Few people know, but investments are not always connected specifically with money, because investments can be considered any kind of investment - funds, health, strength, time - in an object or process that will bring a certain positive result after some time.
If you look at investing in general, then each of us is an investor - we invest our strength and money in children, education, self-improvement, our future, and all this will bring at least some benefit to us. In this article, we will not consider investing in the broad sense of the word, but will reveal only the material aspect of this phenomenon. So, read on what is investment in simple words and examples of work collected from personal experience.
The financial illiteracy of the majority of the townsfolk and the prevalence of American movies about tough businessmen from Wall Street have formed in the minds of most people the idea that investing is a path for very rich people or a business that large investment companies are engaged in. In fact, this is not the case, and you can become an investor, having very small amounts of money, which is enough to invest on the Internet. To understand who is available for investment activity, you should first understand what it is.
Investment is the investment of funds in tangible and intangible assets for a certain period of time with the aim of making a profit.
The word "investment" denotes both the commercial process of investing funds, and directly those material goods that are invested and make a profit. It is worth noting that investing is not only a way to earn money, but also a way to store funds, because if you just put money under the mattress, not only will they not be able to multiply, but they will also depreciate over a certain period of time due to inflation and devaluation.
Thus, we figured out that investment is a rather broad concept, which implies not only a form of income for banks, large businessmen and businessmen who already have money - chickens do not peck. Each of us can also become an investor - you just need to find the right investment options for you.
If you think that investments for ordinary citizens begin and end with a deposit in banks, then you are deeply mistaken. There are a huge number of organizations, objects, subjects and schemes that allow you to earn on your own money. Moreover, there is a whole classification of investments according to various criteria, which we will consider below.
Anything that can generate income in the long run can become an investment object. Depending on the category of this same object, there are types of investments, which you will learn about below.
The purchase of tangible and intangible objects, which are capital in various forms: the acquisition of an already operating business (investment in a business), land, funds, patents, rights to own something. Such acquisitions, unlike ordinary purchases, can generate income in the future. Investing in real objects has minimal risks that the invested funds will not return back.
They are an investment of money in various investment instruments that will bring profit. This category includes PAMM accounts, HYIPs, purchase of securities, mutual funds. The risk of losing your hard-earned money is very high, such investment instruments cannot guarantee 100% that you will be able to make a profit.
This type of investment works on the principle of "find cheaper and sell more expensive", that is, it is pure speculation. The most popular type of investment in speculative instruments is buying a currency during a fall in the exchange rate and selling it when it rises. In addition to foreign exchange transactions, this type of investment includes the acquisition of precious metals, shares for the purpose of resale and bonds.
Investing in new enterprises and startups that have just launched and have the prospect of future earnings. This is an extremely risky type of income from investments, as it is an investment in innovative business, projects that have no analogues. At the same time, the investor cannot know for sure whether the investment platform will “shoot” or not. At the same time, venture investments can bring a very large income if the idea on which the business is based is fully implemented and is of interest to the consumer.
You can invest in anything - both in material objects, and in your own education or health. Depending on the purpose of investment, three types of investments are distinguished, which are described below.
If an investor invests directly in material objects or production, then such an investment is called direct investment. At the same time, if there is any company that receives an investment, then the investor receives a share in its authorized capital.
You can invest not only in a direct object that has a material embodiment, but also a document that has legal force, which a priori will bring benefits. Non-financial investments include investing in projects of licenses, rights, equipment, etc.
The last type of investment by purpose involves investing in securities. They are an investment portfolio of shares or bonds of a company and do not require active management from the investor - he simply receives a profit stipulated by the conditions of investing money. Investments in shares can be both very profitable and not bring any profit - it is important to determine the prospects for such an investment at the initial stage of investment.
Depending on who is the investor and contributes funds to the investment object, there are types of investments according to the form of ownership. A separate distinction is made between investments made by the state, a company, an individual, a representative of another country, as well as a mixed type, when several different investors are present at the same time.
