A New & Trendy Investment Strategy
– Low barrier to entry
– Risk reduction with diversification
– Minimize transactional fees
Yes, you too can now play in the big leagues
Along with that “amazing” opportunity comes some responsibility though. Blame it on our education system, or cultural degradation; whatever the cause may be, the truth is that the average American citizen has a very limited grasp on the subject of financing. The concept of APR is held with a pseudo-mystical regard; most people understand that they make a minimal payment to the credit card company each month but have absolutely no idea how their money is being applied or what they actually end up paying in in total. There is a famous statistic that claims 9 out of ten businesses fail; using that figure alone makes investing a nearly insane undertaking. Trusting that the average person is capable of factoring in the million other variables needed to intelligently invest seems just a tad bit irresponsible in most regards.
But what about our freedom?
Another hotly debated subject, and one in which there is no good answer. It is unarguable that everyone deserves a basic level of respect and courtesy to conduct their lives in a manner in which they choose. The issue becomes complicated regarding the exact that we choose to draw the proverbial line in order to protect a person, from themselves and from others. On the surface, crowdfunding a local business in Michigan seems like a great idea. Obtaining financing as a small business is notoriously difficult to do, and even if you find a way to do it, the terms are not always favorable. Finding other people that support your cause, or trust you enough to invest in your company, seems preferable to seeking out an interested banker or financial institution. If the system was composed with only those people that had such pure intentions, there would be no issues. But, as we all learned the hard way, there are a lot of sharks swimming in those “clear blue” waters of opportunity.
Fraud with a capital F
I know, I know, it could never happen to you. You are too smart, too hard working, and are too good at reading other people to ever get swindled. But please heed my advice; even as a professional you can still get conned out of your money. There are people out there that are just that good at it, so good that you will never even see them coming. The psychology behind this behavior is the topic of another conversation, but to put it in words that most of you can relate to, listen to your priest or other religious authority when they tell you that there is evil that exists in the world. In the financial industry, these monsters are able to commit their crimes at arms length, and with a little likelihood of ever being busted. Even when they are caught red handed, it is often hard to prosecute them or the punishment is a joke. The point is that you should be very careful to say the least. Even though this platform is open to the public, it may be best to consult a professional that is able to help you evaluate and value the business that you are considering investing in.
The more you learn…
If I have yet to scare you away and you are still feeling brave enough to try this on your own, at least read through some information that can help you to better allocate your funds. This crowdfunding article has a brief breakdown of the industry, including regulations and general definitions of important terms you should know. A couple great paltforms to check out are Fundable and Crowdfunder, featured in the corresponding links. As always, feel free to contact us at anytime if you have any further questions or want professional assistance.