Is it judicious to invest in multiple projects?
Don’t put all your eggs in one basket!
Diversifying your investments is one of the golden rules for prudent management of one’s funds. It is therefore heartily recommended.
As a general rule, investing in young company is relatively risky. The risk taken by an investor varies:
- Depending on the project
- Depending on the type of investment (loan or taking a participation).
The following is not an absolute rule, but studies estimate that:
- 4 projects out of 10 will not last and the risk of loss is total;
- 4 projects out of 10 will last but will not offer their investors a satisfactory return;
- 2 projects out of 10 might be extremely profitable and offer excellent capital gains in the end.
By investing in the capital of different projects, one can diversify their investments and diminish the risk.
More information on risk and diversification here.