vania-janet/multiturn-rag-retrieval-data huggingface dataset:
You have plenty of good answers, but I want to add something that might help you grow your intuition on stocks. There are a lot of differences between the example I am going to give and how the stock market actually runs, but the basic concepts are the same. Lets say your friend asks you if he can borrow some money to start up a company, in exchange you will have some ownership in this company. You have essentially just bought yourself some stock. Now as your friend starts to grow, he is doing well, but he needs more cash to buy assets in order to grow the company more. He is forced with an option, either give you some of the profits, or buy these assets sooner. You decide you don't really need the money right now, and think he can do a lot better with spending the money to buy stuff. This is essentially the same as a company electing to not pay dividends, but instead invest into the future. You as a stock holder are fine with it since you know the money is going toward investing in the future. Even if you never get paid a dividend, as a company grows, you can then turn around and sell the stock to someone else for more money then you gave originally. Of course you always take the risk of having the company failing and loosing some if not all of your investment, but that is just the risk of the market.
Are you going to do better than the investment firms that have teams of researchers and years of experience in the investment world? You can do quite well by picking individual stocks, but you can also lose a lot of money if you do it haphazardly. Be aware that there is risk in doing any type of investing. There is higher than average risk if you invest in equities ('the stock market'). There is higher risk still, if you pick individual stocks. There is yet even higher risk, if you pick small startup companies. There are some specific interesting side-elements with your proposal to purchase stock about to have an IPO - those are better dealt with in a separate question if you want more information; search this site for 'IPO' and you should find a good starting point. In short, the company about to go public will hire a firm of analysts who will try to calculate the best price the public will accept for an offering of shares. Stock often goes up after IPO, but not always. Sometimes the company doesn't even fill its full IPO order, adding a new type of risk to a potential investor, that the stock will drop on day 1. Consider an analogy outside the investing world: Let's say Auto Trader magazine prints an article that says ""all 2015 Honda Civics are worth $15,000 if they have less than 50,000 Miles."" Assume you have no particular knowledge about cars. If you read this article, and you see an ad in the paper the next day for a Honda Civic with 40k miles, should you buy it for $14k? The answer is not without more research. And even if you determine enough about cars to find one for $14k that you can reasonably sell for $15k, there's a whole world of mechanics out there who buy and sell cars for a living, and they have an edge both because they can repair the cars themselves to sell for more, and also because they have experience to spot low-offers faster than you. And if you pick a clunker (or a stock that doesn't perform even when everyone expected it would), then you could lose some serious money.
"It sounds like a great opportunity, but like any opportunity you need to do your research and give it a thorough evaluation. Although the current owner may be your friend, don't let emotion get in the way of a fair and honest assessment.   Some general things you need to consider:  Past financial data of the pizza restaurant - if you are going to invest, you want your investment to pay off and to be profitable. What are the historical earnings?If you take management of the pizza restaurant are there things you can do to cut costs/increase profits?   Understand the competition that is around the area, does your pizza restaurant have a competitive edge that will enable to succeed in another location?    Do you enjoy working there? Would you enjoy working there more than the prospective work you would do as a welder?   Finally if you want to invest, what kind of investment structure? What are your rights as a shareholder? What is your ownership stake? What happens in the case of share dilution? Going back to financials, how long do you estimate conservatively that you will be able to make back the principal investment.  Now referring to your other question of ""is it worth the risk to give up guaranteed money""...  It is harder and harder for younger people like you and I to depend solely on fixed salary jobs. If you want financial success, you want to build assets for yourself that generates income without you expressly there recording your hours on a time-card.   No money is ever guaranteed. There are many risks associated with a person's whose only source of income is from his day job.   Finally, you don't necessarily have to put up the investment with your own money and give up school. You could look for other investors or take a loan on the business to open a new store. There's nothing wrong leveraging debt - it will help you save tax money.   Anyways I'm glad you've found this opportunity. Remember to always think big but be smart about it too!   P.S. If you want to pm me any specifics for me to look at in terms of financials or legal stuff I'd be more than happy to help a brother out."
