List the types of investments that a company can make

The term "investment" comes from the Latin word "invest", which means "to invest". In a broader interpretation, investments are investments of capital with the aim of its subsequent increase.

In commercial practice, it is customary to distinguish between the following types of investments:

1) investments in physical assets;

2) investments in monetary assets;

3) investments in intangible assets.

Under physical assets refers to industrial buildings and structures, as well as any types of machinery and equipment with a service life of more than a year. Under monetary assets rights to receive sums of money from individuals and legal entities (for example, bank deposits, shares, bonds, etc.). Under intangible assets refers to the values ​​acquired by the company as a result of acquiring licenses, developing trademarks, conducting staff development programs, etc.

Investments in securities (CS) are usually called portfolio investments, and investments in physical assets, in land and in everything that is rigidly tied to it, are called investments in real assets. Both types of investments are of great importance in the economy, since they provide the mechanism necessary for the growth and development of the country's economy.

For investment analysis and planning, the classification of investments is important.

Classification signs:

1) by investment objects:

Real investments - represent financial investments in specific projects and are associated with the acquisition of real assets (land, buildings, means of production, etc.);

Portfolio financial investments are investments in shares, bonds, bills, and other securities;

2) by the nature of participation in investment:

Direct investment – ​​direct participation of the investor in the selection of investment objects and investment of funds;

Indirect investments - involve investments mediated by others (usually investments in portfolios);

3)by period of use:

Short-term investments – investment of capital for a period of no more than 1 year;

Long-term investments – investment of capital for a period of more than 1 year;

4) by type of ownership of investment resources:

Private investment – ​​investment of funds made by citizens, as well as enterprises of non-state forms of ownership;

Public investment– carried out by central and local authorities at the expense of budgets of all levels, extra-budgetary funds, borrowed funds, as well as state enterprises at the expense of their own and borrowed funds;

Foreign investments are investments made by foreign citizens, legal entities and states;

Joint investments are investments made by entities of a given country and foreign countries.

5) on a regional basis:

Investments within a country are investments in investment objects located within the territorial boundaries of a given country.

Investments abroad - investments in investment objects outside the territorial borders of a given country;

6) according to the degree of risk:

Low-risk investments - considered a safe means of obtaining a certain income;

High-risk investments are considered speculative.

Which investments are most protected from the effects of inflationary growth?

The most protected from inflation are investment in real assets (real estate, antiques, works of art, jewelry, etc.), since the rise in prices for these goods exceeds the general inflation rate in the country. Distinctive feature real investments are that they are not subject to a very high level of risk, and therefore have greater profitability compared to financial investments.

Real investment Real assets real

Real investments include the following investments:

Depending on the object of investment, investments are divided into real and financial.

Real investment- These are mainly long-term investments directly in means of production and consumer goods. They represent financial investments in specific projects and usually involve the acquisition of real assets. Real assets – this is land, buildings, means of production, etc. Thus, real investments are investments in sectors of the economy and types of economic activities that bring an increase in real capital, i.e. increase in means of production, material assets. It is necessary to clarify that real capital (wealth) includes both tangible and intangible values, including R&D results, various information, employee education, etc. Such services as the organization of gambling, services for the redistribution of social wealth of some private individuals in favor of others (redistribution of property), etc. do not relate to real wealth.

Very often, by investment, specialists literally mean a way to part with a significant amount of money in order to receive significant income in the future. All monetary investments are usually divided into real and financial. In this article we will take a closer look at this type of real investment.

Definition

Real investment is some capital that is invested in tangible assets. The financial option is different in that it represents contracts drawn up on paper (for example, bonds, shares, etc.). The investor himself determines his goals and, based on them, chooses one or another policy. Of course, before making such a responsible decision, the investor must carry out significant preparatory work, which consists of drawing up a financial project, calculating possible risks, studying At the moment, experts believe that real investments are stable, but their profitability does not always live up to expectations.

Forms of real investments:

New product lines.

Gradual expansion of production volumes or increase in the range of goods.

Creation of such working conditions under which the enterprise itself will incur slightly lower costs. This category includes the following parameters: modernization of equipment, improvement of technological solutions, improvement of working conditions for employees, use of completely new materials. Such real investments are primarily aimed at increasing the competitiveness of the entire enterprise as a whole, therefore, its position in the market will be slightly higher compared to other organizations.

The financial investments necessary to create such a labor protection system and which will comply with all regulatory requirements currently existing in the territory of any country. The main task of this type of investment is to satisfy the requirements and regulatory conditions put forward by the state.

Real investment management. Main advantages and disadvantages

According to experts, today real investments are investments in innovative equipment and technologies, which will subsequently help improve the work of employees, increase sales volumes, reduce the cost of goods, which ultimately always leads to an increase in investor income. The main disadvantage is considered to be the urgent need to study the market and all the accompanying nuances that are directly related to the company’s activities. If you look from the other side, the profit from real investments (long-term) can be fully obtained only after a few years, but only if the climate in the country is favorable from a financial point of view.

Evgeny Smirnov

# Investments

The essence and forms of real investments

In Russia, the most popular areas of real investment are mining enterprises, oil refining and the food industry.

Article navigation

• Types of real investments, classification, example
• Forms of real investments and features of their management
• Risk management in real investing
• Investments in the real sector of the economy, assets and businesses
• Investment projects for a portfolio of real investments
• Leasing as a method of financing real investments
• Methods for assessing the effectiveness of real investments

A person who is far from the world of finance and business has a very vague idea of ​​what investment is. Usually by this concept people understand financial investments in the purchase of various securities, the Forex market or the purchase of real estate. But in addition to financial investments, there are also investments in the real sector or, as they are also called, real investments.

