Here is a question to ask people who are offering you a great investment – “why didn’t you just go to the wholesale market?
If you had a good investment idea, say a large block of land perfect for a new building, would you prefer to ask one person for $50m or ask fifty people for $1m? Wholesale investors - Superannuation funds, wealthy people or institutional bankers have the ability to write massive cheques, easily and quickly. Really good investment opportunities cross their desks all the time. The people needing this capital are confident they can convince the experts their idea is totally investable.
Raising retail capital is much harder, where you have to convince loads of people with seminars and glossy brochures to part with their money. For example, with the major banks offering some Retail Bond products to attract your money, you can be sure that the terms aren’t as good as the institutions would ask for, or they wouldn’t be bothering. So if you find a group offering you a great investment, ask why wouldn’t they just convince the big end of town to just cut them a single cheque?
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