23Apr

Hello! In this article, we will talk about the basics of direct and portfolio investment.

Today you will learn:

1. What is the difference between direct and portfolio;
2. How to become a portfolio investor;
3. What are the risks for investors?

Real and financial investments: what is the difference

Classic - . If you applied to credit organization As a contributor, you are making financial investments.

This type of investment implies that funds are invested in:

• Bonds;
• Bills;
• Deposits and others financial assets.

Thus, you become a participant in the sale and purchase of securities or any certificate. This is the essence of financial investment.

If the investor decides, he will become a participant. He pours money into large facilities.

Real investment implies the presence of such objects:

• Equipment;
• Buildings, structures;
• Current and non-current assets of the enterprise;
• Fixed capital and so on.

The second type of investment implies the presence of a large amount from the owner and a long process. If the account is opened, for example, in, then the investor's share will be small due to the large number of participants. financial investments do not require large infusions, unless at the personal request of the depositor.

Separate direct and portfolio investments

There is a concept of direct investment. The name is due to the fact that they are aimed at one object. For example, you want to buy a controlling stake in one company in order to further manage it. In this case, you do not pay attention to other investment instruments. You have a specific course of action that you follow throughout the investment process.

Direct investment sets a goal - to get some kind of object. There is no mention of income here. Their calculation will be taken into account only after a positive investment result.

Portfolio investment means dividing your funds among several sources of income. not in a specific large object, but at once in several different shares.

For example, 30% in stocks, 70% in bonds. The main goal of the investor in this case will be to obtain the maximum income from transactions. The number of investment instruments is a kind of portfolio consisting of different parts.

How to distinguish portfolio investment from direct investment

There are several criteria by which you can determine which type of investment a type of investment belongs to:

• Amount of investment. Most often, the amount of direct investment involves large infusions;
• Tool. Portfolio investment is an investment in a set of securities, while direct investment is aimed at various sources of income, including company shares;
• Profit. Its value in portfolio investments is inferior to direct ones;
• Term. Portfolio investments can be short-term, even a small number of transactions can generate income, after which you will sell yours. Direct investment can pay off only after a few years and only after the completion of the intended project. The second type of investment is a longer and more difficult process, the result of the transaction on which cannot manifest itself in a short time;
• Liquidity. In the case of a portfolio, it can be immediately sold to any other investor or several. This happens within minutes. In exchange for the funds received, you will be able to form a new investment package. Direct investment does not imply a change of ownership. While the project is running, you are responsible for own mistakes And . Attracting direct investment is a long process that does not always lead to success;
• Avoiding Workflows. An investor who invests in a portfolio can calmly go about his business and not delve into the peculiarities of the exchange. He can suspend some deal and postpone it until a better chance. It is also possible to control transactions through a financial intermediary. In this case, you do not need to look at the exchange at all, a personal manager will do everything for you. The direct investor cannot leave the project at any time. He controls every stage of the process, actively participates in it and develops some improvements himself. Lack of attention on his part can lead to the impossibility of realizing the plan;
• Company management. The share of a portfolio investor in the securities of a company is so small that it does not give him the right to participate in management activities. The purpose of portfolio investment is to generate income. A direct investor, due to a large share, can become a participant in the management process.

Who can afford direct investment

Direct investment requires large sums and big goals from the investor. By pouring funds into some big project, you will not receive income in the first few years. At this time, additional investments may be required.

Only a person with extensive savings, a large enterprise or the state can afford such expenses by making direct investments in the economy.

Most often, a firm becomes a participant in direct investment. For example, its goal is to take over another smaller enterprise. By buying out a controlling stake over a certain period, the investor gets the right to participate in meetings of the company and offer his ideas or directions for the further development of the company.

If such an investor invests in real estate at the project stage, he also becomes the owner of the future building and will be able to sell the premises, offices in the building at independently set prices. If on initial stage the investor lacks savings, then the process will drag on for a long time. The first profit may appear only after ten years.

