Investing

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~Svenler Nov 29, 2012 Professional Photographer

A lof of people know about investing in the stock market, CDs, or government bonds. But there are other ways to invest, such as angel investing, most of which are heavily regulated by government, essentially prohibiting people to do what they want with their money.

Most forms of investment such as angel investing and seeding require someone to be an accredited investor. That means one has to have a net worth of at least $1m (excluding primary residence) or have an income of at least $200k for at least the previous two years and good reason to believe that one's income won't fall below that threshold in the current year.

Most companies profiting from the common types of investment are comparatively large and already established companies or the government itself. Most companies that would profit from the investments that require someone to be an accredited investor are small and local companies that need to raise funds. If these companies can not raise the needed funds through investors, they have to rely on loans, which is a more costly process.

Yes, it is still theoretically possible to invest in small companies without being an accredited investor, but the chances and opportunities are small and far in between and mostly require connections.

What is your take on it? Do you think that a government should have a right to tell you how you may invest your money?

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~Lytrigian Nov 29, 2012 Hobbyist Writer

Those laws don't exist to restrict investors; they exist to protect individuals from being induced to put their money into very risky investments where they cannot afford the loss.

If you want to be an angel investor and cannot qualify on your own, you can always join an angel group.

~Svenler Nov 30, 2012 Professional Photographer

Neither of this was question. The question was if government should have the right to tell people what they are allowed to do with their money. The stock market is risky too, but the government doesn't seem to have an issue with people investing there.

And no, you can not not join an angel group without being a accredited investor.

~Lytrigian Nov 30, 2012 Hobbyist Writer

There's risk and then there's risk, and the stock market is also HEAVILY regulated.

~Svenler Nov 30, 2012 Professional Photographer

If you want to make an argument why you believe that the government should decide what people are to with the money they earned, please do so, but do it directly and not with those "there's risk and then there's risk" answers.

~Lytrigian Nov 30, 2012 Hobbyist Writer

You don't acknowledge that the risks in investing in a publicly traded company are extremely mitigated compared to a startup? That in private transactions you can have shenanigans that are not possible -- or more difficult to pull off -- than in public ones? That potential investors who lack significant resources of their own are not in a strong position to either protect themselves well or recoup their losses under those circumstances?

Fine. These laws have been on the books for decades. Write your legislator and try to get them changed, if you think they're unnecessary and intrusive.

~Svenler Nov 30, 2012 Professional Photographer

Don't argue against something I never said. Instead, argue for your point.

~HGWizard Nov 29, 2012 Hobbyist Artist

I've only recently begun to get into the wild and crazy world of investing.

What is an Angel investment exactly? How does that differ from a Stock, CD or a Bond?

~Svenler Nov 29, 2012 Professional Photographer

Angel investing is investing in start-up companies to provide them with the required funds, so they don't have to take a bank or government loan. In return for the investment, the investor either receives equity in the company or convertible bonds.

~HGWizard Nov 29, 2012 Hobbyist Artist

Oh nice, I didn't know there was a special term for that!

~Ragerancher Nov 29, 2012

If my understand is correct, angel investing is like Dragons Den. You pitch your idea directly to individuals and get direct investment in your company in exchange for a stake in it.

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