- April 28, 2017 at 2:55 pm #3747
Interesting site. There’s obviously lots going on, and (perhaps like others) I’m a curious non-investor with some money in the bank for a rainy day. (I’m a Brit so those things happen more often than you’d think.)
Obviously I get basically no return on that money… which leads me here. I guess what I’m asking is a parallel to the practical investing advice, which is for a mental hack to convince me why I should start thinking about myself as an investor, and how to get started. Seems the learning curve is quite steep.April 28, 2017 at 4:28 pm #3748
@gunzalis Welcome to YieldTalk! For starters, whether you think of it that way or not, you are an investor already — you’re loaning money to the bank after all, and they’re hardly paying you anything for the privilege! (And I’ll assume you have some sort of retirement savings, which is an investment as well, though not sure what that looks like in the UK.)
Crowdfunding probably isn’t the place for true “rainy day” money, but assuming you have sufficient savings and no consumer (eg credit card) debt, then perhaps it’s helpful here to focus on how you think about the money, rather than how you think about yourself. Whether it’s $100 (or pounds or shillings or crumpets or whatever it is the Queen requires these days), if you’re thinking of putting it to work then it’s capital and it’s a fundamental factor of production in our economy (along with labor and land, of course). There’s plenty of entrepreneurs out there happy to pay a premium for access to that capital, and with these kinds of platforms, it’s actually economical to do that with quite small dollar amounts.
One place to start might be to give some thought to particular kinds of businesses that you think don’t get enough access to funding from “traditional” sources. For example, often startups in industries that don’t fit the mold of VC growth expectations (say, retail stores or book publishing) struggle mightily to find enough capital to build a viable business, albeit one unlikely to achieve mythical “unicorn” status. Then you can look for those kinds of businesses on the crowdfunding portals, and if you can apply your own unique perspective and expertise in evaluating the businesses’ prospects, all the better. The whole point of crowdfunding is that lots and lots of small amounts pooled together can go a long way toward improving access to capital for entrepreneurs — it’s just that now the “small amounts” are normal-person-small ($100), not serial-entrepreneur-with-multiple-exits-small ($10,000).
Or if you’d prefer to take more of a “yield-seeking” approach (less speculation, more cash flow), then largely it’s a matter of deciding your comfort zone on risk, deciding what your time horizon is, and then reviewing options for deploying that capital within those boundaries. Again, it can be helpful to focus on a specific (and initially small!) dollar amount, and treat the money differently rather than trying to change your own mindset or thinking. For example, you might take $500 and decide to find 5 different potential ways to invest it (other than the bank) that would return your principal with interest within a year. Imposing those kinds of constraints can be useful in dramatically reducing the scope involved, making that learning curve a bit more manageable.
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