In addition, only an experienced manager who already has experience of previous investments and knows what difficulties he will have to face can become a direct investor. If he has already implemented several large projects, then implementing a new one will not be some kind of innovation for him.

Who is the owner of the investment portfolio

Those who cannot afford direct investment resort to portfolio investment. It is much simpler and does not require super-large costs from the capital owner. The presence of intermediaries makes this process even more attractive.

Becoming the owner of a portfolio from investments can be as individual as well as the company. In this regard, there are no restrictions, as well as in terms of amount. With even a small capital, you can become an investor.

If you have a broad knowledge of the topic, then you can invest on your own. Various graphs, formulas, analysis of the economic and political situation in the country - all this should be in the arsenal of the investor.

Ignorance of such features of trading does not prohibit you from being an investor. You can hire your own consultant representing one of the brokerage companies. He will cope with the task without your participation and will probably bring you a stable income for the duration of the contract.

A small amount of market entry allows you to invest with minimum investment. By distributing your own funds among several securities, you will be able to receive income from each share of the collected portfolio. You can collect the number of instruments for trading on your own, or focusing on the preferences of the consultant.

Benefits of Portfolio Investment

Combining all the above information, we can highlight a lot of advantages of portfolio investment for an investor who does not have large sums:

• passive investment. You do not need to track the statistics of transactions on a daily basis - this is done by a specialist. You only give your funds, and at the end of the designated period, take them. In this case, examples of portfolio investments for self-investment could include packages from a deposit, a mutual fund and government bonds, or putting your account in the hands of an adviser;
• No need to deal with the affairs of the company that issued securities. It doesn't matter to the average person. You will be able to receive your income, and the company will be managed by the holder of a controlling stake;
• The risk of losing the invested funds is reduced to zero. Your portfolio is diversified, that is, distributed among the securities of different issuers. Direct investments, on the other hand, have a high risk of losing large sums in the event of an unsuccessful start of the project. Portfolio investments of the organization allow minimizing the risk of loss of capital by the company;
• Ease of paying taxes. If you do not withdraw funds from the brokerage account, but use them for further investment, then no payments in tax office do not need to be carried out. Mandatory payment is provided only in the event of the final withdrawal of part of the funds or the entire volume. If you have used the services management company, then she will be a tax agent.

What are the types of investment according to the timing

All attachments Money imply a certain period during which their owner will not withdraw money from circulation. Depending on this, there are short-term, medium-term and long-term investments.

The shortest investment lifetime is a few hours. This is possible with portfolio investment. Transactions of purchase and sale of shares can take place every second. By observing the process of volatility, you can choose the most opportune moment to sell securities. This process only takes a couple of hours. usually last more than six months.

The next period of placement of its funds for investment purposes exceeds half a year and ends at an annual value. If you sell your package after 8 months, then you are a member of the medium-term investment. This type of investment is most common among portfolio investors. Most often, brokerage companies conclude an agreement with a new client for a period of one year. This investment is no different from a bank deposit.

The longest investment period is unlimited in time. You can get the first profit in a year, and maybe in a few decades. The latter option is more related to the investments of state structures. All types of direct investments are examples of long-term investments, when the project pays off only after a few years.

How else are the types of investment divided?

Depending on how much income you want to receive from your own investments, your investments can become:

• Conservative. The most common type of investment. It means minimal risk and low return. These are investments in a bank deposit or government securities - bonds. The risk of losing the invested funds here is so minimal that the investor does not even take it into account. For example, the loss of money on a bank deposit threatens if the bank goes bankrupt. Therefore, it is better to choose an organization for storing your savings wisely and carefully. The return on such investments is minimal, since it does not imply investing in risky projects;
• Moderate. Medium risk and high return. This type includes an investment portfolio consisting of risky and reliable securities as a percentage. For example, part of the money is invested in government bonds, and the other part is invested in blue chip stocks. Here the income is higher due to transactions with shares;
• Aggressive. Most of the portfolio is invested in risky projects. At the same time, the investor often changes investment instruments in order to obtain maximum income. This type of investment involves the possibility of losing all invested funds or making high profits.