Under the state form, a state body or an official acts as an investor at the expense of funds from the state treasury. This form includes both nationwide persons and structures, as well as investors of local significance. Where can the government invest? There are a lot of examples: from investing in improving the environmental situation of a certain region and repairing roads to philanthropy in culture and the development of the spiritual level of the population.
Everything is simple here, if an individual investor invests somewhere for personal purposes, then we have a private form of investment. Most often, private investors invest in order to increase them and pursue only material benefits. In this case, only personal investments and finances are used.
Often, citizens, companies and government agencies of another country act as investors - this practice is quite common due to the fact that in different regions of the world there are different conditions for doing business. If the investor sees greater prospects than in his own country, then nothing prevents him from making foreign investments.
When investing funds, as a rule, the period during which the deposit will work is agreed in advance. The only exceptions are such types of investment as speculative, for example, the purchase of currency and its further resale, which will be carried out under favorable conditions - it is not known whether a year, a month, or 24 hours will pass.
Pursuing the maximum profit, the investor can say goodbye to his funds for a long period of time, which is more than 5 years. This type of investment is called long-term and it is usually the most profitable investment. Most often, long-term investments are large investments in construction, the development of something, the development of a new business area, which a priori should be very profitable and worth the wait.
In the event that the duration of the investment is determined to be shorter than 5 years, then they speak of medium-term investments. As a rule, an investment fund, project or direction with such a period of validity has an average rate of return.
To be an investor, it is not necessary to wait for the return of your funds and profits until old age, waiting for their return in 5-10 years. There are a lot of short-term offers that promise earnings for a period of time no more than a year. Take, for example, even bank deposits - each client of the bank can invest funds and receive them in six months or a year with a small premium in the form of interest on the deposit. At the same time, if the profit from investment comes periodically, although the investment period can be long, then this type of investment is called annuity.
Investing is a risky way to make money. Even if you do not choose HYIP or PAMM as an investment object, which carry a huge risk, but invest in a completely legal business, then any unforeseen situation may arise at any time and funds will be lost. The reasons why an investment does not work out are as banal as the world, but sometimes the most unpredictable turns of events happen in life and the reliability of seemingly safe transactions turns out to be fragile and temporary. The modern classification of risks in investing includes aggressive, moderate conservative types of investments. As a rule, investors resort to risk diversification by distributing funds among projects with different riskiness.
The investor wants to get the maximum profit and at the same time is not averse to taking risks. He chooses an aggressive investment model, in which the shortest, riskiest and most profitable method is chosen.
In the event that an investor does not want to lose his money, but there is also a desire to earn more, then he will choose the golden mean - an investment object that contains these two indicators in the optimal ratio.
The most cautious investors choose conservative types of investments that minimize the risk of losing money. In this case, as a rule, for a long period you can get a small profit, but the capital is completely safe.
Since ancient times, precious metals have had value, which is still observed today. Therefore, it is not surprising that many investors choose gold and other precious metals as an investment object. But such an investment has both its pros and cons. Firstly, the price of gold depends on many factors and it is currently difficult to say what can affect its price. Secondly, the cost of gold, if it increases, is insignificant, and most investors consider this kind of investment as the storage of their funds, which can be terminated at any time and exchanged for real money. From the point of view of multiplying funds, it is not possible to call gold a very profitable investment instrument, so if you look at the return on investment, it is better to look for a better option.
In today's changing world, when it is difficult to find stability, more and more often investors are looking for the most reliable ways to invest. Real estate is one such stable investment. In addition, this type of investment is liquid, residential and non-residential premises will always grow in price and be in demand by consumers. At the same time, the investor is faced with the task of being able to navigate the flow of information and understand well the essence of the sphere that he has chosen to earn money. When choosing to invest in real estate, it is important to take into account not only the geographical location, prospects, quality of the property in which it is planned to invest, but also take into account multiple factors that will affect the pricing of the structure in the future, and indeed its integrity and safety. So, one cannot buy a house in the country and expect that one can make good money on this investment in the future.
