Posted on 12 July 2013.
Many investors usually consider large investments into stocks and bonds but it’s important to consider making some small investments in order to diversify your portfolio. Small investment opportunities provide ways for investors to spread out their investments in more sectors and also allow investors with a smaller investment budget to invest to still make gains better than any sort of bank account. Small investments usually range from a few hundred to a few thousand dollars in investment capital.
Small investment opportunities include investments into start up companies, small businesses, and franchise operations. These investments can include buying capital in the company or loans. Other kinds of investments that can be small investments include penny stocks or small cap stocks and even buying a few large cap shares.
Small business opportunities are out there waiting for you. In the US alone there are over 28 million small businesses! Many of these businesses are in need of capital and guidance in getting through start-up or building out the company. With the internet there are now many online resources that provide ways for small business owners to connect with investors where it may have been difficult to locate capital before outside of a traditional bank. Small businesses offer potential for huge returns if they are thoroughly researched.
It’s important to note that most small businesses fail in the long run. Investments into very young start-ups should be kept to a minimum per business to minimize the risk of failure. Consider a loan situation with brand new business. If the business is requesting a loan, you should look into the people requesting the loan and see if they have a history of failed start ups or suspicious business practices. When making the loan, it should be over a short time span and it should be kept to a modest amount to help keep risk down. Additionally since many banks will not make these loans to small business owners, the interest rate you charge should be above commercial lending rates.
Small investment opportunities open up the door to new business ventures as well. Some very small companies with low startup costs can effectively be a side venture for an investor, giving you a side business to profit from. Side businesses can even be started up outright with investment capital. Small e-commerce stores, off-hours consulting, handyman work, training or tutoring, selling small products or local produce, these are all kinds of small easy to startup businesses that can generate returns. It’s even possible to monetize a blog or video channel online now. None of these ventures should cost more than a couple thousand to get started and can even provide a temporary job if your primary income source becomes interrupted.
Stocks provide a great way for an investor to make steady returns that will beat any bank deposit accounts. It’s not required to have large sums of cash to purchase stock. With cheap online brokers it’s now possible to buy even just 1 share without a massive commission. When investing like this, there’s many things an investor can focus on. If this is going to be a long term investment it might be best to only buy a few shares in a large cap stock, perhaps maybe shares that pay a decent dividend rate. For an investor looking to perform an investment for a shorter span of time it might be better to raise the risk and look at buying up various small caps in hopes they rise quickly. Stocks taken over a longer span of time have outperformed most other “safe” investments for the past few decades.
Franchising.com - Collects information about franchise opportunities, franchise law, and franchise development
Kickstarter.com - Provides a place for small businesses and individuals to raise funding through “crowfunding”. Uses an all-or-nothing model where projects must reach a monetary goal in other to fund the project. Has raised over $100 million dollars.
Go4Funding.com - Online community connecting entrepreneurs with investors. Also can be used as a forum to gain knowledge from other investors.
IdeaCrossing.org - Free online resource that promotes entrepreneurial activity. Non-profit.
BusinessPartners.com - Similar to go4funding. Site has a focus on establishing partnerships.
All investments carry risk. Small investment opportunities allow you to control this risk by being able to diversify more easily. Be sure to do as much research as possible to minimize and hedge any potential losses. Not all investments will turn profitable but it is possible to spot many poor investments and aim to invest smarter. Do thorough research especially if taking on a small investment that has personal liability, such as control of a venture. These investments should be easy to enter and exit out of and it’s why they are small investments.
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