Portfolio investments and investment objects

Depending on what tools the investor uses to generate income, the types of portfolio investments are divided on the basis of investment in:

• Money market. Here are a few of interest currency pairs, on the difference in the price of which you can get income. This type of investment is often short-term;
• State securities. These are bonds of various issues, having a low yield and a long-term character;
• Private securities or financial portfolio investment. Funds are invested in stocks of different issuers and assume a short-term nature with a large income. If you invest in blue chips (the largest and most famous companies), you can get a stable income. Investing in shares originally issued by new firms is fraught with high risks and uncertain returns. If one of these companies becomes successful in the market, then its shares will rise in price greatly in a short period of time.

Portfolios of growth and earnings

Depending on the goals of the investor, there are three types of portfolio investment:

• Focused on growth. These investments are inherent in the direct form of investments. The main purpose of injecting funds is to increase your own share in a particular company. You gradually increase your capital, which increases the initial part of the acquired assets. The larger this share, the faster you can take over the management of the company of interest;
• Focused on income. These are portfolio investments whose main goal is to maximize profits with minimal risks. You buy, for example, shares in order to sell them more profitably in the future. The expectation of an increase in the value of securities or other instruments is the essence of investing in a portfolio;
• Focused on growth and income. It is a union of the above two types. This type of investment is the most acceptable from the point of view of the inadmissibility of loss of funds during direct investment. The investor pours money into the purchase of equipment for the company, which will later automate the workflow. In order to have at least some income, the investor prefers to form a portfolio of securities in order to receive a stable income.

Principles of investment portfolio formation

In order for investments to pay off and bring high income, when compiling an investment portfolio, attention should be paid to the following indicators:

• Quality. When choosing investment instruments, pay attention to the essence of the project or the issuer of securities. They must correspond to reality, that is, the project must have a real basis, and not fiction that is not destined to come true, and the issuer must be carefully studied by you (including the history of its formation and the number of issued securities);
• Reliability. Choose only well-known companies in which you are confident. It is good if they exist on the market for more than five years and develop at a steady pace;
• Trust a professional consultant. If you do not understand investing, then you should not deal with them yourself. You will only lose the invested assets;
• Small initial income. Start with a conservative type of investment. If you pass this step successfully, you can move on to moderate investment;
• Constancy. It is better if the income is stable, and not jumps. This will help to conduct further activities correctly and will not leave you without money;
• Liquidity. Choose those assets that you can get rid of at any time. Portfolio investment in stocks is a great example of this.

Investment portfolio management strategies

Depending on your own time and desire to receive maximum income, you can use one of the investment techniques:

• Passive. In this case, it is not necessary to monitor the accumulation process daily. You deposit money into your account and withdraw it at the end of the term. Such investing involves receiving a small income due to the fact that you do not control transactions. You can open Bank deposit or entrust account management to a qualified consultant;
• Active. It all depends on your personal intervention in the process of asset price movement. Constantly selling or buying different assets, you can achieve quick results. High income with successful transactions is guaranteed. This way of investing is more suitable for competent professionals who know all the intricacies of the market. Direct investment can also become active in the sense that the owner of the capital is constantly involved in the life of the initiated project. He is constantly interested in ongoing activities and makes adjustments at different stages.

What can affect the change in the price of investment instruments

By investing in a particular asset (and more often in securities), you can see a price drop or increase. This may be due to market volatility. The indicator characterizes the normal course of development of the process of buying and selling securities by market participants.