The Internet has become so tightly integrated into our lives that absolutely all spheres of human life have migrated to this virtual space. It goes without saying that they have found a place for themselves and investments on the Internet. At the same time, this type of investment has a large number of directions, some of them even operate outside the law. The most common online investment objects are:
In addition to such specific types of investments in the network, more prosaic ones can be distinguished: investing in your own website, social account, investing in an online project on partnership terms, and much more.
Creation of bank deposits are investment deposits that are most common in society. But it is not possible to consider them profitable, since a low annual percentage, taking into account inflation, will not bring the investor practically any profit. On the other hand, such an investment can be considered a good way to store money.
Mutual funds have some similarities with PAMM investing (read the article " PAMM Strategy" on the blog). The essence of mutual funds is that investors invest in a "general cash desk", after which the purchase of shares of various companies by traders is carried out. Further, the profit received is divided among the participants in proportion to the size of the investments. The disadvantage of investing in mutual funds is that no one can say exactly when the profit will be and whether it is destined to be at all, as well as guarantee the return of your funds.
A profitable type of investment (very similar in essence to such a type of investment as venture capital investment), in which funds are invested in an interesting, unusual project that should bring good money in the future. At the same time, the project after development may not shoot and no one will return the profit, like your money. In the opposite case, when startups show positive dynamics and are well perceived by the consumer, then the sponsor, that is, the investor, has a good opportunity to earn.
Not everyone is born as a venerable investor, everyone starts from scratch and fills a lot of bumps before they come to some kind of result. If there is no desire to fill bumps and risk money, then we offer you a short course for a young fighter - recommendations for successful investing for beginners.
Once you have chosen the environment in which you are going to operate, you need to study it carefully. Analyze trends, find out how you can get the most income, determine the approximate time to break even. For example, if you are going to invest in real estate, then be sure to explore the market, determine which objects are in greatest demand, and whether an economic crisis is brewing.
Predict what changes in your profitability may occur in the future and whether the investment will be profitable after a certain period of time. Also evaluate what factors can affect the change in market conditions and how to avoid negative changes. It would not be superfluous to consult with specialists: traders, stock analysts, managers in PAMM investment. Do not forget to evaluate how risky your chosen investment projects are and whether this risk corresponds to the return that you can get.
Decide what exactly you are ready to stake and in what form the investment will be made. If you are a beginner, then most likely it will be financial resources, in the future both tangible and intangible assets can be added.
Decide in advance on the purpose of investment and act with an eye on it. If you only need to get a certain amount of money and “tie up” with investing, then you should not invest in expanding production or increasing sales. In the event that you see a further perspective in investing and there is a positive trend, then it makes no sense to withdraw money from the project, because there is an opportunity to earn more.
After the start of your deposit, it is necessary to evaluate the development of the property and analyze whether there is a prospect - that is, at this stage it is necessary to evaluate the effectiveness of the investment. Perhaps the situation turned not in your favor, then certain adjustments should be made.
Even if the project in which you have invested money does not involve your direct participation, this does not mean that you need to idly wait for profit. It is important to constantly monitor the situation, control the dynamics, especially if you have invested in a high-risk investment object.
Everyone can try their luck in investing, but not everyone is destined to become successful investors. First of all, an investor is an analyst, strategist, predictor and financier in one person, he must:
In addition to the above, it is necessary to simply have funds for investment, and this should not be your monthly salary, on which you are going to live as a family of five. You should form your individual investment account from free funds that you can afford to lose. And, of course, do not put all your eggs in one basket - remember to diversify funds, that is, distribute capital across several projects, and even better, even across different types of investment.
Investing is a great opportunity for almost passive income, in which money itself makes money. Visit any investor blog, and you will understand that it is not enough to find the answer to the question “how to become an investor”, it is important to understand that before you rush into battle, you need to be quite savvy and aware of what you are doing, soberly assessing the risks.
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The financial resources of the enterprise are directed to finance current expenses and investments.
