Professional investors play a critical role within many economies. Investors can provide capital to companies directly as venture capitalists or indirectly through stock exchanges. Investors help stimulate economies and create jobs. For example, in 2008 venture capital backed companies that employed more than 12 million people in the United States alone, according to a study conducted by IHS Global Insight. Professional investors can operate in many areas including real estate, stocks or angel investing. Successful investors, no matter what industry, must learn effectively manage and take on risks.
Instructions
1. Set your goals by defining the parameters of success. Use this as a barometer and let it clue you in on when to relax or to step up.
2. Select a specialty. Although many investors invest in a lot of different industries' technology, real estate and foreign exchange markets, they often focus in on one or just a few markets. For example, a venture capitalist may have a significant real estate portfolio but will concentrate his efforts investing in early-stage companies. Selecting a specialty allows you to spend the necessary time becoming proficient.
3. Develop a business plan. Investing is no different than starting any other business. Create milestones and income projections to gauge your growth. Use the experience of writing your business plan as way of convincing you into or out of becoming a professional investor. Do this by weighing the positives and negatives discovered through your research. For instance, the potential income may not prove to be worth the extra learning, effort and risk that awaits investors with little experience and savings.
4. Review your plan with respected counsel. Identify veterans in your chosen field. Take them to lunch or tea and see if your plan makes sense to them. Adjust the plan if necessary.
5. Set up your legal status. Whether you choose to operate as a sole proprietorship, corporation, or limited liability company, consider your personal tax implications. This step is especially important because investing has specific and substantial legal and tax consequences. Consult with your tax attorney, if necessary.
6. Raise capital. Use your own funds or recruit investments from your personal network. You can also form strategic alliances with other professional investors. Alternatively, you can hire professional consultant groups to raise money for you.
7. Execute your plan. Pay attention to what works and what doesn't. Be critical about your results. This is especially true if you are using other people's money, because they will demand satisfactory outcomes. Set up regular intervals to evaluate your progress.