"It should be pretty obvious that without knowing what sort of assets the company owns, and what sort of net earnings are being generated it's impossible to say what a $20k equity investment should get you in terms of ownership percentage.   With that said, you want to look at a few to several years of books, look for trends.  Some things to understand that might be subtle red flags: It's extremely common for early stage investors to essentially make loans rather than strictly buying shares.  In the worst case scenario creditors get to participate in liquidation proceedings before shareholders do.  You may be better off investing in this business via a loan that's convertible to equity at your discretion.   Single owner service companies are difficult because all of the net earnings go to the proprietor and that person maintains all of the relationships.  So taking something like 5 years of net earnings as the value of the company doesn't make much sense because you (or someone else) couldn't just step in and replace the owner.  Granted, you aren't contemplating taking over the business, but it negates using an X years of net earnings valuation method.  When you read about valuation there is a sort of overriding assumption that no single person could topple the operation which couldn't be farther from the truth in single employee service companies.  Additionally, understand that your investment in a single owner company hinges completely on one person's ability and willingness to work. It's really vital to understand the purpose of the funds.  Someone will be hired?  $20,000 couldn't be even six months of wages... Put things in to perspective with a pad, pen and calculator.  Don't invest in the pipe dream of a friend of yours, and DEFINITELY don't hand this person the downpayment for their new house.  The first rule of investing is ""don't lose money,"" this isn't emotional, this is a dollars and cents pragmatic process. Why does the business need this money?  How will you be paid back?   Personally, I think it would be more gratifying to put $20k in a blender and watch it blend, this is probably a horrible investment.  The risk should just be left to credit card companies."
"It's called ""dilution"". Usually it is done to attract more investors, and yes - the existing share holders will get diluted and their share of ownership shrinks. As a shareholder you can affect the board decisions (depends on your stake of ownership), but usually you'll want to attract more investors to keep the company running, so not much you can do to avoid it. The initial investors/employees in a startup company are almost always diluted out. Look at what happened to Steve Jobs at Apple, as an example."
"Started to post this as a comment, but I think it's actually a legitimate answer: Running a rental property is neither speculation nor investment, but a business, just as if you were renting cars or tools or anything else. That puts it in an entirely different category. The property may gain or lose value, but you don't know which or how much until you're ready to terminate the business... so, like your own house, it really isn't a liquid asset; it's closer to being inventory. Meanwhile, like inventory, you need to ""restock"" it on a fairly regular basis by maintaining it, finding tenants, and so on. And how much it returns depends strongly on how much effort you put into it in terms of selecting the right location and product in the first place, and in how you market yourself against all the other businesses offering near-equivalent product, and how you differentiate the product, and so on.  I think approaching it from that angle -- deciding whether you really want to be a business owner or keep all your money in more abstract investments, then deciding what businesses are interesting to you and running the numbers to see what they're likely to return as income, THEN making up your mind whether real estate is the winner from that group -- is likely to produce better decisions. Among other things, it helps you remember to focus on ALL the costs of the business. When doing the math, don't forget that income from the business is taxed at income rates, not investment rates. And don't forget that you're making a bet on the future of that neighborhood as well as the future of that house; changes in demographics or housing stock or business climate could all affect what rents you can charge as well as the value of the property, and not necessarily in the same direction. It may absolutely be the right place to put some of your money. It may not. Explore all the possible outcomes before making the bet, and decide whether you're willing to do the work needed to influence which ones are more likely."
It works like this: Note that I've assumed for simplicity that the new investment comes in at equal value to the old investment. This isn't necessarily the case, it can be more or less according to the terms of the new investment voted for by the shareholders, so the first line really is ""nominal value"", not necessarily the actual cash the founders put in. Therefore, you should not think of your 5% as 5% of what you imagine a company like yours might eventually exit for. At best, think of it as 5% of what a company like yours might exit for, if it receives no further investment whatsoever. Ah, but won't the founders also have their holdings diluted and lose control of the company, so they wouldn't do that? Well, not necessarily. Look carefully at whether you're being offered the same class of shares as the founders. If not consider whether they can dilute your shares without diluting their own. Look also at whether a new investor could use the founders' executive positions to give them new equity in the same way they gave you old equity, without giving you any new equity. Look at whether the founders will themselves participate in future investment rounds using sacks of cash that they own from other ventures, when you can't afford to keep up. Look at whether new investors will receive a priority class of share that's guaranteed at exit to pay out a certain multiple of the money invested before the older, inferior classes of shares receive anything (VCs like to do this, at least in the UK). Look at any other tricks they can legally pull: even if the founders aren't inclined to be tricky, they may eventually be forced to consider pulling them by a future new investor. And when I say ""look"", I mean get your lawyer to look. If your shareholding survives until exit, then it will pay out at exit. But repeated dilutions and investors with priority classes of shares could mean that your holding doesn't survive to exit even if the company does. Your 5% could turn into a nominal holding that hasn't really ""survived"", that entitles you to 0.5% of any sale value over $100 million.
