious, risky position when they’re shopping around for a good investment. That’s why it’s so important to ask the above three questions before making a final decision. This is a lot of money you’re thinking about investing. While we probably don’t have to tell you how serious this is, we do want to give you the tools necessary to make money and not lose it all. We have years of experience in finding solid accredited investors. Call us or fill out the form to the right to get expert avice on how to find good quality leads for your project.