Investment And Crowdfunding Are In The Same Financial Realm

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Crowdfunding was able to turn heads the first time it entered the financial scene. There were admittedly a lot of reservations when it came into the picture because it needed input and funds from many people. It was a different and, at that time, a radical approach in gathering funds because it entailed a lot more work at that time.

When compared side by side with traditional lenders, crowdfunding seemed to entail a lot more work. it was easier to talk to a handful of people like the bank or some venture capitalist and get the money from a small number of people. But crowdfunding offered a new and to a certain extent, easier time in gathering the needed funds for a project.

On the other side of the table from project initiators, the investors are in it for a number of reasons and investment is one of them. There are some people who can relate to the particular need for the product being crowdfunded prompting them to put in money. There are those who are related to the people behind the project. But for a good number of backers, it is a business decision more than anything else.

Crowdfunding and investments

Financial planning must be a big part of any consumer’s life and one way most of them plan for their future needs is to dabble into various types of investments. Crowdfunding then becomes a tool in helping people reach their financial target to become more financially stable in the future.

  • Borrowing and returning at a rate. One particular thing about investments is that one side offers a chance to grow money for people while the other side puts in the money expecting a return on that investment. The absence of a rate at which the money will grow over a specific period of time would immediately convert this transaction as a gamble for the investor. There needs to be written understanding of the terms on the money being put it. 
  • It is time bound. If the return on investment or commonly referred to as ROI is not time bound, it might not be considered as an investment. One of the most important component of an investment is that the transaction must be time bound. There is an end date where the proceeds will be realized. It can be a week a month or a year before investors get the return on their money. 
  • Diversification in investments. People who choose to use crowdfunding as an investment tool has the option of choosing from a wide variety of products to choose from. There are groundbreaking products that are offered in the crowdfunding as well as traditional ones. Even the property sector has seen a resurgence in some parts of the world as it started to offer the once affluent industry to the common masses. They are now able to invest a low amount and be a part of the property scene.

Crowdfunding can be a great investment strategy for people as it helps increase their money over tIme. As with anything, there is still risk involved but this is where due diligence comes in.

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This article is written by the Crowdfunders Editorial Team. In Asia, Crowdfunders.Asia is a leading portal on providing news related to crowdfunding, start-up, property and business. It is operated by CoAssets.com. CoAssets is South East Asia’s first listed and largest real estate crowdfunding platform. If you have any Crowdfunding news or stories to share, please email [email protected]

 

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