A lot of people have set financial goals for the year.
And that’s fantastic!
However, setting a goal to invest is one thing. Making the right investment decision is a different ball game.
One of my first investment mistakes was an investment in a private placement opportunity
This was my first attempt at making an investment decision.
We got wind of the opportunity from a senior colleague at the time and we thought it was a great opportunity.
This oil and gas company wanted to raise money privately and if we tapped into that opportunity at that time, we would make a killing when the company decides to go public on the stock exchange which they promised would be In a few months’ time.
A private placement is a sale of stocks, bonds, or securities directly to a private investor, rather than as part of a public offering. A private placement is different from a public issue in which securities are made available for sale on the open market to any type of investor.
A private placement has minimal regulatory requirements and standards that it must abide by. While it is a capital raising event involving the sale of securities, it is a method of capital raising that does not have to be registered with the Securities and Exchange Commission (SEC). Its investors include a small pool of entities and individuals. The investment does not require a prospectus (An information document) and in many cases, detailed financial information is not disclosed.
I didn’t realize there was a risk of the company not going public. All I could think of was how I was going to make a killing in returns when the shares go public
By the way, this was in 2007/2008 when the stock market was at its peak, just before the bubble. I invested in this opportunity and today, I’m still stuck with shares in a company that did not go public.
And because this company did not go public, I can only trade these shares on the Over The Counter (OTC) platform which is not a very liquid platform because I have to find someone who is willing to buy from me.
Anytime, I think about this transaction, I think about how a seemingly great investment opportunity can easily go bad.
To help you avoid making the wrong investment decision this year, I made a video sharing 3 ways to smell a bad investment opportunity from a mile away.
Click on the image below to watch.