Investments - a set of long-term costs of financial, labor and material resources in order to increase assets and profits. This concept covers both real investments (capital investments) and financial (portfolio) investments. Investments are made by both individuals and legal entities.
The law of the Russian Federation "On investment activities in the Russian Federation, carried out in the form of capital investments" No. 39-FZ of February 25, 1999 gives the following definition of investments:
Investments- cash, securities, other property, including property rights, other rights having a monetary value, invested in objects of entrepreneurial and (or) other activities in order to make a profit and (or) achieve another beneficial effect.
Investments ensure the dynamic development of the enterprise and allow:
Expand own entrepreneurial activity by accumulating financial and material resources;
Acquire new businesses;
Diversify into new areas of business;
In world practice, investments are divided into
1) intellectual ones are aimed at the training and retraining of specialists in courses, the transfer of experience, licenses and innovations, joint scientific developments;
2) capital-forming - the cost of major repairs, the acquisition of land;
3) direct - investments made by legal entities and individuals who have the right to participate in the management of the enterprise and who fully own the enterprise or control at least 10% of the shares or share capital of the enterprise;
4) portfolio - not giving the right to investors to influence the work of firms and companies invested in long-term securities, the purchase of shares;
5) real - long-term investments in the sector of material production;
6) financial - debt obligations of the state;
7) hoarding - this is the name of investments made with the aim of accumulating treasures. They include investments in gold, silver, other precious metals, precious stones and products made from them, as well as collectibles.
A common specific feature of these investments is the lack of current income on them.
Profit from such investments can be received by the investor only due to the growth in the value of the investment objects themselves, that is, due to the difference between the purchase and sale prices.
For a long time in our country, the hoarding type of investment was practically the only possible form of investment, and until now, for many investors, it remains the main way to store and accumulate capital.
Portfolio investment represent the purchase of securities, shares, shares, which make up no more than 10% of the share capital of the organization. Portfolio investing is used to make a profit on speculation. Portfolio investments differ from ordinary investments in that their profit is associated with various speculative operations, while ordinary investments are associated with the real sector of the economy. Although there are cases when investments do not differ from each other, for example, in the situation when shares of an organization that issues material goods are acquired.
Direct and portfolio investment has virtually no boundaries. Different countries set this limit differently, usually this difference is 10%. Portfolio investment involves not obtaining control over the affairs of the company, additional benefits as a result of managing the company and taking part in economic activities. The goal of a portfolio investor is to generate a high return by increasing the value of the invested capital (an example of this would be stocks) as well as income in the current period (for example, stock dividends). In this case, the investor does not invest a real or financial asset in one investment, but creates one portfolio from a large number of assets.
Investment portfolios there are several types. It depends on the degree of risk and the source of profit. Investment growth portfolio It is formed from securities for which the value is constantly growing. Fixed Income Portfolio is formed with minimal risk, includes highly reliable securities, but brings not high, but average returns. High income portfolio consists of high-yielding securities, profits from dividends on shares and interest on bonds, in this case, the income is high. Combined income is formed to exclude losses in the stock market, the causes of which may be low interest and dividend payments, a drop in market value.
Portfolio investment has a peculiarity. It lies in the fact that when the yield of one share changes, there is a risk of a change in the yield of other shares that are included in the investment portfolio. A high permanent income can be achieved by purchasing high yielding and reliable bonds and holding them to maturity.
Real investment. The start of a new production is impossible without the creation of new capital, just as the continuation of the production process requires the cost of restoring and renewing capital associated with physical wear and tear or obsolescence of the means of production. In this case, the enterprise-investor, investing funds, increases its production capital - the main production assets and the working capital necessary for their functioning. Any cost of creating new capital or restoring existing capital is a real investment.
Real investments, in turn, are divided into:
material: means of production and their modernization, equipment, acquisition of real estate, stocks, qualifications of employees, social activities, investments in research and development;
intangible : rights to use land and other natural resources; investments in intellectual property (acquisition of technologies, licenses, trademarks, copyrights).
