Should I invest in my friend's business? The quiz
Money choices carry fear, guilt and hope too. Let's slow down and look at the facts. Your answers stay on your device; nobody else sees them.
"Risk comes from not knowing what you're doing."
Warren BuffettIf it doesn't make sense to you, it isn't for you. Never rush a money decision because of fear of missing out: rushing is the weakness of fools.
Questions to ask before you invest
- Who pays you today, and how much?
- What will my money be spent on, exactly?
- How long will the money last?
- What do I get: shares, a loan, a share of profits? Is it written down?
- What happens if you need more money, or the business closes?
Friendship first
Agree up front that business talk stays separate from the friendship. Set a regular update (say, every quarter) so you never have to chase news, and decide now that you will not ask for the money back early.
Questions people ask
How much should I invest in a friend's start-up?
Only what you could lose completely without regret. Many experienced angel investors keep each start-up to a small slice of their savings, because most fail.
Is it better to lend or invest in a friend's business?
A loan has a repayment plan; an investment buys a share of a risky future. Either way, put it in writing and only use money you can afford to lose.
More money choices
TheHardChoices gives general life guidance, not professional advice. It is not a substitute for medical, mental health, legal or financial help. If you are in crisis or feel unsafe, contact local emergency services or a crisis line now. Full disclaimer