There are other factors that contribute to price changes:

• Objects of portfolio investments. Stocks, bonds, futures, options - all these assets and many others function differently in the market and change their value depending on the issuer, the number of issues or pieces in circulation;
• Issuer activity. Different areas are perceived differently by market participants. Many are ready to invest in securities of oil companies, but to support Agriculture not to everyone's liking;
• The situation in the country. The crisis contributes to lower prices of most assets. Conversely, when a firm's business goes uphill due to the rise of the economy, the value of assets increases;
• Internal position of the firm. If a company experiences some difficulties, this can hurt the price of its assets. This situation arises in the case of unsuccessfully concluded contracts with partners and, as a result, a decrease in the company's reputation. This contributes to the outflow of buyers of shares and a decrease in their value.

How to invest in an investment portfolio

If you want to become a portfolio investor, then the following steps will be mandatory:

• Setting investment goals. You must decide whether you will be dealing with low-yield investments or high-risk investments. Your further profit depends on it. If you want to have a small stable return on portfolio investment, then this is one goal, and obtaining maximum amount in a few hours - another;
• Choice of strategic direction (passive or active investment). If you want to independently control transactions, you will become a participant in active investments. When you transfer funds under the management of another company, then this type of investment is passive;
• Studying the features of the stock market. Even if all the operations will be carried out by a specialist for you, it will not be superfluous to know some important components of this process. So you can bring your own idea into the formation of the portfolio for the approval of the consultant;
• Assessment of portfolio profitability. You must understand how effective the created package of securities is. If some tools can be replaced in order to obtain greater benefits, then this should not be neglected;
• Studying the feasibility of the tool. In the process of investing, some instruments may become unprofitable, they must be excluded from the list of income generating objects. To do this, you need to regularly review the composition of your portfolio.

Portfolio investment risks

Portfolio investment is considered the most profitable for obtaining an average income. Risks are minimized due to a large number of investment objects. With losses from one instrument, others will allow you to save income.

However, even it is characterized by some risks:

• Portfolio incorrectly assembled. If you invest only in risky securities, then you may not receive income at all. It is necessary to combine investment objects so that the risk of losing funds is minimal;
• Market entry time. If you bought shares at their maximum price, then it is unlikely that you will be able to sell them without a loss. The main rule of investing in the stock market is to buy securities at a time when others are selling. This will allow you to purchase assets at the lowest price;
• inflation rate. If you have chosen a conservative type of investment, then the rise in prices in the country may contribute to the fact that you will not win anything;
• Activities within the issuer. Some companies issuing securities may merge into one, or, conversely, leave the company as an independent entity. In this case, the share price may change dramatically and not for the better, and therefore choose only proven corporations to create a portfolio;
• Excessive emotionality of the investor. An investor who actively participates in the investment process must rely on the cold calculation from each transaction, and not on their own experiences. The latter most often cause the loss of funds, resulting in a negative impression of the stock or.

Foreign portfolio investment

It is possible to use for investment purposes not only, but also foreign ones.

The owner of capital needs to be extremely careful and rely on the following principles:

• Awareness of the activities of a foreign corporation. Typically, such companies are less affected by economic events and often bring guaranteed income. It is important to understand how the enterprise functions and evaluate the forecasts for its further development. The success of foreign direct investment depends entirely on this point;
• The right choice of country for investment. It is necessary to realize that not all countries occupy a stable position in the world. The domestic economy and production depend on it;
• Knowledge of the features of the functioning of the market itself. The volatility on it may differ from the Russian one. The principle of operation also has its own characteristics, which you need to get used to.

Investments are made in various forms. In order to systematize the analysis and planning of investments, they can be grouped according to certain classification criteria.

Real and financial investments

Real investments act as a set of investments in real economic assets: material resources, intangible assets. The most important component real investment are investments made in the form of capital investments. Financial investments include investments in various financial assets - securities, shares and shares, bank deposits and so on.