Financial investments are usually understood as investments of monetary capital in various financial instruments - stocks, bonds, commodity futures, etc. In essence, this is the purchase of speculative assets with the aim of their further resale at a more favorable price. What investments are called real?

Real investments are investments in the real sector of the economy, that is, in production and the service sector, in the creation of tangible and intangible assets. If we look at investments from the point of view of macroeconomics, then these are investments in the general improvement of the material well-being of society.

Thus, real investments are investments in maintaining the economic complex, as well as in its modernization and expansion. In this case, investments can be aimed at acquiring or creating both tangible and intangible assets (intellectual property objects - production licenses, artistic works, software, etc.).

Real investment is, in most cases, financing large, expensive projects. If, when making financial investments, you can buy securities in small quantities for literally a few thousand or even a few hundred dollars, in the real sector any investments almost always represent fairly large amounts.

For this reason, real investors are either wealthy individuals or legal entities with large capital. Only they are wealthy enough to provide financing for projects for the construction, modernization and expansion of production complexes of various sizes.

Types of real investments, classification, example

Real investments are more diverse than financial investments, since they are applicable to all types of economic commercial activities. And these are dozens of sectors of the economy and thousands of different types of activities, in each of which there may be several areas for investment.

In general, all types of real investments can be divided into two main groups:

1. Material investments. They represent investments in the creation or acquisition of material objects. The classification of this type of investment covers such types of costs as the purchase or creation of real estate, production and auxiliary equipment, utilities, transport infrastructure, etc.
2. Intangible investments. These are investments in the intangible sphere, which is important for conducting business activities. An example of this is investments in advertising that promote better sales of goods, the purchase of a license to use foreign technologies in production, the cost of personnel training, etc.

It is noteworthy that some categories of investments are formalized, as a rule, in the form of current production costs of the enterprise, rather than capital investments. This is due to the peculiarities of their financing through regular contributions rather than one-time costs. This happens with advertising, the use of other people's technologies (renting licenses) and software.

Real investments include the following investments:

• purchase of equipment;
• purchase of land, including mineral deposits;
• purchase or construction of buildings and structures;
• investments in production modernization;
• expenses for structural reorganization of the enterprise;
• purchase or creation of trademarks, brands;
• purchase of patents and licenses;
• research funding;
• training and retraining of personnel.

The concept of real investment, with some stretch, also includes investments in the purchase of bonds or shares of an enterprise, if their resale to third parties is not provided, and the proceeds are used to expand or modernize production.

Real investments are in many ways more profitable than financial investments. Although they do not always provide more high level returns compared to financial ones, but less risky. Firstly, they are little exposed to short-term market fluctuations. Secondly, real investment objects have their own value, which allows them to be sold if necessary and thereby return most of the investment.

While financial investments allow the investor to make money solely on fluctuations in market conditions, real investments are focused on making a profit by producing additional tangible and intangible benefits.

Real investments are always closely related to specific production. If, when purchasing shares, an investor is only interested in the prospect of their rise in price, then when investing in the expansion or modernization of production, many additional factors become of great importance. All the problems of the production process become important to the investor, which ultimately affect the increase in production volumes and profit from the sale of products.

For these reasons, a person who wants to invest in investments and actually make money must be closely connected with the management of the enterprise. An investor needs to not only understand where exactly his money will go, but also be able to influence this process. Thus, a real investor almost always takes part in the management of the enterprise to one degree or another. He either initially owns or receives a block of voting shares in exchange for his investment.

Forms of real investments and features of their management

Investments in the real sector of the economy can be made in various ways. These methods represent separate forms of investments.

The most understandable and obvious option is the acquisition of a manufacturing enterprise. Although, in principle, a wealthy individual can purchase a small workshop, store or other economic complex, in practice, the acquisition of one enterprise (or its tangible assets) by another, larger enterprise is more common.

An important aspect of this form of investment is that it is not individual property that is purchased, but an entire economic complex that is fully or partially ready to produce products or provide commercial services. This type of investment is well suited for experienced entrepreneurs, who can save time and effort by restoring the operation of a purchased business rather than starting their own from scratch.

Next, we should mention such a form of investment as the purchase of individual tangible assets - buildings, land, machines, transport, etc. It is resorted to in cases where it is not practical to purchase a ready-made economic complex. For example, a factory needs 100 new machines. Obviously, buying another factory just for this equipment is stupid. You just need to contact the manufacturer of this type of machine and buy the required number of machines.

Another popular form of real investment is the construction of new buildings, engineering facilities and communications, transport and industrial infrastructure. This form is in demand in cases where an enterprise needs new buildings, facilities and communications, but does not have the opportunity to purchase them. For example, an agricultural enterprise needs its own granary. And if there is no such facility in the area, in principle, then it is impossible to buy it. Similarly, you cannot buy a road between two production workshops on your own territory, you can only build it.

The main forms of real investment also include reconstruction and modernization. This is a special form of real investment, which to some extent is an alternative to enterprise expansion. In this case, the goal is not to increase the number of fixed assets, but to improve them or replace them with more advanced ones that are suitable for modern technical realities. Although increased production volumes are often a consequence of this type of investment, the main goal is still to reduce production costs by optimizing production processes and reducing the costs of raw materials, personnel and energy resources.

Constant modernization is the only type of real investment that no enterprise can do without. Even if we are talking about a small family cafe in a provincial town, where, in principle, there are no prospects for expanding the business, constant technical re-equipment is still necessary both in the kitchen and in the sales area.

