Are you done with spending your money on things that bring you passing joy? Are you determined to put your money to work to make more of it? Then, good for you! It means that you’ll proudly walk into the investors club. However, the story of investing isn’t simple. This is because to make money, you gotta have money – we have to generate capital.
The thought about investing is quickly followed by an important realisation – you need something to actually invest. That something is capital. Which brings us to the purpose of this post, which is how to generate capital for your investments-to-be.
Whether you want to put money into your business, someone else’s business, property, or some other type of investment, you can’t do it without the monies.
Since the talk of the capital tends to build up anticipation, I won’t keep you in suspense a minute longer. Here are some of the best ways to generate the capital you need for your investments.
1. Buy Some, Sell Some, Take Some Money
If you want to launch that ongoing investment cycle, the capital gain income can be your ticket in.
The way it works is that you buy a property, asset, or investment for one price, and then sell it for a higher price. The profit you get will be your capital for future investment.
You do need to invest something to generate the capital, but nothing comes for free. However, as you make a profit (or capital gain), your capital will increase with time, allowing you to make bigger investments.
The capital gain can come from buying and selling houses, shares, coins, businesses, or whatever you have an eye for.
Target something you know a thing or two about. If you have the ability to recognise the potential in seemingly worthless assets, you can buy profitable investments, raise capital, invest some more, and make some drastic changes to your bank account.
Keep in mind – pick something that has a market turnover than matches your goal. If you want super quick capital, you’re going to want to pick your buys and almost ‘snipe’ low price items with high unrealised value that you can quickly flip on. If you’re not too fussed, I’d suggest a low risk share/fund. I guess this defeats the point of the post as you’re looking for that capital TO invest but anything is better than nothing.
2. Rely on the Angels
Life isn’t a fairytale. An angel from above won’t place thousands of pounds on your doorstep. Or, will it?
If you haven’t heard of Angel Investors, now is the time to change that.
Angel Investors are private investors sitting on a pile of cash, ready to ‘give’ it away to a business with potential. They provide promising start-ups and entrepreneurs the capital they need to get their business up on its feet. It is quite common that they provide business advice and guidance in addition to signing cheques.
What do they get in return? Ownership equity in the business. This tip is obviously handy if you’re looking to start a business – this isn’t something you’d invest into shares yourself!
So, if your investment is your business or a business where you are a part-owner, get yourself a business angel.
You can even take the burden to find Angel Investors in return for an ownership equity in the company you want “the angels” to invest in. It all depends on what you have your eyes on.
To get you started, here are a few Angel-Investment networks in the UK:
3. Generate Capital Through Networking
No one likes to ask for money. I get that. But sometimes you just need to accept that increasing zeros on your bank account won’t happen if you don’t step outside of your comfort zone.
People around you – family, friends, current and former colleagues, and bosses – can help you build a foundation for your investment.
Don’t get me wrong, you shouldn’t rush to your parent’s house and demand all their savings. It’s not that simple.
To generate capital for investment from your network, you need to reason your plans. Write an investment plan and explain what you plan to do with the loan – emphasise that this is exactly that – A LOAN. Also, provide an estimate of when you plan to receive the money along with how you calculated the deadline.
The key here is to ensure that in your worse case scenario, that you can pay them back regardless of how well your investments perform. You don’t want to make enemies and at the end of the day, what’s all that money worth if you’ve got no-one to spend it on/with?
Take a look at this guide for writing a funding proposal to get an idea of what you can include in your capital-raising investment plan for your personal network.
Personal loans for investments shouldn’t be taken lightly. They are business agreements regardless if the person on the other side is your grandma or your former boss. Anyone who agrees to give you the funds for the capital deserves to be treated like a business associate not like a cash machine.
4. Turn Yourself Into Money-Making Machine
This may not be something you want to hear, but you can be your own capital-generating solution. Put yourself in full work mode and generate capital by monetising your skills and knowledge.
Even if you have a full-time job, there are ways to start earning money aside. Your monthly salary or wages can be spent on your needs and your side hustle money can be directed to “the capital” pile.
There are many ways you can earn some extra cash for the capital. Since we are having the talk about investments, let’s say that you have the talent for business endeavours. In that case, you can offer business advice or write other people’s business proposals.
Essentially, any kind of skill can bring you money nowadays. You just need to pinpoint what you can cash in.
5. Turn to the Source
Of course, this list wouldn’t be complete without The Source. The Source is the place where that paper that runs the world comes from – better known as the bank.
Banks are commonly perceived as the big bad wolf of the investment world. However, they can give you wind beneath your wings when you most need it. Getting a bank loan can help you get the money you need, thus, we can’t overlook this option.
The type of loan you will resort to solely depends on your situation. So, arm yourself with patience and ask the “lovely” bank clerks about your possibilities.
Some loans you can consider are the following:
Again – the decision to get a loan WHOLLY depends on what you are looking to invest in and ONLY get what you can afford to pay back! With investment property, this would be a Buy-To-Let mortgage. Not something you’d want to take out if you just needed some start-up money to set your own stall up on Dagenham Market.
Investing – A Way to Make Money with Money
Turning to investments as a money-generating solution is becoming quite a popular route. So don’t let your money “rot” or spend it like there is no tomorrow. Investments can bring you notable income without those 9 to 5 working hours.
Hopefully, these tips will help you realise that your investment idea shouldn’t stay just that. Put these tips to use, generate capital, and start investing.