Every investment comes with a certain degree of risk. However, during a global pandemic the degree of risk could be higher. With this article, we are going to dive into 8 tips for investing in a Crowdfunding Deal during COVID-19.
TIP #1 – It is advisable that you restrict all your speculative investments to no more than 5% of your portfolio. Investment money needs to be extra money, it can’t be money that you need to live on next year. It’s got to be money you have the ability to lose and its loss won’t disrupt your life.
TIP #2 – For more ideas about creating a balanced portfolio which suits your financial needs do more research into the types of available investments. Or you could pay for the services of a qualified financial advisor.
TIP #3 – Research the company you might invest in. The Internet has a lot of information. If you’re investing with a company or individual, do your own due diligence on that person.
TIP#4 – Consider how much of their own money the directors have invested into the business. “Skin in the game” is an important factor for many professional investors.
TIP#5 – Make sure that every year you take advantage of your ISA allowance. This can be put into the cash, stocks & shares and innovative finance ISAs in whatever proportions you like. For more information of the Crowd for Angels’ IF-ISA click here.
TIP #6 – Take advantage of tax breaks on equity issues, including the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS). These government incentive programmes offer generous income tax and other reliefs on your investment. For more details check here. And remember that tax law can change and is dependent on individual circumstances.
TIP #7 – Don’t look a gift horse in the mouth – boost your non-financial returns with rewards. Many crowdfunding campaigns will offer additional bonuses to investors who subscribe a certain amount of money. These can potentially be worth hundreds, or even thousands, of pounds. For example, watch business Czapek & Cie gave generous product discounts to investors in their crowdfunding campaign.
TIP #8 – All equity investors need to realise a return on their investment eventually so read through the company’s exit strategy and see if it matches your expectations and investment timeframe.
We hope the above 8 tips for investing during a pandemic help you navigate your investment decisions.
Crowd for Angels is an FCA authorised and regulated crowdfunding platform that funds companies through the issue of shares, crowd bonds and digitalised assets to investors. Begin your fundraising journey or start exploring top investment opportunities here.