Finally, there is such a form of investment as the purchase or creation of intangible assets. As mentioned above, this includes technical patents, trademarks, manufacturing licenses, software, and more.

Risk management in real investing

Analysis and risk management when making real investments is one of the main tasks of the investor. Although investments in the real economy are considered more reliable compared to the financial sector, risks still exist. This is an objective phenomenon that exists both at the industry level and at the level of an individual enterprise. Features of their management are a separate science.

When implementing any investment project, you need to take into account possible risks that investments will not be able to pay for themselves due to reasons arising at the macroeconomic and local level. For any investment project, an assessment of the degree of risk is made, taking into account its specifics, and possible methods and features of their management are also provided. Highlight the following types risks:

1. Risk of insolvency. This implies the possibility that during the implementation of the project the investor will run out of money and the project will be disrupted, and the investments already made will be lost.
2. Design risk. The danger of having significant errors in the business plan or technical design that could greatly affect the profitability or even the possibility of implementing the original project.
3. Execution risk. Unskilled performers can ruin all the original plans by doing the job poorly, taking too long, or increasing costs excessively.
4. Marketing risk. The possibility that consumer demand for the product for which the project is being created will be lower than expected.
5. Inflation risk. As a result of inflation, the costs of implementing the project will greatly increase, or the final real profit will be less than the real costs.
6. Tax risk. The possibility of new taxes appearing or existing ones being increased, which will cast doubt on the economic feasibility of the project.
7. Structural operational risk. During operation already completed project, ongoing operating expenses may increase for various reasons and reduce its profitability.

And these are just some of the most common problems that have to be taken into account when conducting risk analysis and management.

Various classification methods can be applied to investment objects. They are distinguished by the following characteristics:

• scale;
• project focus;
• the nature and content of the investment cycle;
• the nature of state participation in the project;
• investment efficiency.

The most typical objects to which real funds can be directed as part of an investment project are land, buildings, production equipment, utilities, etc. More specific objects for this type of investment include scientific and technical research, development of new and improved types of products and services, advertising, expansion of the sales network, company reorganization, personnel training.

Investments in the real sector of the economy, assets and businesses

The key feature of investing in a real business compared to investing in financial assets is the direct connection with the real sector of the economy. While speculation in securities is only remotely related to the actual production process, every penny of real investment directly affects the production of goods and services.

It is noteworthy that a financial investor may have absolutely no understanding of how the company whose shares he bought works. For him, only general things matter financial results activities of the enterprise, as well as the state and prospects of the sector of the economy in which it operates. For a real investor, absolutely all aspects are important, right down to the territorial localization of production workshops and the average age of employees.

Thus, to make real investments you need to be a real professional and expert in the industry in which you are investing. Or you need to hire such experts as consultants.

The investor also has to take into account that investments in real assets have extremely low liquidity. They are difficult (and often completely impossible) to convert back into financial resources, which almost eliminates the possibility of speculative disposal of them. For this reason, real investments are always made for the long term.

From a macroeconomic point of view, real investment is the only source of real economic growth. Speculation in securities can enrich specific individuals, but only investments in the real sector of the economy - in the construction of buildings, production of goods and services - can ensure a general increase in production volumes in the country.

Investment projects for a portfolio of real investments

A portfolio of real investments is a collection of several investment projects in the real sector of the economy, subordinated to certain tasks and goals. Theoretically, such a portfolio could be owned by private investor investing their capital in various enterprises in order to minimize risks while maintaining high rates of return on investment.

However, in practice, a portfolio of real investments is, as a rule, a set of investment projects implemented at a specific enterprise in order to increase production volumes, reduce production costs and expand the distribution network.

Any portfolio of real investments is characterized by extremely low liquidity. It often has zero value as a speculative asset and can only generate profit for the investor in the medium to long term. This is due to the fact that the only way to make a profit from these investments is the production and sale of products (services) of the enterprise in which the funds were invested.

A portfolio of real investments is very difficult to manage and is directly related to the management of the enterprise itself. For this reason, the real investor is often either the owner of the company (individual or other legal entity) or the company itself.

Within one enterprise, a portfolio of real investments is formed from investment projects based on the general development strategy of a given business entity. Accordingly, profiting from these investments is directly tied to increasing production volumes, reducing costs and expanding the customer base.

As an example of this investment portfolio Let's take a small agricultural enterprise on the verge of large-scale expansion. The owners and management decide to implement several projects at once:

• purchase new tractors;
• acquire additional land plots for new agricultural crops;
• build a livestock complex;
• hire and train additional staff.

Each item on this list is a real investment project that can be financed both from the operating profit of the enterprise, and from funds raised from outside through the mechanism of issuing shares and bonds, or credit funds. Well, all these projects together are combined into a single portfolio, which at the same time is the overall development strategy of this company.

Leasing as a method of financing real investments

Leasing as a method of financing long-term investment projects is an excellent alternative tool for raising funds. In a stagnant economy with high inflation and high stakes for bank loans, leasing allows you to successfully sell expensive investment projects with a long payback period. How it works?

Inflation can eat up all the profits from long-term investments, so an outside investor is not interested in a real investment project designed for a long term. If the enterprise does not have enough of its own working capital for such a project, he only has a bank loan. But due to high interest rates, investments in real assets may turn out to be unprofitable.

The solution to this situation is leasing. A third-party investor purchases the relevant property (for example, industrial machines) and leases them to the industrial enterprise. As a result, the investor receives a rental profit that covers the level of inflation, and at the same time remains the owner of the property, which can be sold after the lease agreement expires.

