When you invest, you have the option between doing it on your own or partnering with other people in the venture. There are advantages and disadvantages to each option, which we shall discuss in this article. Hopefully, the tips below will help you decide which option suits you better. Let us start with…
The Pros and Cons of Investing on Your Own
Should you choose to invest alone, here are some things you have to consider:
1. You have control over everything. When you have control over everything, you can make decisions faster since you don’t have to wait for other people’s opinion before you proceed.
2. You keep all of the profit. Since you are the sole investor in an asset, you get to keep all of the profit. This means more money in your pocket plus, since you have control over everything, you also get to decide how you will manage your finances when it comes to how much you will reinvest and keep.
3. You are more exposed to risk. On the downside, being the sole investor also exposes you to a lot of risk, especially if the investment is made under your name.
4. It’s more expensive to venture out on your own. If you choose to invest in property as a solo venture you will have to shoulder the entire cost of the investment. This will include the deposit, the fees and charges, and the regular mortgage repayments.
The Pros and Cons of Joining a Partnership
Meanwhile, joining a partnership has the below advantages and disadvantages:
1. The risks are limited. While the liability is still unlimited in a partnership, this is relatively safer than investing on your own since the liability is shared between or among the partners. This means fewer of your personal assets are exposed when you work with partners.
2. The workload is shared. Another advantage of a partnership is that the workload is shared, which means responsibilities may be assigned depending on the expertise or availability of each partner.
3. It gives you more purchasing power. When you work with partners, you don’t have to spend as much money as you would if you were working on your own. Going back to the example of purchasing a property, the costs of the investment will be shared among the partners.
4. The profits are shared among partners. While responsibilities are spread out, the same goes with the profits. When you work with partners, you trade the relative ease of investing with a more limited amount of profit.
Which One is for You?
When deciding between the two options, you have to ask yourself what elements are important to you. If your goal is to gain more control over your investments and generate higher profits regardless of the relatively higher risk, then going solo may be more ideal for you. However, if you prefer to limit your exposure to risk and lessen the hassle of investing but and are comfortable about the idea of earning less, then partnering with other people is the best option for you.