If you wish to earn good sum of money and become wealthy, you need to do more than just earning money. You need to invest in your future. There is no good time to invest, but if you are disciplined enough to hold onto the money you earn, the next step is to grow that investment.
Once you become an investor, there are several paybacks you will get from your investment in the form of:
- Interest & Dividends on savings or stocks/bonds
- Cash flow from business & real estate
- Appreciation of value from stock portfolio, or other assets
As you become a pro in investing, you will learn how to work with limited resources in order to get large potential returns. It also means investing into stocks & mutual funds or even exchange-traded funds.
But the bigger question is Why Should You Invest into Stocks & Mutual Funds? Let’s get into this article to understand what might convince an investor to invest their money into stock market or mutual funds in 2021.
Why Should You Invest?
Investing at a young age when you begin to fully understand the exchange markets will allow you to grow your money over time, thanks to the power of compound returns. As compounding is known as the Eighth Wonder of the World, it helps in growing a single penny into millions of dollars, given enough time.
The right time to invest in stocks and mutual funds is right now. Do not be terrified, and begin investing your hard-earned cash into financial institutions such as The Doomsday Preppers, The Gambling Day-Traders or The Indexers, for starters.
How to Convince Investor to Buy Stocks & Mutual Funds?
Here are some key ways to convince the investor to invest into stock market or exchange markets such as mutual funds.
A scalable business does not mean that the business requires double the resources in order to grow or scale up. Rather, to obtain double the benefits from your investment, you must understand the basic structure of the business itself, which helps you rise your income exponentially.
The investor demands for scalability of the business in order to retain trust and an expectation of good returns on investment.
2# Good Investment History
Every investor before buying stocks or mutual funds into a business, have a predilection for a startup or entrepreneurial themes. There could be different types of investments, such as a venture capitalist might not be interested in investing into a travel business, or an investor might only be interested in buying stocks of an eCommerce business.
Maintaining consistency in the investment history & the credit history of the business, helps the investor stay focused on attracting good investments. Collecting all the information will avoid unnecessary and unproductive visits for your investment objectives.
It is necessary to graph out and demonstrate the performance of the business numerically. This is where most entrepreneurs fail. If you do not have validated figures to show to an investor in order to gain credibility, you will not be able to convince them.
Everything other argument would seem subjective, and behind the logical doubts, the investor might rise with other questions such as the size of the market or the response of the customers.
4# Full Commitment
Investors ask and demand for total commitment from the business side. They do not appreciate half measures. If you are asking someone to invest in your work, you need to show them you’re worth it.
You need to make them believe in your work and do not show any personal doubts in your statements, which might confuse the investor.
5# Heterogeneous Team
If you ever watch a sport, such as football, you will find that every player of the team work towards reaching the goal and scoring the point for the whole team. There is no selfishness in teamwork. The same goes in convincing an investor.
A team focused on every aspect of the business including technical, product, marketing and finance, along with complimentary skills working towards the same goal, might convince the investor to buy stocks or mutual funds into your company.
6# Investment Protection
With the following terminologies coming into play, one can figure out if their investment will be protected or not.
- Pre money valuation meaning valuation of the company before investing
- Preferential dividend meaning in case of profits, first collect goes to the investor
- Liquidation preference meaning at the time of dissolution or selling of the company, dividend is distributed according to the percentage holders
- Preferential acquisition meaning if a partner sells his shares, the investor has a trial and error option.
Many entrepreneurs tend to give up a lot of their stocks in the beginning which might not be a good idea. In the end, one who makes the right decisions for all the investors while keeping their investment protected is what matters the most.
The objective of the partners should focus on growing the business as quickly as possible, reaping maximum benefits and returns. With good resources and an effective strategy, an investor feels his/her investment is in safe hands.
The Bottom Line
Only sticking to the technical aspects of the business might not convince the investor and is not a good aspect of evaluation. Rather, looking into the company’s history and telling your business story to the investor might convince them more to invest into the company by buying stocks or mutual funds into the business.
Also, providing them with accurate information about the business statistics and professional career, and about your future goals, help in rising interest in the investors mind and makes them more intrigued to be a part of the business and to eat a slice of the cake.
Enjoy these tips to convince your potential investor and thank us later!