What is investment?

What is investment? Today, almost nobody doubts this question. Time of domination of market relations in the modern economy dictates its rules of survival. Probably, therefore, the possibility of profitable investments of capital today excites not only financial tycoons, but also ordinary people, who care about preserving and multiplying their savings.

The term "investment" originates from the Latin "invest", which in translation means "invest". The Encyclopaedia of the Entrepreneur, edited by SM Sinelnikov, published in 1994, gives the following answer to the question "What is investment?": "Capital placed in legally independent enterprises for a long term either for the purpose of obtaining additional profit or for the purpose of acquiring Influence ... as well as investments in securities ". Of course, the list of objects of monetary investments is not limited only to the points indicated in the quote. They invest capital in targeted bank deposits, loans, machinery, equipment and technology, in property or rights to it, as well as in intellectual values and licenses.

As the field presented for investment activity differs in scope and in different directions, it is necessary to classify similar monetary investments according to several criteria.

So, depending on the planned duration of capital work, financial investments can be either short-term or long-term. The form of ownership of investors divides investments into state, private, foreign or joint. The nature of participation in the implementation of projects determines the direction, that is, investments can be direct (funds are invested directly by project participants) and indirect (attraction of free funds by selling and issuing various securities, for example, shares and similar documents).

As for the types of investment, the following major groups distinguish the practice of financial, economic and production activity:

- Real investments (these are the means invested in long-term projects, involving the acquisition of production facilities and the like property);

- financial (implying investments in such types of financial assets as securities, debentures and similar documents);

- Intangible assets ( investments in the purchase of intangible rights, for example, licenses, patents and other such securities).

Returning to the main issue of the article about what an investment is, let's take a closer look at each of the above types of investment.

Real investment is the most accessible way of investing capital, which involves the acquisition of real estate, the direction of cash flows for the purchase of goods or the cost of buying services, of course, in order to make a profit. For an aspiring entrepreneur who has chosen this path for his investment activities, it should be remembered that this sector is huge and subject to a lot of risks. And yet, it remains one of the most profitable and most commonly used species.

Answering the question "what is investment in financial assets", we mean a lot of transactions and actions with securities. The funds invested in promissory notes, shares, bonds, bank certificates, options, state securities , futures, just represent nothing less than financial investments. The abundance of types of securities and the complexity of working with them are not always attractive to a potential investor. Which, of course, is mistaken, as today the infusion of cash into valuable or, as they are called, stock papers - is the most successful and profitable type of business.

With respect to intangible assets, investment activities are investments in assets that are not tangible or tangible assets and are not intended for sale. These can be investments in research, licenses and patents, trademarks, training, advertising, software and other similar intellectual property.