Alternative Ideas To Gaining Equity Shares

If you are a beginner in the investment world, investing in equity shares can be a thrilling yet challenging task for you. The stock market seems to be a very complicated thing for anyone viewing it from the outside. But once you start understanding how it functions, it can help your money to grow.

You can purchase the shares of a company with the expectation that its share price will increase in the coming time. You would only want to opt for this type of investment when you believe the company you are investing in has the potential to grow. If the company has shown significant growth in the past, then chances are high that it will continue to do so in the future.

There are different types of equity share investment options like convertible loan note, venture capital, leveraged buy-outs, and so on. In this article, we will discuss all the options in detail.

  • Leveraged buy-outs are when a private equity company wants to acquire another company. However, for this type of equity investment, one would need a significant amount of equity and debt.
  • The convertible loan note is a debt instrument used by angel investors who want to invest in early startups that have not been valued explicitly yet. Once all the information is made available to establish the value of the company, the investors can convert the note into equity.
  • Venture capitals are for early startups or small businesses. This type of investment is quite enticing as it comes with high returns, but it bears high risks too.
  • Growth capital is for companies who want to reconstruct or expand their business. This is a reliable investment option, as investors will be investing in already well-established businesses that have shown significant growth in the past.
  • Mezzanine capital is an investment where a given amount of money is loaned in return for interest. It acts as a bridge between equity and debt financing.
  • Offshore equity investment can be described as the investment which is made in off-shore quoted equities. It comes with benefits like the investors are exempted from tax. This is one of the reasons why many investors prefer this option.

If you want to invest in private companies, then you can do that by investing in private equity funds. It is mainly for seasoned investors who can invest a lump sum amount of money for a long period.

There are several ways of investing in these equities, but the most common is through online platforms offering equity funds. Once you have registered and opened an account there, you will be ready to go. You can purchase stocks or equity shares through ETF using your brokerage account.

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