Investment is a type of activity when capital investments are made for the subsequent receipt of income. However, it can only be obtained if the project is profitable, otherwise you can lose the invested funds. Investments are money, property rights (intellectual and property) or securities. In other words, it can be any item or phenomenon that has a monetary or other materially expressed assessment and has the ability to increase its value in the future.
Key Definitions
Investments and development are inextricably linked, because without the first there is no second. Investments in any asset provide an opportunity to develop and improve it, subsequently making a profit.
From a scientific point of view, investments are called capital investments for a long period of time for subsequent income. There are 2 main points here:
- Investments are made for a long time.
- The main goal is to generate income, which will be an indicator of effectiveness.
Of course, where there is investment, there is also risk - with the growth of the potential level of profit, the risk of investments also increases.
Investments should be distinguished from financing and lending:
- in the case of a loan, the lender expects that he will be paid back the loan amount and interest at the agreed time. An investment is an investment for an indefinite time, although investors certainly set a time frame;
- the yield on the loan is strictly fixed. In the case of investments, it can become negative. Financing generally aims to invest, rather than make a profit.
Despite this, investment is a part of the economy that acts as an activator of the growth of production and industry, reduces inflation and helps to improve business activity.
Types of investments
In Russia, investments can be made by both individuals and legal entities. To implement these investments, it is important to distinguish between their types:
- Given the object of investments distinguish:
- real ones. First of all, it is an investment in tangible objects, for example, the acquisition of equipment, the construction of new structures, etc. It also includes the acquisition of intangible assets that affect the business and can generate profits: licenses, patents, trademarks, education, advanced training of employees, etc .;
- financial. In this case, enterprise investments stimulate the level of production using stock market instruments (stocks, shares, bonds, etc.). This also includes loans from banking institutions for the development of the enterprise, the acquisition of equipment through the use of leasing systems;
- speculative. Operations with currency, precious metals, stocks. Their acquisition and implementation after some time in order to make a profit.
Based on the goals, investments in Russia are of the following types:
- direct or basic. They are implemented in order to take control of the enterprise (in most cases, by purchasing its controlling stake);
- portfolio. Investing in the securities market. In other words, passive investment;
- non-financial. Acquisition of patents, copyrights, licenses, etc .;
- real ones. Contribution to the fixed assets of the enterprise: equipment, machine tools, real estate, etc .;
- intellectual. Funds go to staff and their training.
2. Based on the timing, the following investments are allocated:
- short-term (up to a year);
- medium-term (up to three years);
- long-term (over three years).
Who acts as an investor
Depending on who exactly makes investments, investments are:
- private. They are carried out by individuals and legal entities at their own risk. Source of funds - personal savings;
- state. Here, investment is the means of the state budget;
- foreign. Funds come from individual representatives of other states, as well as from entire countries;
- mixed.
The peculiarity of state investments is their reality, that is, they are directed to the purchase of fixed assets, construction tangible assets. 
The accumulations of private individuals are mostly financial. This is especially true of investments in Russia, since their cost is relatively low.
Attraction of investments
The bulk of people who are famous for business, believes that in order to receive funds the company should:
- develop a detailed and optimal plan for further actions. This is necessary so that investors understand what profit will bring them investments;
- have a positive reputation in society. Investors like companies that work openly and inspire confidence. Only then is it possible to return your investments back and receive income. Investing in the shadow business, they are very likely to remain without profit and not get their investments back;
- have clear and open activities, transparent reporting;
- The main investments are dependent on the policies that are pursued in the state where the company operates. Investors prefer to invest in companies whose countries are most stable.
What in reality
In the realities of life, all of the above indicators are needed for portfolio investment. Investments can be attracted without this, the main thing is investor confidence that his rights to manage investments and profits are respected. Such confidence is guaranteed not only by the legislation and open reporting of the company, but also:
- personal ties in departmental structures, government;
- the acquisition of a controlling stake, which allows direct control over the activities of the company.
Material fact
We must not forget the important factor, which is the ratio of risk and potential income. Some investors opt for a lower profit margin, thereby reducing risk. Some - lay high profitability, taking into account that the risks will be significantly increased.
Thus, the level of risk depends on the internal state of the investor. If he wants to get the maximum profit in a short period of time, he realizes that he is at great risk and can lose everything. If the investor wants to receive a little, but steadily, he chooses the appropriate tools.
Investment management
This is a rather complex system of various principles and methods, the purpose of which is the effective implementation of investments. Management implies:
- study;
- forecasting;
- subsequent planning of a situation that will contribute to the optimal use of temporary free capital.
The main stages of the process:
- a thorough analysis of the market in which investments will be made, the situation in the country, its legislation in this field;
- taking into account the selected strategies, investment paths are selected. It is very important to study and analyze the attractiveness of the regions and industries where investments will be made;
- a detailed study of investment offers existing in the market in order to choose the most promising and profitable;
- adequate assessment of return on investment, risk level. Any changes in the market can negatively affect both investments and expected profits. Therefore, it is important to analyze the maximum possible number of factors that can affect the liquidity of investments;
- determination of the volume of investments and their sources;
- calculation of risks and development of measures for their identification, reduction or elimination.
If any of these stages is omitted, there is a greater likelihood of negative consequences from the investment. Therefore, when managing them, it is important to be sure of their effectiveness.
findings
Investment is an important component of the economy at any level of its development. They can also be implemented in states where the economy is still underdeveloped with the help of foreign capital. Investing in industrial development is a powerful incentive for economic growth and raising living standards.
Key indicators of this process: profitability and interest rate.
In this case, it will be a mistake to save capital “just in case”, instead of investing it in production. The paradox of frugality is that it is accumulation that becomes an obstacle to economic growth and contributes to the emergence of a crisis.
