Where Do I Get Start-Up Money?
The next most common question I get from beginner investors is “Were do I get the money?”
And if it were that really that simple – that universally straightforward – everyone would be doing it! The same as “were do I start”, for a thousand people asking that question there are a thousand different answers.
For some people, they own their own house and can utilize some of their equity. For some, loans against their 401K or IRA are appropriate. For still others with good credit but little leverage, investments with some already built-in equity may be the answer for them. And for some, the best option is to pool with other people to utilize their resources – like friends or parents. And once again, the best way to analyze this is to sit down with a qualified lender – one who specializes in investors and knows the ins and outs of the investing world.
A beginner investor could, if so motivated and qualified, get started for as little as $5,000 - $10,000. But I stress – ‘if qualified’. I’ve taken literally hundreds of phone calls and emails from people – good hard-working people – with credit card debt up the wazoo, student loans to the max, very little income, bad credit scores and they are currently renting. And they want to quit their job and be a full time investor! And it pains me each time to have to do a little reality check. If they want to use OPM (other peoples money), they have to be able to show the OP (lender or bank) that they can repay that money on time and with regularity – a bad credit score doesn’t paint that picture.
It’s not that these people can’t invest – absolutely not the case – they just can’t do it right now. For most people in most situations as little as 6 months of diligence can get them on track, extreme situations 2 to 3 years. But anyone can do it. This too, can be assisted by sitting down with a lender. They can recommend the things to do to repair credit issues, tell you how to leverage yourself to qualify for the most money and the least interest, and give you little tips and tricks that will put you right on track.
And I know it’s not the “sexy” part of investing, but it is an extremely helpful first step if you are willing to be vulnerable for a few minutes and share your financial profile with a professional.
