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For many adventurous investors, a racehorse investment combines the excitement of a thrilling hobby with the very real possibility of making a profit.

The love of horses and racing are the main reasons many investors consider horseracing as an investment.

There’s a wide range of money to be made—while some horses are relatively inexpensive, Thoroughbreds can go for hundreds of thousands. The return on the investment is based on the number of purses won by the horse; often this can be up to ten times the cost. However, not all horses will realize such a return.

Unlike traditional investments, horses are living creatures that can get injured or sick. One way to dilute the risk is to join a syndicate whereby you own a leg rather than a whole horse. Some syndicates, however, require you to purchase part of every upcoming offering so if you are not planning on building a stable full of horses be sure to check the small print.

Thoroughbred racing has the reputation of being a pastime for the extremely wealthy who can afford an extravagant, speculative hobby. Some even point to statistics indicating that the average owner loses money consistently. The key here is only invest your disposable income.

But while risk is a word heard often, racing can be compared to penny stocks, with the potential risk for each individual horse (or stock) being high, but the return on investment for those that hit being high enough to make the risk worthwhile. Anyone who invests should value the fun of the experience; investing just for the purpose of making a profit would be foolish.

One horse expert says, “Investing in a racehorse is much like investing in a high-stakes game of roulette. If you get lucky and the horse turns out to be a winner, you will get your money back and then some. But the odds are against you. The great majority of racehorses do not achieve that kind of fame and earnings. You should only do it if you have money to burn and owning a racehorse has been a lifelong dream. But don’t do it expecting a definite or immediate return.”

Investors need to define their goals clearly. Some high-level partnerships buy the most expensive prospects to race with the intention of making them valuable for breeding. These usually require investments of more than $20,000. For investors who disregard breeding potential, investments range from as little as $10,000 to $50,000 or more. Some require all the money in advance, while others allow for the monthly or quarterly payment of expenses.

Regardless of the form of investment—whole or part of the horse, a potential investor needs to find an experienced adviser, one familiar with the sector of the business in which the investor wants to place money. Someone successful in one area may not be familiar or successful in another. The most critical decision is choosing the right adviser, otherwise it could be a case of “only fools and horses”.