02 / 07 / 2020

The approach to investments

The security of funds invested strongly depends on the approach to investments. It may be speculative or based on facts - fundamental analysis of the company, observation of the market, as well as the sector of the economy to which the investment opportunities belong. Furthermore, it is also worthwhile to protect oneself and to find out how difficult it will be to find additional angel investors and how to find investments in a given area of the market which would allow strengthening the position of the company. However, speculation may also be the main or even the only motive to buy a company.

Speculation aims to quickly achieve high profits from making risky transactions. Although this method can be understood in many ways, it is, in fact, similar to gambling. Speculators buy a business not because of the value of the company or counting on its development, but because of its price and predicted activity in the future. They count on a quick above-average profit from the sell of a business. However, when deciding on speculation, one should be fully aware that the risk of losing a significant part of the funds invested in this way is very high, especially if the speculation is not supported by any additional analytical tools. For these reasons, the basic principle of safe investments is to avoid it, without market analysis and a company looking for a business partner or angel investor. Properly conducted investment analysis significantly reduces the risk of losing funds.

Minimising the risks requires a careful selection and then a detailed analysis of the entity whose assets are to be invested. Not only should the company itself and its financial situation be evaluated, but it is also worth understanding business and the sector in which it operates, including the reasons why the owner wants to sell a company or why wants to find investors. When investing, you should, first of all, assess the possibilities of increasing the value of the company as a whole. Before you
decide to buy a company, conduct in-depth research or use the services of reliable investment companies.

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