Direct and portfolio investments

Direct investments act as investments in the authorized capital of enterprises (firms, companies) in order to establish direct control and management of the investment object. They are aimed at expanding the sphere of influence, securing future financial interests, and not just generating income. Portfolio investments are funds invested in economic assets in order to generate income (in the form of an increase in the market value of investment objects, dividends, interest, other cash payments) and diversify risks.

Investment classification:

According to the terms of investments, short-term (up to a year), medium-term (1-3) and long-term (over 3 years) investments are distinguished.

According to the forms of ownership of investment resources, they allocate private) funds of private investors), state (state authority, as well as other state forms of ownership), foreign (investment of funds foreign citizens, firms, organizations, states) and joint (mixed) investments (by domestic and foreign economic entities).

On a regional basis, investments are distinguished within the country and abroad (investment objects located outside the territorial limits of a given country).

On the basis of industry, investments are distinguished in various sectors of the economy: industry, agriculture, construction, transport and communications, trade and catering etc.

According to the risks, aggressive ( high degree risk, high profitability, low liquidity), moderate (medium risk with sufficient profitability and liquidity of investments) and conservative investments (low risk, richness and liquidity). This classification is closely related to the identification of the appropriate types of investors. The importance of clarifying the role of investments in the reproduction process leads to the introduction of such a classification criterion as the scope of investments, according to which production and non-production investments can be distinguished. Defining value for economic system have productive investments that ensure the reproduction and growth of individual and social capital.

Investments are “infusions” of resources into the development of enterprises in order to obtain a certain percentage of profit from their core activities. Allocate investments of direct and portfolio types.

basic information

What is "direct investment"? Any investor has come across this concept, but not everyone understands its essence.

"Direct" are capital investments in which the investor becomes the owner of at least 10% authorized capital company or buys a controlling stake (51%). Thus, by investing money, you can enter into the management of a ready-made (fully formed) business.

Direct investments are divided into two large groups:

• in the share capital of foreign companies (the so-called " foreign investment»);
• into the country's economy.

Direct investments used by large corporations to establish their branches outside the country in which they are located Main office. Very often, the creation of branches occurs through the absorption of a similar, already existing business. It is enough for an investor to acquire a controlling stake and obtain the right to manage the company.

Large monopolies are interested in buying shares of small firms that are engaged in similar activities.

There are countries where competition in some areas of production is too strong, for example, in China there are a lot of small tablet assembly companies.

If there is an investor who wants to assemble tablets in China, then it would be advisable to acquire controlling stakes in already functioning companies.

Direct investment is aimed at working in the long term, so it is often called "strategic investment".

Structure of foreign investment receipts by types

Sometimes, for direct investment, special funds are created that accumulate large amounts of capital in order to further “capture” the monopoly in the market. Such funds have been operating for at least 10 years. After the fund closes, all investors receive a payout equal to their investment plus a percentage of the proceeds from the sale of assets that were resold by the fund.

Novice investors, due to ignorance or unwillingness to spend a lot of effort and time, use portfolio investment.

portfolio investment is a passive investment of money with the aim of obtaining short-term and instant benefits. Portfolio investors are engaged in investments in securities, bonds or stocks of different companies, which form a portfolio of investments or securities, hence the name "portfolio investment".

In fact, such investors acquire a part of the company without any interference in its activities.

Portfolio investments do not provide for the management of the company by investors.

However, there can sometimes be exceptions, for example, when the company is too large and its shares are divided among many small investors. The management of such a company is carried out by an association of investors or the largest of them.

Portfolio investment has some advantages over direct investment.

On the one hand, it is beneficial for the company itself, since its shares are owned by a large number of investors, and the controlling stake is in the hands of one investor.

On the other hand, the portfolio investor also receives certain benefits, because he does not have to take on the responsibility of managing the company.

The second positive aspect of portfolio investment is the minimal risk of losing money. The investor's funds are diversified (distributed) into many parts and invested in the statutory capital of several companies.

