If you’re looking for a more remunerative (and interesting) home for some of your savings than a low-paying bank account, you might like to check out what PrimeStox has to offer.
PrimeStox is basically a crowdfunding platform for high-quality food producers and sellers. These businesses are seeking short-term funding (typically for four months) to make products and get them to market. Once the products are sold, investors get their money back with interest. This is generally around 8% for four months, which works out as an annual rate of around 24%. If you immediately reinvest your money in another project, the annual interest rate will be more than this, due to the effects of compounding.
The opportunity may be best explained by an example, so here’s one product I invested in recently. Scarlett and Mustard is a range of premium salsas, dressings, and so on produced by a husband and wife team in East Soham. They say all the ingredients they use are 100% natural and sourced locally.
Last month they were looking for a total investment of £6,000 to fund 6,000 jars of their tomato salsa range (pictured below). I decided to invest a modest £50, which made me the beneficial owner of 50 jars. All being well, I shall receive £54 (my original investment plus 8% interest) by the end of September 2017.
You might ask what will happen if they don’t sell the salsa. The answer is that all investments are secured by the products concerned, so in the worst case scenario I will receive 50 jars of tomato salsa, which would keep me going for a very long time! Or I could sell them or give them away to friends, of course.
In practice, though, that is an unlikely scenario. So far all investments on PrimeStox have been repaid with interest on or before the date specified. If there is a problem, all investors vote on how best to resolve it, e.g. by selling the goods to a third party for a smaller margin. It is therefore highly unlikely that you would ever lose all your money.
Primestox Pros and Cons
Obviously, investing in PrimeStox is not as safe as putting your money in the bank. In addition, the money will be tied up during the investment period with no easy way of accessing it (although this.is generally no more than a few months). You shouldn’t therefore invest money you may need urgently in the near future.
On the other hand, there are a lot of things I like about it…
- Rates of return are highly competitive, even compared with other crowdfunding and P2P investment opportunities.
- The minimum investment is very low – typically £20. You can therefore test the water without risking any significant funds.
- If you are prepared to spend a bit more – say £100 or over – in many cases you will receive a higher interest rate.
- Unlike some other crowdfunding platforms where demand from investors greatly exceeds supply, with PrimeStox there are generally a few days to decide whether you want to invest and how much (though I have noticed that opportunities are filling up faster and faster).
- You are supporting small businesses in the UK and abroad who are dedicated to producing high-quality foodstuffs.
- And, as mentioned earlier, as an investor you hold title in the product until it is sold. PrimeStox will even send your share to you free of charge if you want.
As for why producers are offering these sort of returns, it is basically to aid their cashflow by covering the cost of raw materials, production, storage, transportation, and so on. But also, they hope that investors will act as ‘brand ambassadors’ for them, helping to promote the product, and maybe even buying some themselves.
In that spirit, here are links to the three products I have invested in on the platform so far, with the amounts I purchased included.
Strong Roots Sweet Potato – £100
Bread Tree – Rainbow Pasta (pictured below) – £56
There is absolutely no obligation to promote any of the products you invest in, but obviously as an investor you have a financial interest in ensuring they are successful. Investors are also sometimes offered rewards, discounts and other incentives by the producers in question.
Clearly nobody should invest more than a small portion of their savings in PrimeStox, but the potential returns on offer are compelling, and investing this way is certainly more fun than stocks and shares!
If you have any comments or questions about PrimeStox, as always, please feel free to post them below.
Disclaimer: I am an investor with PrimeStox but have no other relationship with the company and am not an affiliate for them. Neither am I advising anyone to invest in PrimeStox. Investment decisions are personal to every individual and if in any doubt you should seek advice from a qualified financial adviser. This post is provided for information purposes only and should not be construed as financial advice..