I recently took the time to learn how the so-called “dragons” invest after watching a few episodes of “Dragon’s Den” on BBC and decided to write about my experience.
To be honest, I have always been a bit timid and indecisive as to how to choose the best investments. Since I started watching the series, I feel like I have grown more confident in my investment choices. I am not sure that I can proclaim myself a “dragon” quite yet, but the tools I am learning are giving me more confidence in my choices and I may breathe fire yet! I would love to share my 5 key takeaways with you.
Takeaway #1: Invest through Crowdfunding
Crowdfunding has gone a long way from being a niche market and has now entered the mainstream. More and more people are taking the plunge, because Crowdfunding has the potential to get your foot in the door, investing in new growth businesses. If you choose the right company to invest in, and this company makes it big, you are in for a huge payday.
Please note that we are talking about Crowdfunding for equity investments here, so instead of a fixed return, you would get an equity stake.
Takeaway #2: Peer-to-Peer Business Lending
What if you want a fixed or a more stable return from your investment, instead of an equity stake? Then you may want to consider peer-to-peer business lending.
Recent years have shown us that consumer peer-to-peer platforms have seen quite a lot of success, and in essence, this is what many of the investment television series like Dragon´s Den, Shark Tank, and others are all about. With this in mind, I decided to look into this avenue of investing much more closely.
Certain websites allow you to join other individuals who are also looking to lend money to small and medium-sized businesses. According to Investopedia, there are websites like Peerform, LendingClub, Upstart, Prosper, and Funding Circle that you can check out.
Takeaway #3: Trusting your Intuition
In an interview with Dragon investor Jenny Campbell with Seedrs.com, she mentions that when looking to invest in something, you should trust your instincts. According to Jenny, “Don’t prolong things and start doing lots of due diligence and doing lots of ´umming’ and ‘ahhing’. If it doesn’t feel right at the beginning, then it’s unlikely to turn around.”
Of course, this advice is wonderful for investors with sufficient experience. But in this case, I have personally come to believe that she is correct, especially when it comes to that little voice of uncertainty in your head telling you that something does not feel right. Listen to it!
Takeaway #4: Do Not be Greedy
Greed is not just wanting to have money, fame, and possessions, but also caring too much about them.
In business, once you have made a profit, you have to decide when is the time to get out or stay in. If money is your only goal, there can be a tendency to allow greed to drive these decisions. Investing in enterprises that you have genuine interest, knowledge, and passion about can be a fail-safe against this tendency and aid you in being smart with your timing. If you are greedy, there is a chance that you will lose everything.
Takeaway #5: Always Know that There are Risks
It is important to take note that all investments entail risks and that it does not guarantee you any returns. That is why it is always wise to invest only what you can afford to lose, even on an investment that feels like a sure thing. Diversifying your investment portfolio is also a solid preventative strategy to mitigate risk. When you do lose some, the key is to evaluate the situation and learn from mistakes for the future.
So these are some of the tips and tricks I have learned in my ongoing mission to become a dragon investor. We all need to understand that investing by design is a risky proposition. Have you heard the expression, no risk – no reward? In today’s global economy, more and more individuals are willing to take these risks, rather than keeping their money in banks in hopes of higher returns for their hard-earned money. Follow these principles, and I have confidence that you will soon be soaring with the dragons!