In turn, the enterprise receives for use the property it needs, the rent of which is covered from the profit generated by this property. Moreover, the cost of rent is lower than payments on a bank loan.

Another important point should also be noted regarding this source investment financing. Bank loan can only be obtained from a bank in the country in which the company is located. The law prohibits direct lending from foreign banks with lower interest rates. But a leasing agreement can be concluded with non-residents, that is, you can rent property from companies and individuals registered in another country.

By the way, the decisive prerequisite for the influx of real foreign investment is precisely the high cost of bank loans in our country. Foreign investors are willing to participate in leasing schemes, which are quite safe and at the same time provide all parties with excellent conditions for making a profit.

Methods for assessing the effectiveness of real investments

The criteria that justify the feasibility of real investments are divided into two main categories - profitability assessment and risk assessment.

When assessing the expected return on real investments, the main method of analysis is the development of a feasibility study (feasibility study). This is a document that reflects rough aggregated calculations of all key production indicators, as well as costs and revenue.

An important element in calculating the effectiveness of investments is drawing up a business plan. Moreover, at each stage of the project implementation such a plan is drawn up anew. That is, first a preliminary business plan is developed, then a current plan during the implementation of the project and a final plan at the start of operation of an already implemented project.

Key methods for assessing the effectiveness of investments in terms of profitability are based on calculating the following indicators:

• profitability index;
• payback period;
• net present value;
• internal rate of return on investments.

Having compared different projects according to these indicators, the investor chooses the most suitable and profitable one to implement first.

As for risk assessment when implementing real investment projects, this also occurs through a comparison of the main profitability indicators. To do this, select indicators of production, financing and sales of products within the project, and model their changes in order to assess the sensitivity and vulnerability of the project to such changes.

From a risk perspective, analyzing the effectiveness of investments comes down to drawing up three business plans:

• pessimistic;
• optimistic;
• average or realistic.

The smaller the fluctuations in the main indicators between these three scenarios, the more stable and less risky the investment project is.

An investor who is just exploring the financial world, or plans to expand his horizons, learn about new areas of investment, can pay attention to real and financial investments.

On the one hand, they have a lot in common, common principles and goals for generating income, but there are much more differences. And we will try to figure out what it is, what are the pros and cons of each type of investment, and understand what is best for a beginner and an experienced investor.

What is real investment?

Someone may decide that exploring new directions and horizons is a thankless task, especially if you have some capital and have already managed to invest it in a profitable business. Why look for something new if things are already going well?

But such an inexorable thing as statistics shows that more than half of successful investors were able to count on high income precisely because of the regular development of new directions.

Real investments are a little-studied area for private individuals; it is believed that this is the domain of large companies, because the amount of financial investments is substantial. Real business investments represent the purchase of assets directly related to the production cycle.

For example, there is a dental clinic that does not have free funds. The investor purchases the necessary new generation equipment - modern medical equipment, in return he will receive a portion of the profit according to the terms of the agreement.

There are several most popular forms of real investment:

• Purchase of new offices, factories, industrial enterprises - ready-made complexes;
• Construction and expansion of real estate;
• Opening of additional branches and representative offices;
• Changing the production cycle and technologies - through the purchase of new innovative equipment;
• Purchase of patents, trade names, brands, rights to use them;
• Investing in scientific developments.

This type of investment in Russia is not in high demand, especially among individuals. This is not surprising: entry requires capital measured millions And billions of rubles . But the payback here is much greater, and the risks are reduced, because the money is directed to support material production.

Types of real investments

Investing in production development is not always voluntary; it also happens that investment is mandatory - without it, the company will not be able to function.

We are talking about compliance with environmental regulations, safety regulations, compliance with regulations and standards. As an example, a plant produces vegetable oil and pollutes the air, an investor invests money in the purchase of filters for an agreed percentage of income.

However, there is a general classification that divides investments into three types:

• Gross– this is a generalized type of investment that was made during the period of operation of the company or during the reporting year. All funds aimed at modernization, consolidation, increasing competitiveness, and improving productivity belong to this group. In fact, this includes capital that allowed the enterprise to modernize its production assets;
• Updates– it’s no secret that the essence of any company’s work is not only to function stably, but also to develop – not to stand still, to offer customers new products and opportunities. The enterprise directs free money to the production of additional product categories, development, and innovation;
• Extensions– include external expansion, when the company opens new offices, conquers additional industries, and enters the national or international market. You should invest money only if the company's products are in demand. For example, Samsung sees that its electronics are quickly selling out; in order to meet the needs of the population, new areas are purchased, workers are attracted, and additional workshops and factories are opened.

Money for development, regardless of the type of investment, a company can take from its own funds, obtain loans from banks, or attract other enterprises and individuals interested in making a profit. It is often recommended to seek help from the state: if the product is strategically or socially significant, useful for the population, rare or innovative, you can count on business subsidies.

Examples of real investments

To make it easier to understand the mechanism of working and increasing capital, we can give a couple of examples of real financial investments:

• Wimm Bill Dann Company, which produces dairy products, attracted investors to purchase new equipment. The goal is to maintain existing positions in the market, reorient production, that is, preference was given to goods from the budget category;
• Kerama Marazzi, a leading Italian manufacturer of ceramic tiles, decided to expand production by purchasing new premises - an additional workshop. For this purpose, investors were attracted who purchased the former Coca-Cola plant building and converted it to solve new problems.

