Pros and Cons of Investing
When it comes to investing, many set themselves up for failure because they do not understand what they are investing in. Using the stock market as an example, if you invest in the stock market, depending on market conditions, you may be placing yourself on a roller coaster that could result in money lost instead of money gained.
Directly from part three of our four-part series, Investing 101, on our Kiss My Assets podcast, Jamison and Rocky discussed what makes Neighborhood Ventures investing so transparent. When you are purchasing your first car, you want to make sure there is no prior damage or undisclosed issues that could cause your car to break down after buying it. Any information about the car needs to be presented to the buyer -- nothing left out. The same goes for investing.
As mentioned in episode 10 of Kiss My Assets, Rocky talks about industry jargon that can easily confuse a new investor. She said, about jargon “they are words that a certain industry uses to basically keep others out. At Neighborhood Ventures, we want to be as transparent as possible with current, future, and prospective investors. Here, we highlight the benefits and considerations to evaluate before making the decision to move forward with an investment.
From co-founder Jamison Manwaring, “what we are trying to do here is help folks understand what they're investing in. We want to be really transparent because I believe if people understand what they are investing in, their confidence only grows in that investment, not the reverse. The more information you have, the more data that you can make a decision.” Neighborhood Ventures thrives on the fact that what you are investing in is a tangible asset. You can see it and touch it – and for many people, investing in properties is more exciting than owning shares of stock on paper. After creating an account with us you can view our properties in person, as well as receive monthly videos showing renovation and design updates – getting an up close look at which exterior lights we are going to put up in the courtyard, what the bathrooms will look like, or how we are landscaping the property. It is all there!
Ease of online investing
Noted management guru Peter Drucker once said “the best way to predict the future is to create it.” These thoughts were echoed by Rocky Petersen, our lead designer, in a recent podcast. She said, talking about Neighborhood Ventures investment projects: “this is the future.” In a world where face to face encounters are no longer required and everything from groceries to shoes can be ordered with a click and delivered to your door, our method of investing puts the power in the hands of the investor. No meeting with an investment advisor required. A simple 5-minute process online is all it takes to become an investor with Neighborhood Ventures. And if you do want the human interaction, our investors are always welcome to schedule a phone call with our head of Investor Relations. Send us an email and we would love to get you started!
We have shared what makes our investments different and how they work. However, the following considerations should also be weighed before deciding to invest:
Your investment is not liquid during the life of the project
It is important to note that our investments are not liquid investments. Liquidity means an investor can go into their bank and withdraw their money at any time. If investors have their money in the stock market, they can choose to sell that stock when they like. Once you invest with Neighborhood Ventures, your investment dollars will not be returned until the sale of the property occurs.
From Jamison, “when you look at your investment it is not going to be with us indefinitely, in perpetuity forever. There is a term on it that we are working towards. Two years, three years, four years, or whatever that project is, call that the hold, the hold period.”
Do not invest if you do not have an emergency fund
It is also critical to know not to invest yet if what you are investing is your only income. When investing in real estate, since it is not a liquid investment, you cannot retrieve your funds since they are being used. If your car engine dies, or there are medical bills that need to be paid and you have already invested, you cannot retrieve your invested money. Financial advisors typically recommend people have three to six months’ worth of your total income in savings for emergency purposes. And remember – the majority of the return comes at the end of the project! Evaluate the target hold period for each project, and make sure you are comfortable with waiting for the bulk of the return to come at the end of that period, when the property is sold.