Equity investment is the act of investing in and purchasing the equity of a company in order to participate in or control its business activities. It can occur in the publicly traded market, when a company is initiated or established, and when shares are transferred privately.
Second, the method of equity investment
1, invest rationally and do what you can.
Because of the high risk and high return of equity investment, the rational investment strategy is to regard equity investment as a part of investment allocation, instead of concentrating all funds on equity investment.
2. Familiar with the equity investment cycle.
The term of equity investment usually exceeds one year, most of which is 1-3 years, and some even reach 10 years. Individual investors must know the investment period of the equity investment they participate in, and the capital invested must match it. Otherwise, using short-term funds to participate in medium-and long-term equity investment will inevitably lead to liquidity problems.
3, the principle of its own funds to participate in investment
The long-term and high-risk characteristics of equity investment determine that ordinary individual investors should adhere to the principle of participating with their own funds. If financing investment is adopted, although it will produce the leverage effect of income, it will also lead to the superposition of risks. As an ordinary investor, it should be the best choice to participate in equity investment within the range that you can afford.
Extended data:
Risks of equity investment:
1, investment project risk
That is, due to poor management, horizontal competition, economic cycle and other reasons, there are unfavorable situations such as performance decline, shutdown and bankruptcy. , affecting the withdrawal of investment funds through listing, equity transfer and management repurchase. , resulting in no return on investment and even loss of principal.
2. Policy risks
Policy risk refers to the risk brought by market price fluctuation due to changes in national macro policies (such as monetary policy, fiscal policy, industrial policy, regional development policy, etc.). ).
3. Risk of fund extension
Private equity investment projects generally have a long preparation period from negotiation to successful shareholding, and the original investment plan will be postponed or postponed at any time for various reasons, which increases the uncertainty of investment and brings the risk of fund delay;
4. Liquidity risk
Not all private equity investments can get a good ending through listing and cashing out. More investment projects may not be listed for various reasons or can only be transferred within the original shareholders, or the equity is difficult to cash out in a short time or can only be transferred at a higher discount, which is not conducive to the flow of funds.
References:
Baidu encyclopedia-stock right investment