In any case, funds are needed to make investments. A person making real investments can use his own funds or borrow from someone else with an obligation to return after a certain period of time with (possibly) some remuneration. Reward in excess of the amount owed is an incentive to the lender of his resources, and they can also be seen as an investment in the sense that the funds are given in exchange for a commitment to repay.
Obtaining passive income is one of the most attractive activities that allows you to significantly increase capital. However, there are many pitfalls and undesirable risks. To become a successful investor, you need to know what types of investments are, as well as what profit and loss they can bring you. Let's look at several classifications of investments, as well as discuss the most important points when deciding on future investments.
Depending on who allocates funds for investment, the following types of investments can be distinguished:
The investment period is the time after which the investor plans to reach a certain level of profit.. Terms can vary significantly - from a month to tens of years. According to the generally accepted classification, the following types of investments are distinguished:
Each investor determines the individual level of risk that he can tolerate. Often it depends on the warehouse character of the person and the experience of investing. High-risk operations, as a rule, promise quick and significant profits. Investments with minimal risk bring stable and measured profits. Investments that would give a high return in the absence of the risk of loss do not exist. Therefore, each investor determines which of the two factors is more important for him. The selected types of investment strategies depend on this choice:
There are the following types of investments:
When choosing an investment object, the territorial component can also play a role. Depending on this, investments can be internal and external.
They are the most interesting for many investors. Profit from a financial type of investment can be obtained in several ways:
For successful investing, you need to have a good understanding of what area you are investing in, how it develops, what percentage of profit and loss you can get. To protect themselves from force majeure, many investors diversify their risks by investing in different assets that have different characteristics. Investing should be taken seriously enough, because instead of a quick and big profit, you can get the same loss. Having studied the various investment opportunities, you should choose those instruments that can bring good returns. The most interesting for investment may be the following types of instruments:
The economic essence of investments and their types - the knowledge necessary for an investor to make his investments profitable. Understanding the main types of investments, you need to correlate each of them with your desires and capabilities. You should not, for example, make long-term investments with an insufficient amount of capital - the result will not be able to recoup the duration of expectations.
The economic essence and types of investments listed above correspond to the most important goal - making a profit. Wherever you invest money, they must work and generate income. Only after assessing the potential profit, you need to evaluate the possible risk. A variety of forms and types of investments allow you to distribute risks among several instruments and protect yourself from large losses. Diversification is one of the most reliable ways to minimize losses. No analytics and no forecasts can save you 100% from unexpected losses.
Large organizations and all legal entities have a staff of analysts and ample opportunities for choosing the right investment instrument. Where is the best place to invest for individuals?
The following types of investments are considered the best ways to receive passive income:
The economic essence and types of investments may differ somewhat, but all options are aimed at obtaining additional profit.
Independent investment. Often found in the field of stock trading, buying antiques and valuables. These types of investments require in-depth knowledge in the chosen field. You can get a good income only with a professional approach to business.
The above types of investments are available to everyone. You can choose an investment area for any amount of money and for any requirements for the risk/reward ratio. You can choose the object of investment yourself, or you can entrust it to more experienced people. Depending on who decides which types of investments to choose, they can be classified into:
Depending on the source of funds for future effective investments, the following classification has been formed:
The economic essence and types of investments imply a careful selection of the object of investment. At this stage, many investors are wondering: is it better to choose one thing or create a portfolio of instruments? There is no correct solution here. If you are very well versed in the chosen area and can predict the size of profit and risk as accurately as possible, then choosing a single instrument is quite justified. The portfolio, on the other hand, wins in that it allows for diversification, which in total leads to stable profits and reduced risk.
There are certain rules for the portfolio to be as efficient as possible and really be able to protect you from unforeseen losses - all assets must be carefully selected taking into account the correlation, the shares of all instruments must be the same, a combination of aggressive and conservative trading style and other important points are required.