Often real investments are not at all focused on obtaining benefits, but are socially significant.

For example, the city administration of Orel was looking for investors to install LED lighting on the streets - Rostelecom agreed to carry out the work. The company expects only to return the costs incurred without receiving income. Another example is the organization of toll travel across the railway bridge in Ryazan, which allowed local residents to significantly save time in morning and evening traffic jams.

What is financial investment?

The definition of financial investment, as the name suggests, is investing money for future development, generating income over a short or long period.

Every person, familiar or unfamiliar with the world of business and capital, still makes financial investments. For example, when he pays for his education, he goes to language courses in order to find a well-paid job in the future.

However, often under financial Investments are still understood as cash investments of available funds in all kinds of instruments. The field for activity is quite wide, so you can choose one of the areas of work:

• The stock market is certainly popular among beginners, although only a few achieve results here. Entry does not require a large sum, but you do need knowledge, an understanding of the principles of how everything works;
• Credit and depository market– is less risky, capital is spent on the purchase of government bonds and corporate IOUs. As an option - bank deposits, they can also be considered as a low-income, but practically non-risky way of obtaining benefits;
• The foreign exchange market - the object of the investor in this case - is a currency that can be traded on special electronic platforms, playing with quotes and exchange rates.

The main advantage financial investments is their simplicity - even with a limited amount of capital, without sufficient experience and knowledge, you can enter a certain niche and count on making a profit. For a beginner who does not have access to real investments, this option is the most profitable, and indeed the only possible one.

Types of financial investments

The choice of direction for investment is huge for every investor, so you need to weigh the pros and cons and understand which option is attractive in your case. It is necessary to determine what is more important - high income, the opportunity to increase capital in a short time, or risk reduction? The most popular types are:

• Futures and options contracts– derivative financial instruments require preparation for the investor, otherwise there is a high probability of losses. Working on the stock exchange also requires time, but the entry size here is minimal. The risk is significant - you can get both profit and loss;
• Shares investment funds – the meaning of the investment is that the investor buys securities from the fund or through an intermediary. Asset management is carried out by a specialist; accordingly, the amount of income directly depends on his abilities and on the policy of the chosen organization;
• Stock- the riskiest, but most attractive way of investing, allowing you to get the maximum profit if the company prospers. This security is an opportunity for speculation, that is, when its prices increase, the owner can sell the asset on the stock exchange. On the other hand, it will be possible to receive dividends and interest on the company’s income on a regular basis. If the company turns out to be unprofitable, you risk only the amount of money that you spent on buying shares;
• Investments in precious metals – gold, silver, platinum are constantly growing in price, but even if there is a decline, in the long term you can see a stable increase. This type of investment is less risky, but is long-term - buying and quickly selling precious metals, receiving income, is unlikely to work, such a transaction has no economic feasibility;
• Bonds- usually represented by large corporations and the state, they are easy to buy, for example, at Sberbank, but such an instrument is more of a debt instrument. The risks here are always reduced, although they exist, but the income is not very large - a comparative assessment makes it clear that bonds are sometimes less profitable than regular time deposits.

Financial investments are distinguished by the degree of risk, income, features and period during which one can count on profit. We can say that such investments are an ideal option for beginners; they do not require a large amount of capital. However, due to the fact that people without experience buy stocks, futures and options, and then “merge” them at a reduced price, there is an opinion that the market risks are enormous, and some sincerely believe that they cannot count on income at all costs.

Examples of financial investments

There are a lot of examples when companies raise funds from outside, this is a common way to improve their financial position. Money should be the source of enterprise development. For clarity, two examples can be given:

• Sberbank - dividend yield is 5%, purchasing preferred shares allows you to increase your capital during the year, the average price of one security is within 200 rubles;
• Yandex - the dividend rate is about 6%, quotes are growing steadily, and you can buy one share of a successful company for about 2,000 rubles.

It will be possible to invest in the development of hundreds of enterprises around the world. PayPal, Netflix, Apple, Amazon are obvious proof of this. In addition, investors should pay attention to less popular, but extremely promising companies.

Comparison of financial and real investments

To summarize the above, having assessed the features and characteristics of both types of investment, a cheat sheet was compiled that takes into account their similarities and differences.

Evaluation criterion	Real investment	Financial investments
Infusion size	Large - from several million rubles	Minor - you can start work even if you have 1000 rubles
Major Investors	Large companies and enterprises	Individuals, beginners, non-professional players
Risks	Less, since the money is invested in tangible assets	Above, there is a possibility of loss of funds that were used to purchase financial instruments
Ease of implementation	It’s difficult, you need to independently search for a company interested in attracting investors	Simple - you can contact specialized institutions, banks, the stock exchange, work via the Internet
Profitability	Can reach 100-150%	On average it is about 15-20%
Public benefit	Large, especially when investing in socially significant industries	Insignificant, largely due to the growing level of speculation
pros	High profit, improvement of people's welfare, low risk	Investment opportunity small amount, simplicity of the procedure, you can balance income and risks by choosing financial instruments from an impressive list
Minuses	Large entry size, requires knowledge about the industry in which money is being invested, inaccessibility for the common person.	Greater risk of capital loss, low profitability.

If you are not a millionaire, you should not consider real investments from a practical point of view, but you can invest money in financial instruments - stocks, bonds, other securities, precious metals, mutual funds.

Even though this type of investment is less profitable, and the risks here are increased, with skillful management, gaining experience and knowledge in the economic sector, you can count on increasing your own capital.

