Choosing a way of income, increasing the profitability of production or business, it is important to take into account a variety of investment options - their ways, differences, positive and negative points. What is investment, and what is their role in the economy of various industries and the state as a whole - an urgent issue in the modern world.
Investments - what is it?
As a rule, financial investments are the investment of money in an object or tool for the purpose of making a profit. In the case of a loss-making project, investment funds are returned extremely rarely or not at all. What is investment? Such investments can be not only money in its pure form. Often, this is the purchase of shares or securities, the ownership of the object, a license or copyright, currency, precious metals. Sometimes, as an investment, they invest in:
- reconstruction;
- repairs;
- the maintenance or servicing of anything;
- New construction;
- education or education.
The role of investment in the economy
What is investment for? Their rational use allows to increase the level of development and its prospects for the most important industries, production or agriculture of the country. Investing allows you to save or optimize the number of jobs, improve the quality of products, establish turnover and create a reserve of financial assets for the subsequent implementation of planned projects.
It should be borne in mind that not every investment will be useful. Investing in illiquid business, provided it is not optimized and modern or established methods of production often does not bring the desired result. In such cases, the return on investment may be low.
How to attract investments?
High-yield investments will always be more attractive for investors, but how to achieve the desired result? There are some aspects that affect the possibility of obtaining the necessary investment package:
- conducting an open business with strict reporting of a different plan;
- work on planning for further actions, drawing up a development strategy, applying maximum efforts to comply with them;
- a sober assessment of the expected income and expenses;
- availability of recommendations or positive reputation in the business sphere;
- readiness for flexible cooperation;
- favorable economic situation, investment climate and some state support.
Types of investments
Attention of the future investor deserves a classification of investments. There are several of them:
1. By investment terms:
- short-term investment - a period, usually less than a year;
- medium-term investment - the period from one year to 3-5 years;
- long-term investment - often, for a period of more than 3-5 years.
2. On the territorial basis:
- internal;
- external.
3. By types of investment objects:
- Direct or real - contributions directed to the development of production or business;
- portfolio or financial - they directly bring profit to the investor.
4. By type of investor participation:
- indirect investment;
- direct attachment.
5. By revenue:
- lack of income, but the presence of social, environmental or other benefits;
- low;
- average;
- tall.
6. When accounting for the form of ownership, investments can be:
- foreign;
- joint with other states;
- private;
- state;
- mixed.
Investments - where to invest money?
As a rule, making money on investments is the main goal of investors. The choice of industry for such investments may depend on the following factors:
- preferences of the investor;
- economic situation and the availability of promising directions;
- features of industries or businesses in the region;
- amount of free capital.
Investments in business
Many are wondering how to make money on investments. The answer can be ambiguous. For example, when investing in business projects it is important to consider a number of factors:
- profitability of business;
- its stability;
- development prospects;
- possible risks.
Investments in shares
A common type of investment is the purchase of securities, but not always you can achieve the desired result - there are some features of investment in stocks. Their cost can vary depending on the economic situation. Operations require experience and skills. The disadvantages of investment can be attributed to the fact that initially the profit is distributed among credit organizations, employees and suppliers. Do not forget about the possible bankruptcy of the company and other financial risks.
Investing in start-ups
Often, investments and innovations are inseparable. At present, there are many talented developers and beginning businessmen, for whom it is important to find a stable investor. Not everyone is ready to invest their capital in a new, untested project, so there are huge risks of such investments. In order to find both a startup project and an investor, it is important to consider these risks and possible additional costs. It will be useful to draw up a business plan and its subsequent implementation.
Invest in bitcoin
The goal of the majority of investors is profitable investments, but not always it is possible to achieve the desired result. What is investment in bitcoin, and what is their difference from investing in the usual currency? Bitcoin is a virtual payment system, usually peer-to-peer, which is used for online settlement between sellers and buyers, exchange for goods or services. Sometimes it is possible to exchange bitcoin for regular money through specialized online services.
The question of investing in bitcoin is controversial, because the cost of such a currency can change several times a day. Often, such investments are of a long-term nature. There is an opinion that they are expedient in the presence of free capital. There are examples of both profitable and unprofitable investing in bitcoins, so the choice in this case remains for the investor.
Investing in gold
It is rare to find investments without risk. Even a stable price of gold may be shaken because of the influence of external economic factors. There are some advantages of investing in gold reserves:
- metal is not very exposed to external factors, so it can persist for a long time;
- its storage does not require special conditions;
- The influence of economic factors on the value of gold is not so great.
Investing in precious metal can be in the form of buying coins, ingots, ornaments, opening metal accounts or brokerage trade. Like any type of investment, investing in gold entails certain risks that must be taken into account when choosing a financial asset.
Investments in construction
The growing pace of construction often allows one to call investing in this industry one of the common investments of available capital. Investment objects in this case - residential, industrial, production, social funds. The housing stock is a popular segment for investment. And this applies not only to urban, but also suburban real estate. There are a number of factors that cause such popularity:
- The cost of square meters of housing stock in the early stages of construction is much lower than the prices for finished housing.
- Ready-made residential or non-residential premises are often subject to rental, which brings a certain benefit to the investor.
- With stable economic conditions, prices for secondary housing are growing, especially in areas with developed infrastructure.
- Rural properties rarely lose value. An additional factor in the growth of the cost of housing can be a high probability of uniting the territories of the city and the region.
- In addition to rent, investments in the hotel chain are common, especially if the region is attractive for tourists.
Investments in agriculture
As a rule, investment goals are those tasks that an investor sets for himself when choosing an object for investing funds. Often this is a financial gain, but sometimes the tasks may be social or environmental well-being. What is investment for the agricultural sector?
This is an investment of funds for the construction and maintenance of livestock farms and agro-industrial complexes. The result of such investments depends not only on their volume and competent distribution, but also on the type of agricultural facilities or crops, the region, climatic and weather conditions.
There are some features of this type of investment:
- The long waiting time for profits depends on the terms of growing the crops, collecting them, processing them and exporting them. A similar condition applies to livestock complexes.
- High risks - the impact on the harvest of weather conditions, the presence of diseases of livestock or birds.
- The need to update the fleet of agricultural machinery, the introduction of new technologies in crop production and livestock.
Understanding what investment is and how this financial instrument works is necessary to calculate the required costs and the estimated benefits. Choosing an object or asset for investment, it is important to consider the possible risks, financial and time costs that can accompany almost any type of investment.