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Urgent Stock Market Message

UK Financial Markets: Pros and Cons of Being a Private Investor

Personal_Finance / Investing 2017 Nov 18, 2017 - 04:23 PM GMT

By: Submissions


By Dividend Investments : By definition, a private investor refers to a certain person or a private company who has privately held shares that are not traded in the stock market for investments. Thanks to newly-launched regulations, policies and online marketplaces, having private investments are becoming more common and accessible.

If you are new to the business field and is planning to become a private investor, below we’ve listed the pros and cons of private investment to help you determine whether or not private investing is for you.

Pros of private investing
One of the most common advantages of private investment is that the investor gets exempted from the issuance of a prospectus and does not have to be fully transparent and disclose much information as compared to public companies.

  • They are not strictly monitored by regulators so private investmets can choose which information should be made public.
  • Aside from that, private investments, despite being risky, tend to have higher return opportunities and have higher possibilities of hitting a home run and receiving a massive investment return.
  • One of the most common misconceptions about private investing is becoming rich in order to participate, requiring an investor to have a net worth of more than $1 million. However, a bill entitled Jumpstart Our Business Startups (JOBS) Act of 2012 was launched to open up new and equal opportunities for all investors.
  • Because of this, every investor is given the right to invest in anywhere they want without having accreditations (however, some private investments still need to have one).

Cons of private investing
As alluded to above, private investments are associated with many risks and are more liquid. Basically, private investments are not easily sold and bought on secondary markets.

  • Recently, the Securities and Exchange Commission has regulated some opportunities for private investors, making their investments appear inaccessible and impractical for others. Even for some private investors who met accreditation standards, many people think that investing with them seems to be exclusive, very expensive, tedious, and very opaque to participate.
  • In private investing, one must have an open perspective and have to consider a lot of things, both general and specific.
  • Because a private investor typically works on his own, the reception of information tends to be very slow and when he finally gets hold of it, the reaction time is much slower as compared to a professional trader or computer that does it for only a short period of time.
  • Furthermore, a private investor usually gets the worse price of everything but has to pay high costs for dealing. Along with this, a private investor needs to deal with high amounts of taxes.

Despite these aforementioned cons, several technologies already exist to make this type of investing easier and become more transparent. For instance, online brokerages which specialize in private securities have been created for investors who want to easily browse, sort, and subscribe to placements deals. These online brokerages can also be used to establish accreditations.

By Dividend Investments

© 2017 Copyright Dividend Investments - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2018 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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