With direct investing , you as a customer usually acquire direct ownership or co-ownership of a particular item. These can be shipping containers or railroad cars, for example, but you can also become the owner of trees or cocoa plants in this way. With this type of investment, you do not take the detour via a security or a fund, but buy directly (co-) ownership or beneficial ownership of the offered items.
Depending on the type of direct investment, different variants are conceivable: If the items purchased in this way generate ongoing income , for example through harvesting or renting, this income will flow directly to you, the owner of the cocoa plants or the shipping container. Often both sides agree on a term for the direct investment . At the end of this period, the seller or a company affiliated with him usually sells the item for you as a customer or buys it back from you. The proceeds from the sale or resale – minus the agreed management fees – then flow back to you, the customer.
Possible goals: When could it make sense for me to invest in a direct investing product?
A direct investment in tangible assets is often advertised with the argument that it should be seen as a supplement to the other investment options, as there is no overlap with these. The providers also lure with the inflation security of direct investments .
Risks: What are the dangers of investing in a direct investing product?
Investment risk: With direct investing , caution is generally required. Because there is definitely an investment risk here: Nobody can and will guarantee that the income expected from the purchased items can be achieved with certainty in the end – be it during the term through harvesting, renting or leasing or at the end of the investment period Sell your cocoa plants or shipping containers.
Exchange rate risk: An investment in raw materials can also involve incalculable risks. Because just like currencies, the prices for raw materials on the world market are subject to considerable fluctuations, which makes it difficult to forecast future profits. Due to all of these uncertainty factors, there is a risk that you will ultimately receive lower payments than expected or, in the worst case, even fail completely. If you choose a direct investing product, it is always your own risk.
Practical problems: You should also consider practical difficulties before making a direct investment: If you become the (co-) owner of a thing that is far away , be it a shipping container or a teak plantation, it could be time-consuming to check the information provided by the manager.
In addition, in the event of a dispute, you must assert your claims under foreign law and before foreign courts and possibly in a foreign language. This is usually not only very problematic for small investors, but also usually associated with considerable costs .
Use: What can the investment in a direct investing product bring me ?
Depending on the type of direct investment, you can earn regular rental or lease income as the owner of the acquired property .
If the seller sells the items you have purchased at the end of the agreed term, the proceeds from the sale , usually less the agreed management fees, will flow back to you.
Have you invested in sought-after raw materials?
If their price has risen in the international market since your purchase and all purchased items are also sold, this can result in a profit. But you have no guarantee of this.
Own duties: What obligations and costs do I have to face when buying a direct investment?
If you decide to make a direct investment, in most cases you will not only conclude a purchase agreement, but also an administration or service agreement with the seller or a company affiliated with him. For example, if you buy a stock of mahogany trees, you contract the vendor to look after the trees until they are ready to hit and then sell them at the best possible price. After all, you cannot take on such tasks yourself!
NOTE: The costs that arise as a result of this are in most cases deducted from the sales price achieved. You reduce your proceeds.
Termination: Can I sell my direct investment again at any time?
Basically, it is possible to use any part of the Direct Investing Tings to purchased goods to a third party transfer . Depending on where these items are located, the transfer of ownership can take place according to foreign law and is usually associated with costs.
NOTE: There is no regulated market for items that you have purchased using direct investing, such as a separate exchange. This can make the sale difficult.
Where and with whom can I make direct investments?
You conclude a direct investment as a civil law purchase contract directly with the seller or a company affiliated with him .
Typical investor profile: Who are direct investments suitable for?
Only experienced investors who are able to assess the opportunities and risks of such an investment should consider a direct investment. Above all, you should be familiar with the items for sale and the relevant industry. For example, don’t invest in precious woods if you have no idea about it!
A direct investment means that you are committed to a long-term commitment to your assets . Ask yourself whether you want to take on the associated entrepreneurial risk and, if necessary, can cope with it. Because direct investing can lead to a partial or complete loss of your investments or to personal bankruptcy. You should choose another form of investment if you are looking for a short-term investment and you do not want to risk any losses. In this case, direct investments are not suitable for you.