Wednesday 30th September 2009
You can learn a lesson from the TV programme Dragons' Den. Here are five serious investors' that all stick to the same basics when looking at investment ideas. Without exception, they all invest in "people". How many times have you heard them say, "I like the idea but I could not invest in you" or "I'm investing in you"? The major investors invest in people/management teams as do most of the huge investment institutes. So if you are thinking of investing with a team already in place look at the track record of the management team.
A common term used by investors is "Return On Investment" (R.O.I.) which basically means for every £/$ or Euro they invest how much in percentage terms will they get in return. The R.O.I is usually measured against risk and that is why some investors on Dragons' Den often refer to the term risk when seeking equity. When you look at investment ideas you too should look at the R.O.I. and the risk to reward elements. Copy the top professionals as what works for them should work for you too. Why re-invent the wheel?
A word of warning though, a lot of financial advisors (not all) are working towards a commission for themselves, so your best interests are rarely number one priority for them. Like anything else, shop around and ask the questions they don't want you to ask. Make them squirm before you trust your money with them. Ask them this..."What, exactly is in it for you?" If their answer sound like a polititian on tv cross them off your list and move on to the next.
Monty Burn
Founder - Investment Ideas