Have you imagined yourself being a part owner of a certain company? Much more a huge multinational company that earns so big? It feels so great right? However, chances are you might be thinking that your $100 might not be enough to buy shares of a certain company, and enjoy the perks of being a part owner such as via earning a part of the company’s income.
Investing in private companies doesn’t really involve lots of cash, hundreds of thousands, or even millions for that matter. If you know where to go to and even who to approach, you can invest and make a lot of money through private companies for a very minimal investment.
Private companies come in different sizes, some are small while some are huge. In small companies it’s fairly easy to invest, but the risk that you face might be enormous. Small private corporations can fail easily because of minimal capital or they could be eaten up by large companies. If you know somebody who is a part of a small private corporation, then you can easily ask that person how to invest. Corporations, especially the small ones, need money; hence you can easily invest in them.
Huge private corporations are a little tricky, but the simplicity in investing in them is relatively easy. The risk involved in investing in large private corporations are relatively less. They are very stable and profitable companies and has a vast experience in doing business.
Since investing in small private corporations is relatively easy to do, let’s focus on how to make investments in large private corporations. Here are some ways on how to do it.
1.) Stock market – Companies raise capital by issuing or selling stocks. Anybody who buys those stocks (also referred to as shares) instantly becomes a part owner of the company and earns the rights of a shareholder. If you have shares of a certain company, you are entitled to its earnings and assets. If the company is doing so well, you’ll earn in reference to the number of shares that you own in the form of dividends. Aside from the dividends, once the company does well, its stock price goes up resulting to capital appreciation. The price of the shares that you bought will increase.
2.) Purchase notes and bonds – Companies also raise capital by issuing notes and bonds. Notes and bonds are really debt since the company is borrowing money from the people and firms and in return, pay an agreed upon interest rate after a specific period of time. Notes normally are short-term debt instruments that are payable or mature within a year, while bonds have longer tenure that extends to more than a year. Since notes and bonds are debt, they give relatively fixed rates hence are considered fixed income securities on the lenders point of view. Notes and bonds can be found in banks as companies tap the services of banks in order to sell such notes and bonds.
3.) Fund their projects – If you have a hefty amount of cash or funds, you can attend auctions. Private companies hold auctions for their projects in order to become more cost-effective. You can help companies in this way, and as soon as they get satisfied with your service or help, you may get better offers such as a seat in the board or other investment opportunities. However, this may take some time as you will build your reputation and make them see that you are indeed worth it.