The main and most popular type of investment for legal entities is investment in securities, bank deposits, as well as the currencies of other countries with a strong stable exchange rate. Investing in foreign exchange market assets does not involve the investment of time, but it is worth noting that such investments are subject to a high level of risks.

Bank deposits, on the contrary, are considered the most reliable types of deposits with a clearly established rate, but receiving dividends requires a lot of time.

Legal entities also often invest their capital in leasing, as well as in providing credit services to third parties.

Classification of investment deposits

According to the timing of the investment process, there are:

• Short-term – investments for a period of up to one year, or investments that provide for profit in a year;
• Long-term – investments for a period of one year or more, or investments that provide for profit for more than one year.

By investment purpose investment funds differentiate

• Strategic – investing funds in the capital of third legal entities in order to consolidate their position in the market;
• Portfolio – used to eliminate the adverse effects of inflation and receive dividends.

In addition, there is a special type of alternative investment activity, which involves investing money in assets with a specifically established price in the market, which may increase over time.

Types of investing in securities

Financial investments in the securities market are less accessible, in contrast to bank deposits, but can bring greater profits for the investor.

It is worth highlighting the following types of financial investment in the securities market:

• Direct deposits, which involve investing money in equity securities that provide the right to participate in the capital of an organization;
• Portfolio, which involves investing capital in debt securities such as bills or bonds.

Also, according to the type of securities in which investment is made, a distinction is made between government and corporate securities and securities. It is also possible to distinguish between collective and individual investments by legal entities in the securities market. Individual investment involves the contribution of capital to the Central Bank, which is issued by some state or organization.

Real investments are the investment of capital in material production (in construction, industry, agriculture, etc.), as well as the acquisition of intangible assets (copyrights, patents) with their subsequent use for material production.

Real investments are classified into the following types:

1. Renewal investments carried out at the expense of the organization's funds.
2. Expansion investments made from income or stock savings.
3. Gross investment, which is the sum of expansion and renovation investments.

Characteristics of real investments

To characterize this type of investment, the following characteristics are used:

1. Investment size. This characteristic is the value expression of invested capital.
2. The investment rate is the ratio of real investment to GDP.
3. Capital intensity increase ratio. This indicator characterizes the efficiency of savings and is defined as gross real investment in fixed assets in relation to the increase in GNP for the same period.
4. Savings is the use of part of income to expand reproduction.

Principles of real investment

1. Compared to growth national currency, real investment increases faster.
2. Regarding financial ones, the risk of real investments is less, and the return is greater.
3. Real investments enable the organization to develop intensively, increase product quality, and explore new markets.
4. Real investment provides enterprises with a constant cash flow, achieved through depreciation charges on fixed capital, which are received even if the implementation of investment projects does not bring profit.
5. As a result of rapid technological progress, real investments may be subject to obsolescence.
6. Real investments have very low liquidity.

Forms of real investments

1. Acquisition of entire property complexes. Usually such investment operations are carried out large enterprises, thus providing regional, sectoral or product diversification.
2. Construction of a facility with a completed technological cycle. Such real investments are made with a significant increase in production volumes and with the formation of branches or subsidiaries.
3. The reconstruction is carried out to radically transform production on the basis of the latest scientific and technical achievements.
4. Modernization implies the improvement of existing assets of a given production.
5. Real investments in intangible assets are usually aimed at applying new scientific and technological knowledge in the production.
6. Investing to increase reserves of tangible current assets.

Real investments in working and fixed capital

The most common is investing in fixed assets. This form of investment includes capital investment in land plots, buildings, machines, and other means of production. In this case, it is worth allocating funds for production and construction purposes. Production assets include vehicles, machinery, equipment and work equipment with a service life of at least a year. Construction funds include construction mechanisms and machinery, vehicles and power equipment.

Investing in working capital involves investing funds in stocks of raw materials, structures, fuel, etc.

Real investments can be made by legal entities and individuals.

Legislation limits the participation of individuals in real investments and can be done in the following way:

1. Purchase of real estate and its further rental.
2. Purchase of equipment and subsequent rental.
3. Registration of intellectual property.
4. Formation of your own company.

As for the participation of legal entities in real investment, then, probably, any organization needs to engage in investments in order to expand and modernize its technical base.

Assessing the effectiveness of real investments(real investment effectiveness estimate) - a system of principles and indicators that determine the effectiveness of the choice for the implementation of individual real investment projects.

The main principles for carrying out such an assessment in modern practice are:

1. Assessment of the effect of investments based on net cash flow. At the same time, during the assessment process (depending on its goals), the net cash flow indicator can be taken differentiated by individual years of the upcoming operation of the investment project or as an annual average.
2. Mandatory reduction to the present value of both the volume of invested capital and the amount of net cash flow. The volume of invested capital is reduced to the present value if the process of investing in a real project is carried out in several stages in accordance with the developed business plan.
3. The choice of a differentiated discount rate in the process of bringing the amount of invested capital and net cash flow to the present value for various real investment projects. Individual investment projects differ in both the level of risk and their level of liquidity. Therefore, the discount rate, along with the average market interest rate, should take into account, if necessary, the size of the “risk premium” and the “liquidity premium” for a specific real investment project.

Taking into account the stated principles, the following main indicators are used in the process of efficiency of real investments:

1. Net present value(net present value; NPV). This indicator allows you to obtain the most generalized characteristic of the investment result, i.e. its final effect in absolute terms. Net present value is understood as the difference between the amount of net cash flow reduced to present value (by discounting) for the period of operation of the investment project and the amount of capital invested in its implementation.

