Finance and investment Basic concepts
Investments are property invested in a business with the goal of making a profit. The most common investment is financial investment. By investing their property, an investor can pursue different goals. Some invest to increase capital, others to preserve it.
Financial investments may be in the form of:
– valuable papers;
– mutual funds;
– provision of loans;
– Leasing of property.
There are several types of investments:
– long-term investment (it implies an investment of funds from one year);
– short-term investment (less than one year).
Before investing in any project, it is necessary to calculate the risk and probability of income from this project. It is believed that the more funds invested, the higher the level of return on investment.
Economists do not recommend investing in one type of business, as in the event of an unfavorable outcome, there is a risk of losing all investments. It is better to choose several directions then the losses will be minimal.
Types of risk are determined by the following parameters:
– social risk (assesses the level of tension in society);
– political (change of power or political course);
– ecological (changes in the environment);
– legislative (changes in legislation and analysis of the impact on the level of profitability from such changes);
– technological (assessment of the level of equipment reliability, deterioration, the need for modernization);
– economic (level of economic development, economic forecasts and changes);
– criminal (studying the level of crime in the region, analysis of crimes in the economic sphere, and the possibility of a threat of redistribution of property).
In order to determine the feasibility and effectiveness of financial investments, it is necessary to attract experienced professionals who can calculate and evaluate profitability. Proper management of financial investments is the key to profitability, reliability and safety of funds. An investment project is considered effective if there is a constant increase in cash. In order to decide whether or not to invest in one country or another, you must first study the financial climate of the selected country, the stability of the conditions and rules of doing business.