Wednesday, January 4, 2012

Type of Investments: 6 - BDC

I continue my series on different types of investments...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

Business Development Companies are interesting investment vehicles. On one hand they are an equity: the company issues stock to raise funds to then lend it to other companies. Yet on the other hand isn't it similar to a bond? It is competing with bonds and banks for business of the small companies needing capital.

Like REITs, BDCs have a favorable tax treatment to its income. However they are forced to give out the majority of its profit in the form of dividends to its shareholders. This way the government still gets what it feels is its share.

Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

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