This indicator is calculated using the formula:

NPV = NPV - IR

Where NPV- the amount of net present value income for a real investment project;
NPV- the amount of net cash flow (reduced to present value) for the entire period of operation of the investment project (before the start of new investments in its reconstruction or modernization). If the full period of operation before the start of a new investment in a given object is difficult to determine, it is taken in calculations at the rate of 5 years;
IR- the amount of capital invested in the implementation of a real project (in case of different investments, reduced to the present value).

An investment project for which the net present value indicator is negative or equal to zero should be rejected, since it will not bring the enterprise additional income on invested capital. Investment projects with a positive net present value indicator allow you to increase the capital of the enterprise and its market value.

2. Investment return index(profitability index; PI). It allows you to correlate the amount of invested capital with the upcoming amount of net cash flow for the project. This indicator is calculated using the following formula:

Where IDI- index of return on investment for the project;
NPV- the amount of net cash flow (reduced to present value) for the entire period of operation of the investment project;
IR- the amount of capital invested in the implementation of the investment project (in case of different investments, reduced to the present value).

If the value of the investment return index is less than one or equal to it, the investment project should be rejected due to the fact that it will not bring additional income to the enterprise. In other words, investment projects can only be accepted for implementation with an investment return index value above one.

3. Payback period(payback period; PP). It is one of the most common and understandable indicators for assessing the effectiveness of a real investment project, as it allows one to judge how quickly the funds invested in its implementation will be returned. This indicator is calculated using the following formula:

Where BY- payback period of invested capital for a real project (in the number of months or years);
IR- the amount of capital invested in the implementation of the investment project (in case of different investments, reduced to the present value);
NDP p- the average amount of net cash flow (reduced to present value) in the period (for short-term investments this period is taken as one month, and for long-term investments - one year).

If billing period If the investor is satisfied with the payback, then the real project can be accepted for implementation. The disadvantage of this indicator is that it does not take into account those amounts of net cash flow that are formed after the payback period of investments. Thus, for investment projects with a long operating life, after their payback period, a much larger amount of net present value income can be obtained than for investment projects with a short operating period (with a similar or even faster payback period).

4. Internal rate of return(internal rate of return; IRR). This indicator is considered one of the most important in the system for assessing the effectiveness of real investment projects. It characterizes the level of profitability of a specific investment project, expressed by a discount rate at which the future value of the net cash flow from investments is reduced to the present value of the invested funds.

The internal rate of return can be characterized as discount rate, at which the net present value will be reduced to zero during the discounting process. This indicator is calculated using the formula:

Where VSD- internal rate of return for a real investment project (expressed as a decimal fraction);
NPV- the amount of net cash flow reduced to present value;
IR- the amount of capital invested in the implementation of the investment project (in case of different investments, reduced to the present value);
n- number of discount periods.

The value of the IRR indicator can be determined using special tables for financial calculations.

The internal rate of return indicator is most suitable for comparative assessment not only within the framework of the investment projects under consideration, but also in a wider range, for example, in comparisons with the level of return on assets, the level of return on equity, the level of income on alternative investment (if the internal rate of return exceeds the market rate percent, the investment project is considered effective). An enterprise may set the “marginal internal rate of return” indicator as a standard, and investment projects with a lower value will be automatically rejected as not meeting the requirements for the efficiency of real investment.

Investments in real business - the era of startups.

Today, almost everyone knows a couple of examples when investments in real businesses made people millionaires in a fairly short period of time. The thing is that most businesses of the late 20th and early 21st centuries lie in the information space, which closely borders the area of ​​high technology. Initial cost and financial expenses entrepreneurship on initial stage may be millions of times less than the potential it receives at a certain stage of development.

So that all this does not seem like some kind of complex and confusing process to you, let's look at a simple example. Social network Facebook. The largest social network in the world. Those people whose capital was at the origins of the formation of this company are now millionaires. The founder himself, Mark Zuckerberg, is generally one of the richest people on the planet. A logical question arises.

Would you invest at least $1000 during the formation of this large business in order to become a dollar millionaire in a few years? Of course yes!

This is exactly the kind of investing we do. Our projects may be of a smaller scale now, but today there are already a couple of brands from the development of which we have earned good money.

What should be the investment in a real business:

• Promising. Before choosing any investment object from a business area, we carefully study all the documentation, business plans, calculations and prospects for this project. And we are not talking about how likely the success of the business is, we are talking about the coefficient by which we can increase our capital.
• Scalable. Depositing $1000 to receive the same $1000 every year may not be bad for some. Still, after all, this is 100% per annum. But we believe that if you risk your capital, then understand that all transactions will have the maximum return. By following this rule, you can make many times more profit.

If you understand how much potential this type of investment has, and how enormous a profit you can get here, be sure to contact our contact center. Our specialist will tell you about current business investment opportunities.

NON-GOVERNMENTAL EDUCATIONAL INSTITUTION

HIGHER PROFESSIONAL EDUCATION

HUMANITIES AND PROGNOSTICS INSTITUTE

Faculty of "Financial Management"

Course work

Investments. Principles for carrying out investment activities

Completed by: Grigoriev Sergey

Course 4 DFM Group 05

Checked: ________________

Moscow 2009

Introduction. 3

1. The concept of investment. 5

2. Classification and structure of investments. 6

3. Principles of investment activity. 10

4. Investment financing. 16

The price of advanced capital and the factors that determine it. 32

Conclusion. 36

References.. 37

Introduction

The modern understanding and fundamental importance of investments and the investment process, which have existed at all times and among all peoples, for the economy develops and increases with the development of the market. After the formation of national and international markets, investments and the investment process acquire enduring importance for the national and global economy. In other words, the basis of the modern market economy of all countries and the world economy as a whole is made up of relations associated with investing in the production of material and spiritual values.

