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Private Investing
I researched this when a friend sent me a link to check out. When I got done reading the presentation, I had no doubt that the entire system was nothing more than an excuse to legally rip people off.
Private investing is presented as a way to easily make money, by loaning money to others. The instruction books that purport to teach you about this mention that people are lining up to borrow money at good interest rates, and make it sound like all you have to do is hang a shingle over your door and watch the money flood in.
There are only two ways to do this: Through a firm that is established to handle money from private investors - in which case you better check them out good, or by going into the loan business yourself - in which case you must have licensing and follow your state regulations (and there will be a LOT of them).
There are several points
on investing which can help you understand what the issues really
are.
1. You invest thousands, and you earn
pennies. Earnings from investing, which is considered "passive" income,
are usually less than pennies on the dollar.
2. These types of programs often have hidden
or confusing fees, so the amount it appears you can earn is nowhere near
what you actually earn.
3. Investment programs have all sorts of
variations, and many of the real differences are hidden in the fine
print, in technical terms.
4. There is a learning curve. If they tell
you that you don't need to know anything about investing to do it,
BEWARE. What that really means is, "If you don't know anything, then we
can rip you off without you knowing".
5. They tell you that the program helps you
find people who are looking for investors. Believe me, this is NOT an
issue! Everybody wants money for something! The real issue is QUALIFYING
the prospects, and finding other investors to make up the total
needed.
6. If you invest in the wrong thing, or with
the wrong company, or if they invest with the wrong mortgage company or
the wrong handler on the other end, you can lose everything you put in. And the risk of
this is VERY high!
7. Remember, people who seek private
investors are by nature, high risk. We are talking VERY high risk!
Because if they QUALIFIED for traditional funding, they'd get that
instead. The people who seek private investors are those who cannot get
traditional funding, or who, for obscure reasons, may not wish to draw
attention to themselves. The chance of unknowingly financing a deadbeat,
or worse, a criminal, is astronomical.
This is something I'd not ever think was a
good idea. It is far too risky, and contains a near certainty of losing
your money.
If I had money to invest, I'd buy a house
and rent it out before I'd try any of the programs or instructional
systems associated with this.
NOTE: There are legitimate "angel investor" programs, and companies that handle processing loans for real private investors. But they are NOT selling themselves on a one page website, nor are they trying to hawk a book on the subject for $29.95. Rather, they will be recommended by Economic Development Corporations, and by reputable investment counselors.
Written by Laura Wheeler, MicroBusiness Website Developer, and founder of the MicroWebmasters Alliance
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