If someone invest certain amount on my company and after a year I am   able to return the exact capital with the profit, what will I do to   that investor?  Did the investor receive shares in the company for the money that was invested in the company? This is the big question here as if so then there isn't the need to return the money but rather grow the business so that the investor's shares are worth more. Will that person still invest in my company?  You may need to consider what you mean by invest as generally there are a couple of ways to finance a business: Equity - Ownership of the company is sold to raise money to run the company. Debt - The company is lent money that is to be repaid over time. Investing is usually the first case not the second. What if I have enough profit to continue my business, do I still need   that investor? You wouldn't need the investor. However, you may want that investor as they could provide more funds, connections or other benefits to the company that may be worth considering here.
A firm is a separate legal person from its shareholders or owners (but doesn't get invited to parties much). Owners invest capital to get shares in the firm or may get shares for investing time, effort etc. but those shares are on a limited liability basis. That means that shareholders are only liable up to the value of their shares and that the firm itself is responsible for any expenses or liabilities. The firm will have working capital from its initial investors (i.e. any capital invested to get shares) and can borrow money on the bond market or issue new shares to cover outgoings. Share ownership simply entitles the owner to a proportion of the residual equity of the company and voting rights (for non-prefered equity). In a firm that I previously worked for, for example, one of the partners owned 51% of the firm but put up 100% of the firm's equity capital. The other partner owned 49% and provided 90% of the intellectual capital of the firm. They both took decisions equally. The distribution of ownership should, therefore, have no bearing on who finances deals. The owners (or managers in larger firms) should decide together how to use the company's capital for spending because it is exactly that; the company's capital; not any one of the investor's. Limited liability of owners is one of the major benefits of forming a company.
And of course there is risk involved in that (as if there is really any reason we should expect there NOT to be? Anyone who thinks that way IMO is simply ignorant of the vast scope of human history). For those of us here, that is feasible. However, most people will not have the interest or ability to manage their own investments. Where does this requirement leave them? Still working and, in doing so, keeping those jobs from opening up for new graduates/new people entering the workforce. &gt; The best I think one can do is to TRULY diversify (and that does NOT mean ""mutual funds"") -- to separate your eggs into various ""baskets"", holding some major part in solid (as solid as can be) form (even with the possibility of zero return and/or some ""loss"" -- i.e. owning primary housing clear of debt, some PM's in physical form, etc); having other assets in what are fairly solid ""bets"" (based on demographic trends, company quality, etc); and then some things (several small bets) that are ""long shots"" but potentially high-return things (where just one ""win"" can not only offset a dozen non-performers/losers, but gain you a substantial real profit). I could not agree more. I have done the same thing and used the same argument; even to the point of purchasing a whole life insurance policy. Diversification, in case one or multiple investments tank, is the only way to survive. I have also decided that, for some of my assets, I am just a DCA/DRIP buy and hold guy of 10-20 diversified stocks from different industries. Leave it up to time and compounding over my own ability to time/pick. Anyway, I guess that's the whole answer; there is no right answer. Diversification and continued diligence are key. Good discussing with you. Best of luck."
"(I'm assuming USA tax code as this is untagged) As the comments above suggest there is no ""right"" answer or easy formula.  The main issue is that you likely got into business to make money and if you make money consistently you will pay taxes.  Reinvesting generally should be a business decision where the main concern is revenue growth and taxes are an important but secondary concern. Taxes can be complicated, but for a small LLC shouldn't be that bad.  I highly recommend that you take some time closely analyze your business and personal taxes for the previous year.  Once you understand the problem better, you can optimize around it.  If it is a big concern, some companies buy software so they can estimate their taxes periodically through the year and make better decisions."
Agreed, this article is crap.  I have no problem with venture capitalists.  They give you the oppurtunity to attian: the capital, the tools, the hardware/software, the knowledge systems, the networking and right talent to work with for your innovation. I'll take that and burn through their capital, than use my own capital and lose it all.
Disvestment activities tend to be misguided. In doing so, a fund/individual is not really taking money away from the companies in question (assuming they're not doing secondary offerings), and 'disvestment' doesn't imply that you're going to be using their products less (or boycotting them entirely), which would actually impact their financials. And in a convoluted way, disvestment could actually trigger further consolidation among coal companies, since it makes them cheaper and thus easier takeover targets.   Funds that have the ability to do so should make 2nd &amp; 3rd round VC investments in clean energy startups. It's been awfully difficult for clean energy startups to raise money lately, and funding those startups would have a lot more impact.
