Private Placement Investing, Pros and Cons
With any decision in life, it is always important to weigh the risk and reward. By doing so, you can take a step back and determine if things feel right to you, or not. Though this seems like a basic concept, it is CRITICAL to understand, and is the difference between success and failure.
In this article, we have listed the pros and cons of the private placement industry for our readers. This will allow you to see if private placement is right for you, while also giving you facts on the PPP business. Scroll down and take a look below!
Pros and Cons of the Private Placement Business
1. Possible High Yields: In private placement, you can get higher yields than you would ever expect. In addition, there are pre-determined contracts with buyers which minimize risk for bank instrument traders (MTN, BG), and their investors.
2. Privately Multiply Money: If you are someone with high net worth, it is always nice to profit in a private setting. Unlike public investments, private investing can protect the interests and information of the investor while they grow their wealth.
3. Fund Large Projects: If you are a wealthy investor with projects, private placement is a great way to achieve your goals. In fact, project funding is the main point of private placement investments. If you’re an investor with 100M+ in liquid assets, you could be funding Billion Dollar projects in no time.
4. No Risk if Real Trader: If a private placement trader is real, he will have a contractual commitment with someone to purchase their bank instrument at a higher value. Without this pre-defined commitment, the private placement trader will not even purchase the instrument from the bank. In short, the contract with the “commitment holder” eliminates all risk for the trader.
5. Meet Most Powerful in World: There is a very small circle of successful people in the private placement business, and most of them are immensely wealthy. If you are lucky enough to find a real private placement deal, you could become connected with some of the most powerful people in the world. This could include those with political ties, and other connections that could benefit you in the future.
1. Most Trades Don’t Perform: As you should know by now, most private placement investments do not perform as promised. If you go into a transaction thinking differently, you will always be disappointed. Stay true to yourself, and you will have a far better chance of succeeding.
2. Scam or Real Trader: The problem with private placement is, it’s very hard to determine if a program is real or not! Despite what many brokers may claim, less than 1% of what you will find is real. Keep this in mind, or you could become a victim of time waste or investment fraud.
3. Takes Millions to Even Apply: If you are an investor with less than 50M, you are most likely chasing a dream. Unfortunately, bank instruments are usually 100M+, so trying to get into a PPP with 50M or less is almost impossible.
4. All Investor Information Upfront: Before you enter a private placement investment, you MUST first provide a bank statement, passport, and compliance documents. If you provide this to the wrong person, your information could be sent all over the internet to hundreds of brokers. This is rarely problematic, but it can lead to identity theft or worse in some cases.
5. Upfront Fees for MT 760/ SBLC: Despite what many private placement brokers will tell you, there are fees for blocking funds via MT 760. Let’s face it, banks are in the business of making money, and they will NOT meet rare requests (MT 760, SBLC) for free!
After reviewing some of the pros and cons we listed, remember, each private placement deal has its own variables. Despite the fact that private placement investments are rare to find, they are REAL, and CAN create huge profits. No matter what anyone else tells you, YOU can be successful in private placement, it just takes persistence and realism.
InsideTrade LLC Staff
Phone: (949) 444-2111