Traditional investing opportunities have dominated the playing field for so long that people tend to look at alternative investing with skepticism. Now, with the rise of cryptocurrency as an alternative investment opportunity, many people are turning to different types of alternative investments as a way to diversify their portfolio risk, some of which we’ll discuss below.
The terms private equity and hedge fund are huge in the investment community. These investments were historically only open to the ultra-wealthy. Now, any accredited investor can participate in these opportunities.
What is an accredited investor?
The SEC (U.S. Securities and Exchange Commission) defines an accredited investor as either:
– an individual with gross income exceeding $200,000
– joint income with a spouse or partner exceeding $300,000 USD
– a person whose individual net worth, or joint net worth with that person’s spouse or partner, exceeds $1,000,000, excluding the person’s primary residence
Private Equity Funds
According to Investopedia, private equity is an “alternative investment class and consists of capital that is not listed on a public exchange.” A private equity group goes out and buys companies or shares of a company. They begin to turn it around, make it very profitable, and then sell the company. A private equity investment vehicle is a long-term strategy.
Hedge Funds
According to Investopedia, hedge funds are “alternative investments using pooled funds that employ different strategies to earn active returns, or alpha, for their investors.” The purpose of a hedge fund is to get the investor the maximum short-term profits possible.
Hedge funds started in 1949, with a psychologist by the name of Alfred Winslow Jones. Jones started the first hedge fund after watching markets continuously fluctuate. He believed there was a better strategy that could protect his investment.
Shorting
One example of such a strategy would be shorting, which is when funds borrow a stock, betting it will drop in price. If the stock does drop in price, the fund would profit from the difference in the sell and buy price. Hedge funds will move in and out of positions consistently and quickly.
However great shorting may sound, it still has major flaws. The GameStop meme stock was a great example of this.
The Miracle of Alternative Investing
The Family Business Fund functions as the middleman between investors and the small businesses receiving merchant cash advances, taking all the hard work out of alternative investing. The Family Business Fund finds small businesses in need of merchant cash advances, vets them through a rigorous process, secures the underlying assets, and even handles the underwriting and repayment terms. In the Family Business Fund, the underlying assets are the outstanding invoices that the businesses have yet to get paid for. This means that Family Business Fund has secured the money we know they will receive.
For more information contact Douglas Muir at douglas@familybusinessfund.com or call (888)884-6442 ext. 3
About Family Business Fund
The Family Business Fund (FBF) was founded in 2018 to help ensure that small businesses have access to the resources needed to thrive. FBF is an SEC Reg. D., 506C, high-yield, fixed-income fund for accredited investors.
For more information about how you can invest in the Family Business Fund, contact Douglas Muir at douglas@familybusinessfund.com or call (888) 884-6442 ext. 3
