The expression "long money" is a concept that has arisen in the financial world for a long time. It determines the type of investors who invest their capital for the long term. If you focus on the West, then we can say that they are long-term investments of 5 years or more. At the same time, the medium-term outlook is from 2 to 5 years, and the short-term outlook is less than 24 months.
In our country, these time periods are much less. So, in Russia, the medium-term prospect is considered an investment from 1 year to 2, and long-term from 24 months to 5 years. For even longer periods, very few decide to make investments. Without a doubt, growing markets have great volatility, in which prices fluctuate very much, which quickly leads to increased risk, but can also bring big profits.
The concept
So, “long money” is an expression that is used in the economy, mainly in the field of finance, to determine long-term borrowings and investments or loans that are granted for a long term.
Through them, financing of long-term development programs takes place, and, in addition, the accumulation of funds is carried out. They are an indicator and proof of the stable development of the economy in the country.
How often do people take a loan for 5 years? About it further.
Long-term loans
Registration of long-term loans, as a rule, occurs in banks. They should be provided to customers at a small percentage due to an increase in the overpayment in absolute amount in the process of increasing the period of use of borrowed funds.
The need for a procedure for processing long-term loans is explained by the fact that the borrower needs to repay them through comfortable payments that are not burdensome for the budget.
In addition to banks, there are alternative ways to obtain the required amount on acceptable terms. And these are not at all familiar to many microfinance organizations.
What is convenient loan for 5 years?
Long-term loans
The main problem of all microfinance institutions that issue small loans is too high a percentage. The term for the return of funds received in such an organization, as a rule, is no more than one month. But if you convert the daily rate to annual rates, then some customers of microfinance institutions may be very surprised, since the full cost of the loan will result in more than 300% per annum.
But banks are not at all ready to provide small amounts, since the costs of directly obtaining such a loan will not be covered by interest income and, therefore, will not bring the expected benefit to the lender.
But is there a solution that could allow you to get long-term loans with a small overpayment? You can get money without an intermediary in the form of a banking institution directly from cooperation with private investors, namely at the lending site - “Lonberi”.
For a reliable borrower, they can calculate rates from 14% per annum even as part of his first call to the service. Amounts in this case start from 20 thousand rubles. The terms convenient for the borrower are also set. It depends on what monthly payments can be made with his income, so that it remains for additional needs.Thus, terms from a couple of months to 3 years are offered. When free funds appear, you can pay off the amount in advance, as well as reduce the total overpayment.
But is it profitable to use such long-term loans? Even if the rate recommended for the borrower is about 12% per annum, the overpayment will be a pleasant surprise. But still, how much will you have to give? Under the above conditions, the total overpayment for the amount, terms and specified rate will be 670 rubles, and 220 per month will have to be paid.
So, having received 20 thousand, the borrower will have to return 20 670 rubles. In fact, the overpayment may turn out to be even lower, since, provided that the volume of offers exceeds the amount of the application, investors reduce the proposed rate. Thus, each potential client is able to calculate the cost of the necessary loan.
What other sources of long money exist? Let's figure it out.
How do such loans work?
All participants of the credit service are individuals. That is, any loan operations are carried out exclusively between people, and not on behalf of a company. As part of investing its own funds in a loan, a private investor, Lonberi, receives a greater profit than if he places the same amount for the same period at a banking institution at interest. At the same time, the benefits in both issuing and repaying loans are mutual.
Long money in the economy is now used most often.
How is bidding done?
It should be emphasized that there is no difference between the banking mechanism and the service of the long-term lending platform. The reputation of the borrower is evaluated through a scoring program, and the data comes from the national Bureau of credit histories.
14% per annum are offered as a rate for customers who have a reliable credit history even within the framework of their first appeal to the services of the service for long-term loans. The general conditions are as follows:
- The refund period is from a couple of months to 3 years.
- Amounts from 20 to 500 thousand rubles are issued. This is cheap long money.
Who is eligible to receive long-term loans?
These persons are able-bodied citizens from the age of 21 at the time of receiving a loan and up to 65 years at the date of repayment. It is important that a person has a reliable credit history. It should be noted that potential borrowers are selected quite strictly.
At the same time, candidates from any region of Russia are considered. Both residents of Moscow and any other city in the country can apply on an equal footing and use loans for long periods from private investors without an additional visit to the office. Funds are transferred to the account of the borrower, which can be opened in any Russian bank.
List of documents required for applying for a loan
The borrower's questionnaire is filled out once and updated as the information on employment changes or, if necessary, the addition of a salary certificate. As part of the registration, data from the following documents is entered:
- Passport of the borrower.
- A work book or a document confirming employment, for example, a contract.
- Information on the availability of official income in the form of a 2-personal income tax certificate or an extract from a salary or pension account.
In addition, customers who are looking forward to long-term cooperation are recommended to add additional information to the questionnaire. Like banks, Lonbury has a loyalty program based on the principle: "The more documents, the lower the interest rate."
Everyone who, except for small loans, for a long period needs funds from 150 thousand rubles or more, is recommended to issue an electronic digital signature.Each long-term loan is granted on the basis of a contract available as part of a preliminary review.
What else is included in the concept of "long money"?