Investment - the contribution of a certain resource in order to increase benefits. In business, investing means putting money "into the cause". Invest at the consumer level - to acquire something significant that will not lose its value over time and will bring income. Types of investments and their role depend on the following parameters:
Depending on who is the investor, investments are distinguished:
In this classification, the determining factor is the owner of financial resources. For example, the state can invest in the development of the economy, and the entrepreneur to expand the business.
In Russia, there are popular investments aimed at creating clusters - production projects with a closed cycle of activity. Private investors are joining the participation of the state, foreign capital is being attracted. The attractiveness of the country for foreign companies indicates the development of the economy, as investors invest their resources only in those projects that will bring profit.
Investments in clusters proved to be effective - many entrepreneurs were able to make a profit, and the state was able to expand the economic infrastructure.
Clusters - vivid examples of mixed investments, in which each entity makes a certain contribution in order to obtain maximum benefits.
Investments can be made both in a certain material resource, and in something that has no form, but brings profit in the future or saves capital - securities,.
Objects of investment divide investments into direct or real and portfolio.
p> Direct investments imply a real contribution of material resources to the production process to stimulate the activity of the enterprise.
In this case, direct assets can be:
Portfolio investment involves the acquisition of a share of the company's ownership in the form of securities or shares. The presence of portfolio assets entitles the investor to participate in the activities of the enterprise whose shares are purchased.
Portfolio assets often serve as a tool for risk diversification. What does it mean? Briefly - there is an investor who has a lot of free money that needs to be invested so as not to lose, preserve and increase their value over time.
Investing is a long-term process that involves the preservation and growth of capital. It is in the long term that you can get the desired result.
According to the duration of deposits, investments are distinguished:
You can get a quick effect on investments by putting money on a deposit at a high percentage. However, this is a risky operation, since a high interest rate on deposits indicates that the bank has problems, and as a result, the money may not be returned.
The degree of risk is another important parameter by which investments are classified. Economic entities are guided by different goals when deciding where to invest free resources. Some want to significantly increase their capital, others want to keep what they have, since money loses its value in conditions of inflation.
Depending on the degree of risk, there are the following types of financial transactions:
Risk-free investments do not carry the risk of losing the investor's resources - this operation is carried out in order to insure own assets, as well as to preserve existing capital. They do not involve a large return, profit is either small or non-existent.
In an intangible aspect, investment without risk is charity. In this case, the return on investment is commensurate with the effect of utility for society.
It is believed that risk-free investments are the main tool for preserving capital in the face of rapid depreciation of funds - inflation.
The occurrence of force majeure circumstances leads to a decision by the investor to return his resources. In such situations, it matters how quickly the investment can be turned into cash.
The ability to convert investments into money is liquidity. There are several types of investments for this parameter:
The types of investments have something in common with each other - mixed ones can carry a different degree of risk, direct or portfolio ones can be different in duration. Their characteristics cannot be determined by only one parameter.
The origin of investments is also different, namely:
Initial deposit involves the formation of capital to launch a new project. At the same time, both private individuals and the state can be participants.
An example of primary contributions are venture investments or investments in start-ups. These are transactions with a high degree of risk and a high level of income. Statistically, 80-90% of startups fail.
Extensive investment are multiplied net investments. After launching a project that makes a profit, the investor, in order to maximize the effect, decides on additional investments to increase production capacity.
Reinvestment - the direction of the income received from the activity in which the initial investment was invested back into the business. For example, an investor decides not to withdraw capital, but to reinvest it in the same project.
Disinvestment - the withdrawal of material resources from the financial project irrevocably or its redirection to a new field of activity. Resources can be withdrawn completely (the business does not bring the desired profit) or partially - when it is possible to withdraw part of the capital to diversify risks without harming the core business.
Investments are a financial instrument, the relevance of which increases over time. As the market environment improves, investments acquire new forms, therefore, the signs by which they can be characterized also change, they become more perfect.
Investments - long-term investment of capital for profit Investments are an integral part of the modern economy. Investments differ from loans in the degree of risk for the investor (lender) - the loan and interest must be repaid within the agreed time frame, regardless of the profitability of the project, investments are returned and generate income only in profitable projects. If the project is unprofitable - investments may be lost in whole or in part.
