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In this Guest post Nick Daws explains how to make money by investing in Food and Drink with Primestox
Today I have guest post from fellow blogger Nick Daws who writes over at Pounds and Sense . He has quite a bit of experience with investing so I was keen to see what he had come up with for me as a newbie investor who doesn’t have a clue what she is doing! Investing can be a great way to make money long term and while there are risks involved it is still something that is worth looking into. Here Nick talks about making money with food and drink by investing with Primestox.
Over to Nick. . .
If you’re fed up with the rock-bottom rates currently paid on savings by the banks, here’s an alternative that can offer more interest, in more ways thanone!
PrimeStox (https://primestox.com) is a crowdfunding platform for premium food and drink producers who need working capital to bring their products to market.
If you are willing to lend them money through the platform, the businesses concerned will return it with interest to you in a few months to a year. Rates paid are typically 20 to 24 percent annually, which is roughly twenty times what most banks are paying now.
- And if you immediately reinvest your returns in another project, the annual rate will actually be even higher than this, due to the effects of compounding.
One I Made Earlier
The opportunity may be best explained by an example, so here’s one I invested in myself a few weeks ago…
Elizabeth D Bakes is a company run by London-based baker Elizabeth Draper.
Founded in 2015, the business quickly established itself as a wholefoods bestseller with ‘free from’ varieties of American classics such as brownies and peanut butter bars. All products are made from 100% natural ingredients, and are gluten-free and vegan-friendly.
With a busy period including Halloween, Thanksgiving and Christmas coming up, Elizabeth needed money to fund the next stage in her company’s growth. She wanted to invest in more staff, her website, raw materials and packaging.
Through PrimeStox she therefore invited people to invest in the production of 1,500 boxes of her best products for £20.00 each. The investment period was seven months and she offered a return of 11.3%, equivalent to an annual rate of 20%.
I liked the sound of this offer and the information about the company on the PrimeStox website. I therefore decided to invest £500, which made me the beneficial owner of 25 boxes of Elizabeth D Bakes brownies and bars. All being well, once these are sold, I will get £559 back by March 2017.
You might ask what will happen if they don’t sell all the bakes. The answer is that all investments are secured by the products concerned.
So in the worst-case scenario I will receive 25 boxes of brownies and bars, which would keep me chewing for a very long time! Or I could sell them or give them away to friends, of course.
In practice, though, that’s very unlikely. So far all investments on PrimeStox have been repaid with interest on or (in several cases) before the date specified.
If there’s a problem, all investors vote on how best to resolve it, e.g. by selling the goods to a third party for a smaller profit margin. It’s therefore extremely unlikely you would ever lose all your money.
How To Invest
The first step to becoming a PrimeStox investor is to register on the website. There is no cost to this and no obligation. Once you are registered you will be notified by email any time a new offer is launched on the platform.
It’s important to move quickly if you like the sound of an offer. When I first joined it took several days or even weeks for offers to fill up, but as word has spread about PrimeStox they now fill up much faster. One recent offer (for a premium coffee brand) was fully subscribed in under 10 minutes, while others have taken no more than a few hours.
To take part in an open offer, you enter the amount you want to invest on the PrimeStox web page and click on the ‘Invest’ button. You will be required to enter your credit or debit card details, although no money is taken until the offer is fully funded.
All you have to do after that happens is sit back and wait for your money be returned to your account with interest at the end of the agreed term. You can then withdraw it or invest the money in another offer.
PrimeStox Pros and Cons
Let’s start with the negatives.
Clearly, investing in PrimeStox is not as safe as putting your money in the bank. There is a degree of risk involved. While the risk is relatively small (for the reasons mentioned above), if you can’t sleep comfortably with this, you probably shouldn’t be investing this way.
Also, the money will be tied up during the investment period with no easy way of accessing it (though this is generally no more than a few months). You shouldn’t therefore invest money you may need urgently in the near future.
On the other hand, there are a lot of things I like about PrimeStox…
- It’s a simple concept and every offer is clearly explained.
- Rates of return are highly competitive.
- The minimum investment is very low – typically £20. You can therefore test the water without risking any significant funds.
- If you’re willing to spend a bit more – say over £100 – in many cases you get a higher rate of interest.
- You are supporting small businesses in the UK and abroad who are dedicated to producing high-quality foodstuffs.
- And, as mentioned earlier, as an investor you will hold title in the product until it is sold. PrimeStox will even send your share to you free of charge if you want.
As for why producers are offering these sort of returns, it’s basically to aid their cashflow by covering the cost of raw materials, production, storage, and so forth. But they also hope that investors will act as brand ambassadors for them, helping promote their products and maybe even buying some themselves.
There’s no obligation to promote any of the products you invest in, but obviously you will have a financial interest in ensuring they are successful. Investors are also sometimes offered rewards, discounts and other incentives by the producers concerned.
Clearly, nobody should invest more than a modest portion of their savings in PrimeStox. The potential returns on offer are compelling, though, and investing this way is certainly a lot more interesting than stocks and shares!
About the Author: Nick Daws blogs at Pounds and Sense (www.poundsandsense.com), a UK personal finance blog aimed especially (though not exclusively) at over-sixties.