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Starting A Hedge Fund - Is It As Easy As It Sounds?
Are you an avid stock market investor? Do you love the thrill of investing money in a certain stock, bond, or other financial derivative and watch its value skyrocket? Do you want to make more money than you ever thought possible? If so, starting a hedge fund is the perfect opportunity to change your life forever.
The first step in starting a hedge fund is securing an adequate amount of capital. If you can't secure enough money to make starting a hedge fund worth your while, the forthcoming steps don't even matter - you will be dead in the water. This also happens to be the step that most hedge fund startups have trouble with - even if you have a proven track record of making profitable trades and haven't had a losing year in the past decade, people are still going to be apprehensive about investing in your fund. More often than not, you will have to start with your own money and money from people who are close to you, like business associates.
The next step to starting a hedge fund is the legal organization. If you thought it took a lot of paperwork to start a normal business, you will be amazed at how much is involved in starting a hedge fund. Hire a lawyer, get all the legal documents you need drawn up, and consider retaining their services for the future - when there is lots of money involved, it is always good to have legal representation you can trust.
After you have a sufficient amount of capital and all the legal issues are taken care of, one of the last major things you need to start a fund is someone to execute your trades. Most people starting a fund opt to use an introducing broker, although there are some other options that are also available.
After all of the above is taken care of, all you really have to worry about is office space, assembling a reliable team to help you execute your vision, recruiting accredited investors, taking care of financial audits, and building your reputation among the investment community. Starting a hedge fund is a large undertaking, but if you are successful, the rewards that you garner will be well worth it!
If you have a proven track record making a solid profit year after year, it may be worth it to look into starting a hedge fund. Even with all the negative media attention hedge funds have gotten throughout the duration of the so called financial collapse, they are still a very lucrative proposition - there are always people looking to increase their net worth. But, if your past trading record is not so stellar and you are still looking to grow your nest egg, it might be a better idea to look into investing in a preexisting, successful hedge fund. Take an objective look at your current situation, investigate your options, and choose the path that will lead you towards your goals!
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