From a legal point of view, the foreign investment policy of the state is the creation of a favorable legal climate for foreign investment, which involves the use of national legal regulation, national legal forms and norms (laws and other regulations), as well as, accordingly, international legal regulation, international legal forms and norms (bilateral and multilateral treaties and agreements).

The purpose of this work is to define investments and investment activities.

To achieve this goal, the coursework addresses the following issues:

give the concept of investment;

consider the classification and structure of investments;

consider the principles of investment activity;

also consider investment financing.

The investment activity of an enterprise is an important integral part of its overall economic activity. The importance of investments in the economy of an enterprise can hardly be overestimated. Modern production is characterized by constantly growing capital intensity and the increasing role of long-term factors. So that the enterprise can operate successfully, improve product quality, reduce costs, expand production capacity, to increase the competitiveness of its products and strengthen its position in the market, it must invest capital, and invest it profitably. Therefore, he needs to carefully develop an investment strategy and constantly improve it to achieve the above goals.

1. Concept of investment

In its most general form, investment is defined as cash, bank deposits, shares, shares and other securities, technologies, machines, equipment, licenses, including trademarks, loans, any other property or property rights, intellectual values ​​invested in business or other activities for the purpose of making a profit ( income) and achieving a positive social effect.

By financial definition, investments are all types of assets (funds) invested in business activities in order to generate income.

The economic definition of investment is interpreted as expenses for the creation, expansion, reconstruction and technical re-equipment of fixed capital, as well as related changes in working capital. After all, changes in inventories are largely explained by movements in expenditures on fixed capital.

Investments in a market economy as a process of investing funds in any form are inextricably linked with obtaining income or some effect. Investment is a resource, by spending which you can get the intended result. Thus, the essence of investment contains a combination of two sides of investment activity: resource costs and results. If resource costs, i.e. investments do not lead to the desired result, then they become useless.

Investment represents use financial resources in the form of short-term or long-term investments. Investments are made by legal or individuals. By type of investment, they are divided into risk (venture), direct, portfolio and annuity.

Venture capital represents investments in the form of issues of new shares made in new areas of activity associated with high risk. Venture capital is invested in unrelated projects with the expectation of a quick return on investment. It combines various forms of capital: loan, equity, entrepreneurial.

Direct investment is an investment in the authorized capital of a business entity with the aim of generating income and obtaining rights to participate in the management of this entity.

Portfolio investments are associated with the formation of a portfolio (a set of different investment values) and represent the acquisition of securities and other assets. Annuities are investments that bring the investor a certain income at regular intervals, representing investments in insurance and pension funds.

2. Classification and structure of investments

To account for, analyze, plan and improve the efficiency of investments, their scientifically based classification is necessary at both the macro and micro levels. Such a classification of investments allows not only to correctly take them into account, but also to analyze the level of their use from all sides and, on this basis, obtain objective information for the development and implementation of an effective investment policy at both the macro and micro levels.

During the time of the planned economy, the classification of capital investments according to the following criteria became most widespread in the domestic scientific literature and in practice.

Based on the intended purpose of future facilities:

For industrial construction;

For the construction of cultural and community institutions;

For the construction of administrative buildings;

For survey and geological exploration work.

By forms of reproduction of fixed assets:

For new construction;

For the expansion and reconstruction of existing enterprises;

For equipment modernization;

For major repairs.

By sources of financing - centralized and decentralized.

By direction of use - production and non-production.

With the transition to market relations, these classifications have not lost their scientific and practical significance, but they have become clearly insufficient for the following reasons.

Firstly, as already noted, investment is a broader concept than capital investment. As is known, they include both capital (real) investments and portfolio ones. This classification does not take into account portfolio investments at all.

Secondly, with the transition to market relations, the methods and methods of financing both capital investments and investments in general, as well as the scope of their application, have expanded significantly. All this does not find a place and is not reflected in the above classification.

Depending on the objects of investment, real and financial investments are distinguished.

Based on the nature of participation in investment, direct and indirect investments are distinguished.

Direct investment is understood as the direct participation of the investor in the selection of investment objects and investments.

Direct investment is carried out mainly by trained investors who have fairly accurate information about the investment object and are well acquainted with the investment mechanism.

Under indirect investments means investment mediated by other persons (investment or other financial intermediaries).

Based on the investment period, short-term and long-term investments are distinguished.

Short-term investments are usually understood as investments of capital for a period of no more than one year, and long-term investments are investments of funds for a period of more than one year.

According to the form of ownership of the investor, private, state, foreign and joint investments are distinguished.

Private investments are investments made by citizens, as well as enterprises of non-state forms of ownership, primarily collective ones.

Public investments are carried out by central and local authorities and management at the expense of budgets, extra-budgetary funds and borrowed funds.

Foreign investments are investments made by foreign citizens, legal entities and states.

Joint investments are investments made by entities of a given country and foreign countries.

Investments within the country and abroad are distinguished on a regional basis.

Investments within a country mean investments in investment objects located within the territorial borders of a given country.

Investments abroad mean funds invested in investment objects located outside the territorial borders of a given country.

The efficiency of using investments largely depends on their structure.

It is necessary to distinguish:

General investment structure;

The structure of real investments;

Structure of capital investments;

The structure of portfolio (financial) investments.

The general structure of investments refers to the relationship between real and portfolio (financial) investments.