What makes a successful equity investment?

By August 12, 2020For Angel Investors

Bure Valley Group is an investment brokerage business which links successful investors with exciting, innovative UK startups seeking funding. This content is for information purposes only and should not be taken as financial or investment advice.

All investors want their investments to be successful. But what does that mean exactly, and how can someone maximise their chances of achieving that “success”? In this article, our investment team here at Bure Valley Group will be offering some thoughts on what makes an investment “successful”, outlining some of the key characteristics to look out for when assessing your own portfolio’s health. To find out more about our own EIS and other investment opportunities, visit our portfolio page here. To enquire about our latest projects and funding, you can reach us via:

+44 160 334 0827

[email protected]

 

What investing is not

It helps to start with a helpful definition of what investing is – in order to determine its “success” forms. In short, investing is both an approach and an aim. As an approach, investing involves allocating resources (e.g. cash) towards assets which are expected to generate an investment return. These assets might include equities, bonds and property. As an aim, however, investing seeks to maintain and increase the real value of a portfolio over time.

Understood this way, it becomes clearer what investing is not – and, therefore, what makes it “successful”. First of all, investing is a long-term commitment. Successful investing, in short, is not the same as gambling where the aim is to reap some quick winnings. Nor is it a simple “roll f the dice” to try and increase the original amount you put in. Whilst gambling puts you almost completely at the mercy of the game you are playing (where the odds are stacked against you), successful investing does not rely on luck in this way. Rather, by doing your due diligence on the different investment opportunities in front of you, you can increase your chances of reaping a reward from the risks you are willing to take with your capital.

 

Identifiers of a successful investment

With some of these initial qualifiers out of the way, what does successful investing mean to you? For certain investors, the definition might centre primarily around safety – i.e. if the investment helps to preserve my original capital then that will largely qualify it as a “successful investment”. Yet for others, this definition falls far short. Specific investors might not see investing so much as wealth preservation, for example, but as wealth growth. In other words, if a certain asset or opportunity generates a high potential for return (e.g. 10%+ over, say, 2 years) then this can be characterised as a successful investment.

If only things were this simple! Other investors, for instance, will argue that an investment also needs to achieve certain goals established before capital is committed. This is a strong line of thinking, for instance, behind ESG investments where the objective is not only to increase returns for the investor but also use the capital to uphold and promote environmental, societal and governmental wellbeing/good.

Still, others will fiercely hold that most (if not all) successful investments must be highly “liquid” (i.e. easy to buy and/or sell). It does little good, they say, if your investment turns sour and you cannot then get rid of it. Another common argument is that a good/successful investment will be one that is offered to the investor at an undervalued price – offering the individual the chance to generate a significant return later when it (presumably) rises massively in value. Finally, many investors will also claim that an investment is successful if it does a good job of helping to balance or diversify your portfolio.

 

Where does this leave us?

As you can see by now, there is little consensus around what constitutes a “successful investment” – although there is perhaps more agreement around what makes a poor/failed investment. If you invest in a company and it fails, for instance, losing your original investment in the process, then most people would likely call this a “failed investment”. Idneed, generally most would assign this label if an investment falls way below expectations.

Here at Bure Valley Group, we recognise a balance when it comes to successful investing. On the one hand, we appreciate that all investors are different when it comes to what they want their investments to achieve for their overall financial plan. On the other, however, we believe it’s important to have a set of solid, high-aiming benchmarks in place to ensure that the investment opportunities we offer comprise vetted, promising companies which will appeal to a wide range of investors. The benchmarks include:

  • Minimising unnecessary risk. Our property loan notes, for instance, are typically asset-backed – meaning that an investor is more likely to receive their original investment back if the project fails.
  • High return potential. Who wants to settle for a 5% return when you could generate 10%, 15% or an even higher figure? Here at Bure Valley Group, we recognise that successful investing will seek to maximise returns within reasonable expectations.
  • Achieving goals. Finally, our team recognises that successful investing goes beyond the simply figure which went into the company or opportunity in question. Here in our network, we work with companies that are on the front line for developing solutions and technologies which could not only benefit the investor, but society and the world at large.

 

Invitation

Get in touch today to start a conversation with our team, and discuss some of the great investment memorandums we have available:

+44 160 334 0827

[email protected]