After a long and tumultuous 2009, many investors are breathing a collective sigh of relief. The recession is (seemingly) behind us and things are slowly starting to make a turn for the better.
The upturn is naturally leading to more investment opportunities, but nevertheless, people are still somewhat wary of making a major investment. This type of thinking needs to change, says Syd Saperstein, a senior vice president and the division manager of Special Corporate Financial Services with Comerica Bank.
“Investment opportunities exist, even in down economies,” Saperstein says. “Even if you’re not ready to invest right now, it’s a great time to put your money in a position to get ready to invest.”
Smart Business spoke with Saperstein about today’s investment opportunities and how to properly take advantage of them.
Why are we seeing increased interest in investment opportunities?
During the economic downturn — and the subsequent and lingering credit crunch — reasonable opportunities for investing slowed significantly. But, now we’re seeing a byproduct of the downturn: new investment opportunities at reduced enough prices to be interesting. Take, for example, uncompleted real estate development projects. They have sat stagnant and lost value, creating an opportunity for investors and developers who are well backed to take advantage of the lower prices. These projects are worth finishing, which can lead to a healthy profit, even in today’s market. I’ve seen a growing demand for such opportunities in the last six months.
Also, this concept is not limited to just real estate. There are many companies that make good acquisition targets. Many such companies relied heavily on credit and, with the availability of credit deeply curtailed, also lack the ability to raise capital. This creates other opportunities to take advantage of, because those internal and external funding sources have dried up. With the credit environment being what it is, venture capital leaning on bank lines isn’t what it used to be either; so private equity fund-raising has become the viable alternative.
How can a business or an individual take advantage of these opportunities?
Bottom line, money talks. Having money set aside that you can point to when negotiating a purchase puts you in a very powerful position. Given the low interest rates that people have to accept today, the opportunity cost on the investment set-aside funds sitting at the ready does not make for a difficult decision. Having cash in a pooled investment-ready bank account will deliver the same return as if it were left sitting in an investor’s own individual bank account. There’s not a lot of opportunity cost downside in today’s cash investments, so you’re probably not losing interest by putting your money into an investor’s pooled opportunity ready bank account that has a good chance of future investment success.