Investing is what? The object and process of investing

For all people the question was always important: "How to save and increase money?". If a person wants to make the most of his income in order to provide himself and his children with a future, it is necessary to seek an answer to this question. And then one day such a seeker stumbles upon the word "investment". It is this method that promises to multiply your money savings. But what to do with this? Investing is what?

Instruments

Investing is the investment of money to make a profit. There are quite a few different tools that allow this to happen. What it is? Tools for such a process as investing funds are everything where money can be invested in order to generate income. Any other investment (without the goal of gaining income) is patronage or charity. Investing is any type of money investment that provides an opportunity to increase the invested amount in the nearest (or long-term - everything depends on the strategy and needs of an individual investor) perspective. It becomes clear that the tools for such a process can be very different - from banal speculation on buying / selling to financial participation in major projects for the construction or development of oil fields, which assume significant dividends on condition of successful implementation. Naturally, in view of such a wide variety, there is a certain classification.

Attachment types

1) Real investment is the investment of means in production (industry, construction, agriculture). Also under this type are some intangible assets (copyrights, patents) that can be used for production needs.

2) Intellectual investment is an investment in retraining, education, science and so on. Also under this type are some intangible assets (copyrights, patents) that can be used for intellectual needs.

3) Financial investment is the purchase of securities, investment of funds for deposit and so on.

The most common investment tools

In the economic literature, you can find such ways of investing:

1) deposit (bank deposit);

2) pension savings and insurance programs;

3) securities (bonds, stocks, options, vouchers and so on);

4) structured banking products ;

5) mutual funds (mutual investment funds);

6) shares of various exchange-traded funds;

7) investing in hedge funds;

8) investments in precious metals (silver, gold, platinum);

9) purchase or construction of real estate;

10) alternative types of investment - antiques, art, collecting, precious stones and more.

It is also necessary to understand that the "investment object" is all of the above (or something specific from the list). With the spread of the Internet, passive income has become available to the masses. Internet investment is the ability to perform transactions with the help of the worldwide network that are connected with all instruments through Internet banking (currency exchange, investment of money for a deposit, purchase of shares or shares, etc.). If you have a large start-up capital, you can start developing an Internet business. It should be clarified that out of all of the above, real investment is the kind of investment that requires the maximum amount of funds and often huge capital infusions, which is why it is much less accessible.

Risks

Investing is always a risk. Any instrument is characterized primarily by this indicator, as well as its profitability. There are three types of attachments:

- low-risk;

- medium risk;

- High-risk.

There is a link between the degree of risk and profitability: the higher the probable profit, the riskier the investment. It is the ratio of these two criteria that determines the investment strategy. It is worth considering all types of details.

Low-risk

Instruments with low risks give virtually guaranteed income. The interest is conditionally comparable to the yield from bank deposits. This group includes accumulative and insurance programs, government bonds and bills. It can be seen that the profitability of these instruments is practically guaranteed, and all invested capital can be completely returned back to the investor. The only risk is the refusal of the state or insurance company to fulfill its obligations.

Medium-risk

This category includes:

- deposits in commercial banks;

- promissory notes and bonds of commercial banks;

- shares of various funds (bonded, real estate funds);

- Real estate letting.

Instruments in this group bear certain risks (up to fifty percent), and in some cases can even reach the total loss of all capital. Usually such huge economic stress provokes global crises.

High-risk

Here, profitability is actually virtually unlimited and can reach staggering interest. This type includes stocks, own business, trading in exchange commodities and currency, shares of index funds and stock funds. This kind of investment is always a serious risk, but also a big profit. In large portfolios, the share of such instruments usually does not exceed 1-15%. A high-risk investment object is a casino, where luck often plays a very large role, since mathematical calculations depend too much on the mass of probabilities.

Investment process

The investment process is a set of directed movements of different financial flows, different levels and forms. For this, there are a number of conditions: the availability of sufficient resource potential, capable of ensuring progress on the necessary scale of economic entities. In this mechanism, the object of investment is what investment resources are transformed into. Such a process is a set of actions aimed at attracting the accumulation of individuals and legal entities for use through the transformation of working capital and fixed capital to obtain a certain profit. This involves basically only two sides: the enterprise-applicant and the investor itself.

Management of investment process

For this, it is necessary to monitor the economic climate of a particular region and enterprises; Assess the investment climate of the sectors of the economy and industries; Develop investment strategies for enterprises; To carry out economic and financial regulation of the market and exchanges; Assess the impact of investment flows on the enterprise. Real investment is the most labor-intensive process, so here are the stages and points of the investment process, such as:

- motivation for investment;

- the existence of a development program and the rationale for the objectives;

- development of a strategy and investment plan;

- availability of stable financial security;

- insurance;

- providing the real investment sector with all the necessary technical and material resources;

-regulation and monitoring of the investment process;

-evaluation of the results and further planning.

Financial asset

Investment is a combination of various types of investments. Financial assets - one of the most affordable, to date. The bank deposit is a savings-investment activity, and also has minimal risk. However, inflation has a very negative impact on such investments. And this means that the bank deposit is not even a medium-profit tool, and its entire essence boils down to saving money. The rest of the financial assets have no guarantees, so their evaluation is much more complex and complex, as it requires a fairly deep knowledge in a particular field.

Money

"Material" investment of capital is an investment in precious metals and other types. Naturally, the yield here is significantly higher than that of deposits. Gold over the past dozen years and fell, and significantly increased in price, but its growth was very unstable. Invest in precious metals can be through futures contracts, metal bills and so on. Also here you can include real estate.

Currency and stock market

The main advantages of such types of investment are the ability to make investments with minimal amounts, the possibility of virtually instant input and withdrawal of funds. The main disadvantage can be called the highest risk of losing part or all of the invested funds. Especially this "sin" the Forex market, which is not regulated at the legislative level, and brokers prefer to register exclusively in offshore.