Long term investment
Long-term investments are an investment in the process of business development for periods exceeding 12 months in order to profit. As a rule, they are made for periods not exceeding 5 years.
Long-term investments are made in construction, as well as intangible assets intended for long-term use, and in addition, in various securities from which additional income can be obtained. This is mainly related to investments, which are characterized by rather high stability, regardless of changes in the economic situation or from fluctuations in the financial market.
This is the basis of state investment policy.
This is a set of targeted measures undertaken by the country to create favorable conditions for all business entities in order to revitalize investment activities, boost the economy, increase production efficiency and achieve social development objectives.
The main objective of the state investment policy is to create optimal conditions for the development and acceleration of the investment process. Let's consider this question in more detail.
The objectives of the state investment policy include:
- selection and support for the development of individual sectors of the economy;
- ensuring balanced development of industries;
- ensuring the competitiveness of domestic products and accelerating scientific and technological progress;
- in support of the development of export production;
- ensuring the defense capability and security of the state;
- implementation of social programs (development and support of health care, education, culture and sports, housing and social construction);
- employment regulation;
- environmental protection, the implementation of environmental programs, etc.
Types of Long-Term Investing
Long-term investments are classified by investment objects. They are divided into long-term financial and real investments. Each of them has its own distinctive features. At the same time, investments in securities, as well as shares of various organizations, along with loans, are classified as financial. The purpose of such investments is to obtain additional profit. Real investments are called investments in the formation of such production processes as:
- The process of improving fixed assets.
- The acquisition of land funds.
- Construction along with the purchase or updating of equipment and real estate.
- Materials with products intended for further processing.
- Investments in licenses and patents for various rights.
- Copyright, and in addition, user rights.
- Trademarks along with new technologies and scientific developments.
The profit from long-term financial investments is constant. Such investments can not bring quick income in small time periods. The attractiveness of the long-term type lies in the stable nature of profitability throughout the entire investment period.
It is worth considering other nuances. At the end of the investment period, the object can be sold at a price that, if favorable conditions exist, can exceed the original cost by several times. A good example of such investments is the purchase of residential premises, as well as commercial or industrial buildings for the purpose of leasing for a long time. This will bring a stable profit. With a significant increase in prices on the real estate market, such an object can be sold at market value. Similarly, market prices can rise in securities.
Popular types of long-term investments
Among investors, a number of types of long-term investments enjoy well-deserved popularity due to their stability and profitability. Below we consider the most promising of them.
Securities
The most popular type of long money is a contribution to stocks and securities. Consider this option in more detail. In the event that an organization invests in securities, this means that it is expanding, increasing its production volumes. In addition, this may also mean its entry into the international market.
As a rule, the most promising economic sectors are used for investments. It is best to invest immediately in several organizations from various industries so that in an unfavorable scenario not to lose all your money at once.
Strategic investment
Strategic investments are the acquisition of a large number of shares in order to establish absolute power over the acquired organization. It rarely happens that a controlling stake is acquired at a time, but usually it is a rather long process. Most often, an investor buys up the shares of an institution that interests him purposefully for several years until he has the necessary number of shares in his hands, which will allow him to control all the commercial activities of the company.
The concept of long-term investment is interesting to many.
Investing in construction and real estate
Particularly attractive at present are investments in construction, as well as the purchase of ready-made residential, exactly like commercial buildings and premises. Especially often this phenomenon is observed in megacities. In the economic conditions of our country, it is considered acceptable to use borrowed funds in order to invest them in construction. True, it is necessary to take into account all potential risks, for example, the probable bankruptcy of a contracting institution.
As part of investing in completed construction or a constructed facility, losses are likely due to the downtime of premises intended for rent. The constant increase in property prices also acts as a risk factor for the presented direction, as large loans may be needed.
There is state support for small businesses in Russia. This is also an example of long money. The more enterprises in the country, the greater the treasury.
Investing in machinery and vehicles
Currently, investment in vehicles and equipment is considered another popular destination. How it works? Investing in transport is carried out with a view to its subsequent leasing, and equipment, respectively, for rent. In this case, the investor earns rental income, which is charged for the operation of the equipment.
After the termination of the lease or lease agreement, you can sell the product, receiving additional income in the event that the equipment, exactly like the vehicle, is not too worn out. The risks of this type of investment consist in additional expenses for repairs or insurance.
Direct investment in production
Another equally interesting area is considered direct investment in production. Allocate various investment options in production, which include the enlargement of their own enterprises or investments in foreign organizations.
In the first case, an important requirement for a successful investment is the necessary production space. In the second situation, the negative point is the additional costs for using someone else’s equipment, as well as the risk that this institution may begin to copy products, thus becoming a direct competitor in the market.
Sources of Long-Term Financing
An important step in each such project is the identification of funding sources.Long-term investment can be carried out at the expense of own funds, and borrowed. Often this happens through budget funding or sponsorship. Net profit, along with authorized and other capital, depreciation and income from the sale of intangible assets, serves as its own source of financing for long-term investments.
There are other options. Together with own funds, long-term investment can be financed by borrowed money. These include loans and bank loans. Other sources of financing long-term investments include attracting in the form of targeted subsidies, budget allocations, financial assistance from sponsors and other funds allocated free of charge.
We examined the concept of long money.