Investment activities- investment and implementation of practical actions in order to make a profit and (or) achieve another beneficial effect.
From the position of the monetary theory of money, funds can be directed to consumption or savings. Simple saving withdraws funds from circulation and creates prerequisites for crises. Investing brings savings into circulation. It can occur directly or indirectly (placement of temporarily free funds on a deposit in a bank that is already investing itself).
Investment classification
There are different classifications of investments.
According to the object of investment, allocate
Real investment(direct purchase of real capital in various forms):
in the form of tangible assets (fixed assets, land), payment for construction or reconstruction;
overhaul of fixed assets;
investments in intangible assets: patents, licenses, usage rights, copyrights, trademarks, know-how, human capital (upbringing, education, science), etc.
financial investments(indirect purchase of capital through financial assets):
securities, including through mutual funds ( Mutual investment fund is a property complex, without forming a legal entity, based on trust management of the fund's property by a specialized management company in order to increase the value of the fund's property. Thus, such a fund is formed from the money of investors (shareholders), each of whom owns a certain number of shares);
granted loans;
leasing (for the lessor).
Speculative investment(buying assets solely for the sake of a possible price change):
precious metals (in the form of unallocated metal accounts);
securities (shares, bonds, certificates of joint investment institutions ...).
According to the main investment objectives
Direct investments.
Portfolio investment.
Real investment.
Non-financial investments.
Intellectual investments (associated with the training of specialists, conducting courses and much more).
By investment period
short-term (up to one year);
medium-term (1-3 years);
long-term (over 3-5 years).
By form of ownership of investment resources
state (capital investments);
foreign;
mixed.
Investment project- a set of interrelated activities aimed at achieving the set goals in conditions of limited financial, time and other resources.
Investment classification:
from the investment object: real and financial;
by the nature of participation: direct (the investor directly participates in the choice of investment object, including management) and indirect (investments through an intermediary - securities, etc.);
by investment period: short-term (addition of capital< года - депозитные вклады, покупка сертификатов и т.д.) и долгосрочные (>of the year);
by the level of investment risk: risk-free, low-risk, high-risk, speculative (characterize the most risky investment of capital, for which a fairly high level of investment income can be expected);
by forms of ownership: private (investment of funds by citizens and legal entities of a non-state form of ownership), state (at the expense of the budget and off-budget funds, state enterprises at their own expense), foreign and joint (foreign firms and enterprises of the given country together);
on a regional basis: national and foreign investments.
From the position of the management personnel of the company, projects are classified according to the following criteria:
the amount of investment required: large, traditional and small;
Type of expected income: cost reduction, expansion income, entry into new sales markets, expansion into new business areas, reduced risk of production and marketing, social effect;
type of relationship: independence, alternativeness, complementarity, substitution;
cash flow type: ordinary, non-ordinary;
attitude to risk: risky, risk-free.
This is a rather arbitrary division. For example, estimating the size of a project depends on the size of the firm. The objectives of the valuation may be different, and the results are not always in the nature of profit. There may be economically unprofitable projects that bring indirect income.
There are complimentary projects - if the adoption of one contributes to the growth of income for others. This is important when accepting a project if the choice according to the main criterion is not obvious. Two projects are replaceable if the acceptance of one leads to a decrease in the profitability of the others.
28. Effect of financial leverage(EGF)
financial leverage characterizes the use of borrowed funds by the enterprise, which affects the change in the return on equity. In other words, the RF is an objective factor that arises with the advent of borrowed funds in the amount of capital used by the enterprise, allowing it to receive additional profit on equity.
FR effect calculated following. formula:
((1-n)(ER-SP) is the differential)*(LK/SK is the lever arm)
n - income tax rate, ER - economic return on assets = profit before taxes / asset, SP - average interest rate on a loan, LC - borrowed capital, SC - equity.
The ratio allows you to set the amount of borrowed funds attracted by the enterprise per unit of equity.