"I disagree. I believe money should be invested, not spent. Investing is something you should do as early as possible, even (especially) before incurring personal debt, such as cars, houses, student loans, etc. As Warren Buffet says, delaying investment until you are all paid up, is like saving sex for your old age. Remember that you are considering an investment, not another expense. The only consideration is whether or not the property will be cashflow-positive, i.e. ""does it make more in rent than it costs to maintain?"". If it is, buy it. You can use the income to pay off those debts faster, and at the end you will still have the income stream. Second, it makes no sense to use all your cash when the bank is willing to lend you money. There is nothing wrong with debt, as long as it is attached to an asset, i.e. something that makes more money than it costs. If you have that much cash, buy several apartment buildings, hire a management company, and retire."
Since you are talking about a small firm, for the long term, it would be advisable to invest your money into the expansion - growth, diversification, integration - of your business. However, if your intention is to make proper use of your earnings in the short term, a decent bank deposit would help you to increase the credit line for your business with the benefit of having a high enough liquidity. You can also look at bonds and other such low risk instruments to protect your assets.
For instance: let us suppose (for reasons that seemed valid at the time) you bought your original holding at £10/share, the price has dropped to £2/share, but you (now) believe both prices were/are ""wrong"" and that the ""true price"" should be around £5/share. If you feel there is a good chance of this being achieved then buying shares at £2, anticipating they'll rally to £5, may be sound. But you should be doing this because you think the price will rise to £5, and not because it will offset the loses in your original holding. (You may also want to take stock and evaluate why you thought it a good idea to buy at £10... if you were overly optimistic then, you should probably be asking yourself whether your current decisions (in this or any share) are ""sound""). There is one area where an existing holding does come into play: as both jamesqf and Victor rightly point out, keeping a ""balanced"" portfolio -- without putting ""all your eggs in one basket"" -- is generally sound advice. So when considering the purchase of additional stock in a company you are already invested in, remember to look at the combined total (old and new) when evaluating how the (potential) purchase will affect your overall portfolio."
"I find the question interesting, but it's beyond an intelligent answer.  Say what you will about Jim Cramer, his advice to spend ""an hour per month on each stock"" you own appears good to me. But it also limits the number of stocks you can own. Given that most of us have day jobs in other fields, you need to decide how much time and education you can put in. That said, there's a certain pleasure in picking stocks, buying a company that's out of favor, but your instinct tells you otherwise. For us, individual stocks are about 10% of total portfolio. The rest is indexed. The amount that ""should be"" in individual stocks? None. One can invest in low cost funds, never own shares of individual stocks, and do quite well."
This depends on: Here in the US where I am, interest rates were around 3.9% when I fixed my mortgage. This underperforms the market, e.g., a total market ETF like $VTI or an SP500 ETF like $VOO have expected returns of ~7+%, the current market growth rate. So, in theory I am better off paying into the market, and making returns greater than my interest rate, rather than paying into the equity.  HOWEVER, past market returns do not guarantee future market returns. The market could reset. It could crash. Are you willing to accept this risk? You have to analyze what happens if the market suffers say a 30% correction and you lose a lot of money quickly.  I would certainly not invest in individual (non-ETF) stocks, or you are really exposing yourself to risk.
The role of business investors differs greatly within different organisations. If you are starting a business or already have a small business, business investors can be a key tool to get your business of the ground. Business investors give money to small businesses or start-ups in exchange for ownership in a part of the company.
"i really want to know. and you shouldn't lose hope because reddit says so. if you can show there is a market for this, and you have a legitimate plan with attainable objectives, sound financial backing, and you have contingency plans in place, and you truly believe in this idea and are willing to put everything you have into this idea, then go for it. but if this is a ""meh, it would be kinda cool if..."" type of business approach, then drop it immediately."
"It's viable for you,  but the ""investor"" is either stupid or willing and able to write off the investment as a gift for a friend in need, knowing it will probably end the friendship.  The banks make their money off of indebtedness, with the highest returns being on the highest risk loans . If the bank isn't willing to give you that debt on your own,  it's because they already know it's a bad debt. In this case,  trust the banks. If you can't come up with the downpayment on your own, you won't be able to meet your other commitments on this contract."
I've had 50% raise offers before. Start ups might pay more to attract talent but you look at what they are doing and realize they will probably be out of cash flow once the venture capitalist money dries up. If you like changing jobs sure. I've been at the same company for 12 years. My salary has gone up 4x since I started so whatever. It's just easier. I know one of my offers went out of business in less then 8 months...