Portfolio investments consist of liabilities and assets of the company. Operations with the purchase of assets include trading in securities (stocks, certificates, bonds) of large foreign firms.

Financial liabilities can be government loans in the form of cash held by the investor.

Direct and portfolio foreign investments have a certain structure. Direct investment consists of four main categories:

• investments in fixed assets (new);
• creation of fixed assets (PF) through joint investment;
• investments in the modernization of the OF;
• investment in order to acquire 51% of the shares.

Portfolio investments consist of investments in securities and loans to enterprises or the state.

According to experts in the field of investment, today direct investment is one of the most developing types of earnings. Direct investments, although more risky than portfolio ones, however, they bring much more profit.

The difference between direct and portfolio investment

The fundamental difference between direct and portfolio investments is their ability to influence the company's activities.

The division of investments into two groups (direct and portfolio) is, of course, a convention.

Direct investments allow you to manage activities, portfolio investments do not.

Sometimes even 10% of the authorized capital is enough for management large enterprise(remember the example above, when a corporation is divided among many small investors).

Portfolio investment in the status capital of the company allows you to have a stable passive income, in fact, without interfering in the activities of the company. and planning strategies, as well as the calculation of return on investment.

Read about investing in gold. Has gold lost relevance in our time?

No one can guarantee a quick return on investment, so when you invest at a high interest rate, the risk of losing capital is high and not welcomed by many experienced investors. Here is everything about this type of investment and advice to the investor.

Who can invest?

Individuals and legal entities who use their own or borrowed monetary resources.

In deciding on the type of investment, an important role is played by the availability own funds and the purpose pursued by the investor.

For example, if funds are invested to preserve capital and increase it, then portfolio investments are used.

In addition, small investors also prefer portfolio deposits.

If the task of the investor is to obtain the right to manage the business, then you should choose the direct type of investment.

Before making a decision regarding the choice of the type of investment, it is necessary to analyze the effectiveness of investments.

Buying real estate is a type of long-term investment that has both pros and cons. attract many people because of the stability of the economic climate in the country. Read about some of the features of the German real estate market.

About investing in the American stock market read .

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Direct and portfolio investments- types of investments in the development of an enterprise or company.

With portfolio investment, the investor does not have the right to control the activities of the organization, while in the case of direct investment, he has such an opportunity.

What is the difference between portfolio and direct investment?

Under direct investment It is customary to understand investments in the capital of a corporation to make a profit and obtain the right to participate in the management of its activities.

The main difference between direct and portfolio is that with direct investment, the company can count on all kinds of support from the investor: financing for the development of the enterprise, assistance in strategic administration, etc. As for investment, here investors do not have the opportunity to manage the enterprise and make decisions related to his work.

As an example of direct investment, consider an investor who purchases equipment for the production of pasta in order to further produce and sell this
product. If we are talking about an investor who buys Gazprom shares, but does not intend to take part in the management of the enterprise, and expects to receive income in accordance with the number of shares acquired, then this investor is a portfolio one.
It should be noted that direct investment is much more profitable than portfolio investment.

What you need to know about portfolio investing

The essence of portfolio investment lies in investing money in shares of enterprises that are either very small or so dispersed among the owners that it is simply impossible to gain real control over the capital of the company.

Aimed at making a profit by changing the price of the company's shares as a result of trading on the stock exchange. Portfolio investment is rarely long-term, it often has a spontaneous, unpredictable character.

The main task in portfolio investment is to assess the investment attractiveness of the company in which money will be invested. Investment attractiveness is usually called the availability of income from participation in the project, as well as related investment risks(It should be said that the greater the expected income, the greater the risks). For this, it is necessary to evaluate financial condition company and opportunities for its development.

Very often, investors use the services of brokers for investing in international funds- this is a type of collective investment when the funds of many investors are combined into a common investment portfolios and in accordance with the chosen strategy, which makes this investment method extremely convenient for investors with a limited budget.

