Mailbag: Thoughtful Investing Can Break the Guidelines
Q: I know the U.S. Securities and Exchange Commission (SEC) has a guideline on the optimum quantity financiers are enabled to take into startup deals annually. What takes place if you review that amount?
A: If you fail to follow the SEC’s extremely stringent (in my book) limitations on yearly investment quantities, just you will understand it.
I pay more attention to what the SEC does than what it says It states you have limitations on what you can invest. However it has done definitely nothing to enforce its guidelines. I’m delegated conclude that it doesn’t care. Or not enough to do anything about it.
And if it did care enough to implement its rules? I’m no lawyer. However I’m pretty sure the SEC would go after startup websites, not specific investors. It would be pretty simple for the websites to keep an eye on your investments on a yearly basis. It would be easy for them to alert you if you will exceed the SEC limitations. It would also be simple for them to reject you access to a financial investment that would put you over those limits.
However the websites do not do this since the SEC has not pressured them to. And the websites want as many investment dollars from you as possible.
It’s most likely you have actually purchased start-ups from a number of portals. And if the websites don’t monitor your financial investments in their own portal, they certainly don’t tally your overall investments from all the other portals.
Simply put, you’re on the honor system.
I would never ever advocate breaking the rules for the sake of breaking rules. However the only honorable thing to do with your financial investments is to invest thoughtfully and thoroughly. We have actually always promoted costs simply 5% to 10% of your investible savings on start-ups.
The SEC will not be enforcing that. And neither will we. But we suggest you take it seriously.
+ Early Investing Co-Founder Andy Gordon
Q: I’ve been wanting to make some cannabis investments, and I came across REITs. What are REITs? And are they cannabis-specific?
A: REIT represents property financial investment trust. It’s an unique kind of company and financial investment. REITs purchase business realty and lease it out to companies. Then they take their revenues and pay them out as dividends to their investors. By law, 90% of their earnings must be returned to shareholders. So when you purchase REITs, you’re buying their industrial genuine estate portfolios– and their ability to manage them.
A lot of REITs are publicly traded, like stocks. You can discover them on the New York Stock Exchange and Nasdaq. Many REITs focus on just one sector. Vici Characteristic, for instance, concentrates on gambling establishment properties. Last week, it completed the purchase of the Greektown Casino-Hotel in Detroit for $700 million.
Ingenious Industrial Residence is the best-known cannabis REIT. But it’s not the only one.
Well-managed REITs can create steady dividend payments. And it’s a good way to purchase realty without a lot of cash. The trick is discovering the excellent ones. Growth sectors, like marijuana, are an excellent location to begin.
+ Early Investing Senior Handling Editor Vin Narayanan