Investments in various forms and forms have penetrated so deeply into our daily lives that many people who are not even directly related to investing have a common understanding of what investment is. The nature and types of investments of different authors are slightly different. Let us dwell on this definition of investment:
Investments are the investment of capital in any form (property, money, securities, etc.) in the objects of the economy for profit or for solving any social problems.
Types of investments.
In the economy, investments are divided according to the objects of capital investment into financial and real . Real investment involves investing in the operations of the enterprise and the life of the staff. Financial investments are investments in securities and other financial instruments.
According to the level of investment risk, investments can be of four types: risk-free, low-risk, medium-risk, high-risk and speculative investment. Explanations are only required for the latter type of investment. For speculative types of investments, the maximum level of income is always expected, but money is invested in questionably risky investment projects.
By the nature of participation in the investment process, investments can be direct and indirect. In direct investment, the investor invests money himself, most often in the authorized capital of enterprises, securities, etc. In indirect investment, financial intermediaries are involved in the allocation of money.
According to the investment period, the following types of investments are distinguished: short-term (up to one year) and long-term (more than a year).
Types of investments by ownership: private and public .
And finally, according to regional affiliation, national and foreign investments are distinguished.
Although the economic nature and types of investments have many definitions and explanations, for the average person another classification of cash investments will be much clearer. Consider the types of investments that are most convenient for an individual:
- Deposits . One of the most convenient ways to place your own free funds. It is enough to come to the bank and find out the term, interest and general conditions for deposits, and then choose the appropriate one. The only difficulty will be the variety of banking offers.
- Mutual investment funds . For those who are just beginning to comprehend the basics of profitable capital allocation, this investment is the most convenient both in price and in decision making. An investor buys shares that are nothing more than stocks or bonds of any company. The interest is calculated on the amount of investment.
- Trust management involves the transfer of money or securities to a legal entity for profit. From the profit you have to deduct a certain percentage of the “asset manager”.
- United Bank Management Fund. In this case, the property of several founders is managed by a credit organization.
- Real estate investments are quite expensive and the risk level is very high. As a result of investing in housing, you can equally win and lose.
- Non-state pension funds place the main emphasis on investing in a decent old age. These funds manage pension assets.
- Credit unions are characterized by high risk and high profitability. The investment scheme resembles bank deposits.
- Independent trading of valuable boumans requires certain investor knowledge and skills.
- Investing in a business is a direct investment. About the business in which you are going to invest, you need to collect the maximum amount of information.