Portfolio investment is very common in countries such as Denmark, Switzerland, Canada. But in other parts of the world it is much more common than direct.

What you need to know about direct investment?

This type of investment can be done in several ways. In one case, we are talking about companies or banks that create foreign branches, build new enterprises and buy out a business, and in the other, we mean investors who acquire controlling stakes in a company, which, as a rule, constitutes 25 percent or more of the share capital of an enterprise, and get the opportunity to manage the work of the corporation. Both options are quite popular and are used in many countries for enterprise management.

Among the common examples of direct investment, one can recall the automobile concerns of America and countries Western Europe(the production of cars is their forte), which literally monopolized the market for the production of cars. Another prime example of this type of investment is oil companies, whose shares are owned by only a few investors. It is worth saying that the high percentage of direct investors in the country, to a certain extent, indicates its economic development.

Results

Sometimes it is quite difficult to draw the line between direct and portfolio investment. In Western countries, this circumstance is successfully used by artificially lowering the percentage of direct investment. The fact is that portfolio investment provides only profit from dividends, while direct investment makes it possible to receive much more substantial income from the activities of the enterprise.

Both direct and portfolio investment imply that the investor owns a fairly large amount of money, which he is ready to turn into investment capital.

Portfolio and direct investment is often carried out by foreign investors in little-studied markets, but in some cases prohibitions are imposed on areas of production in which foreign investors are entitled to make direct investments.

The volumes of portfolio and direct investment can reach very large financial sizes, for this reason, large investors carefully analyze the market for the effectiveness of capital investment. To determine the profitability of certain investments, various methods of market analysis are used, they can be based on various mathematical models. In order to assess in more detail the possibilities of portfolio and direct investment, you can attract an independent expert ( financial analyst), which will help evaluate the effectiveness and profitability of investments in a particular enterprise.

What's happened direct and portfolio investment and how do they differ from each other? Let's start with the first part. Direct investment is the investment of money in a project (company). Direct investments provide the investor with the right to actively participate in the management of the company, as well as to influence the decisions that will be made by the leaders of this company. That is, direct investment gives the investor a lot of rights. Well, if the amount of investments allows you to acquire a controlling stake, then the company practically falls under the control of the investor, who in this case receives even more rights.

Now let's talk about portfolio investment. Portfolio investment is the acquisition of a share of a company's shares. But she must be portfolio investor could not participate in the discussion and decision-making on the work of the company.
I also note that if direct investment involves generating income in the medium and long term, then portfolio investment has the goal of making a profit in the short term.
Let's talk about portfolio investment in a little more detail.

Types of portfolio investments

Types of portfolio investments determined on the basis of their profitability and risk. There are three main types of portfolio investor investments.
Investments with a high percentage income. They assume and high level risk.
Investments with an average return and risks in them will be correspondingly lower.
The third type of portfolio investment can be called combined, because the portfolio investor invests both in assets with high returns and in securities with an average return. What, in fact, is the diversification of risks.
still exist types of portfolio investments terms, as well as national and foreign.

Foreign portfolio investment

As I said above, one of the types of investment is foreign portfolio investment. They are good because they create a large space for selecting attachment objects. Among many countries, you can find stocks of companies that are optimally suited both in terms of income and risk. But there are, of course, disadvantages. Foreign portfolio investment require knowledge of the economy, politics and language of the country. Otherwise, it will be difficult to make the right choice. Besides, foreign portfolio investment create legal difficulties, as well as problems in taxation. In addition, the costs of arranging investments and their maintenance will increase.

Now, I hope you understand what direct and portfolio investments are.
In general, this topic is very broad. In order to feel like a professional in it, you need to work hard. And you need to start by obtaining the maximum possible amount of knowledge in this area. I only talk about the basic concepts in my blog. But if there is an intention to invest seriously, then you need to “dig deeper”.