Essence and types of investments

Investments in various forms and forms have penetrated so deeply into our everyday life that many people who are not even directly involved in investing have a common understanding of what investment is. The essence and types of investment are different for different authors. Let us dwell on this definition of investment:

Investments are the investment of capital in any form (property, money, securities, etc.) into economic objects for profit or for solving any social problems.

Types of investment.

In the economy, investments are subdivided by the objects of investing capital into financial and real . Real investments mean investing in the operational activities of the enterprise and the life of the personnel. 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 investments. Explanations are required only for the last type of investment. On speculative types of investments, the maximum level of income is always expected, but money is invested in questionable risky investment projects.

By the nature of participation in the investment process, investments can be direct and indirect. With direct investment, the investor himself invests money, most often in the statutory funds of enterprises, securities, etc. With indirect investment, the financial intermediaries are engaged in the placement of money.

For the period of investment, the following types of investments are allocated: short-term (up to one year) and long-term (more than a year).

Types of investments by forms of ownership: private and public .

And, finally, by regional affiliation, national and foreign investments are distinguished.

Although the economic essence and types of investments have many definitions and explanations, for the average person, another classification of monetary investments will be much clearer. Consider the types of investments most convenient for an individual:

1. Contributions . 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 right one. The only difficulty will be the variety of bank offers.
2. Mutual investment funds . For those who are just beginning to comprehend the basics of profitable allocation of capital, this investment is the most convenient for both the price and the method of making decisions. An investor buys shares, which are nothing more than shares or bonds of an enterprise. The interest is calculated on the amount of investment.
3. Trust management involves the transfer of money or securities to an entity for profit. From the received profit it is necessary to deduct a certain percentage of the "asset manager".
4. The United Banking Management Fund. In this case, the property of several founders is managed by a credit institution.
5. Investments in real estate are quite expensive , and the level of risk is very high. As a result of investing money in housing can be equally likely to win and lose.
6. Non-state pension funds focus on investing in securing decent old age. These funds manage pension assets.
7. Credit unions are characterized by high risk and high profitability. The investment scheme resembles bank deposits.
8. Independent trading in securities implies the presence of certain knowledge and skills of the investor.
9. Investing in business is a direct investment. About the business in which you are going to invest money you need to collect the maximum amount of information.