Experienced investors know that money lying in a "three-liter jar" on a shelf or under a mattress is the most unprofitable way to "invest". Banknotes and coins must be in constant motion, multiply and work for their owner. Of course, there are risks that the investment project will fail, but if you approach the issue of investments competently and carefully, you can always minimize these probabilities. What types of investments are there? Novice investors should know the basic aspects of proper capital allocation.

Investments - basic concepts

The essence of investments is the investment of capital (material or intangible form) in various investment projects, securities, funds in order to make a profit in the future. Very often, some types of investments are compared with speculation, however, these are two different concepts. After all, speculative projects involve investing money for up to one year (most often for a month or two). All investments for a period of more than a year are already investments. But there are types of investments that fall under these two definitions, such as trading on the stock exchanges. They are mostly short-term, but they are not called speculation.

Real investment

This type of investment differs from others in that here money is invested in real things: enterprises, privatized objects, real estate. There are several types of real investments:

• Material - the creation of enterprises, or turnover.
• Intangible - when, promotion of a brand or trademark, market research, advertising, design of a trading floor, and so on.

How to determine the profitability of an investment? You can use a dynamic method to assess the effectiveness of investments: determining the index of return on investment, the internal rate of return, or using the net present value method. The comparison method is most often used when the current project is compared with a similar one and the rate of return is determined. If it turns out to be high, then the investment is considered effective.

It is worth noting that such investments are considered risky and therefore require professional management. Before deciding to invest, for example, in a specific production, it is recommended to get the opportunity to influence the management of the company, and it is best to own the main block of shares. There are cases when the views of the management of the company and the investor on the ways of distributing investment funds did not coincide. As a result, conflict situations arose. Competent management of real investments involves a constant analysis of the market, the search for consensus between stakeholders, forecasting performance.

Features of real investments

Unlike the national currency, whose exchange rate can jump up and down, real investment objects rarely depreciate. For example, an investor bought an apartment in order to rent it out, and it only grows in price against the backdrop of general inflation. The rate of return on such investments is quite high. This is not a fixed percentage in the bank, as is the case with a deposit, but an opportunity to earn much more. After all, by expanding production, modernizing, and improving the skills of personnel, you can get more quality products, which means more money.

But there are certain risks of this type of investment:

• Technological progress affects the rapid loss of relevance of a particular equipment. Real objects require constant investment. The investor is engaged in the introduction of new technologies, and the competitor has already acquired something even more high-tech.
• Some real investment objects have low liquidity. For example, purchased raw materials quickly fell into disrepair or equipment is outdated.

In the latter case, financial instruments look more attractive. They can be easily sold on any exchange. But precisely, to act more broadly and effectively.

Real investments for individuals

These types of investments do not require a lot of paperwork (with the exception of investing in opening your own company):

• Buying an apartment, house or other premises for further rental. Very much in a house under construction and its subsequent sale after putting the house into operation at a much higher price.
• Acquisition of various equipment in order to rent it or resell it at a better price.
• Buying antiques that only increase in value over time.
• Opening your own company.

All these types of real investments are also used by legal entities, but the list of their possibilities is more extensive. It also includes the modernization of production, the reconstruction of buildings, the construction of new facilities and infrastructure equipment.

financial investments

This type of investment is considered the most popular and widespread. In this case, the investor uses various investment instruments in order to make a profit. In addition, a similar method can also be used to diversify risks, gain control over the issuing company, and preserve capital. The main qualities of financial investments:

• accessibility for all types of investors;
• circulation on the secondary market;
• a portfolio form of investment is available;
• high level volatility;
• the level of profitability is potentially high;
• The process is regulated at the legislative level.

Of course, there are risks of lower profitability and loss of capital of an investment nature, but this is inherent in any type of investment.

How is the structure of financial investments distributed by markets:

• Currency - implies trading on FOREX, buying options for the further acquisition of currency, etc.
• Credit - state or corporate type, bonds and other debt securities.
• Stock - purchase / sale of shares of various corporations and enterprises.

What are the types of financial investments? Shares are considered the most highly profitable, but also risky instrument. Bonds are usually backed by the state and are less risky, but also less profitable. Mutual funds are considered to be something between the two previous investment instruments, because in this case, the investors' money is managed by professionals, which reduces the risk of losses. The financial type of investment also includes investments in, futures, options, forwards, depositary receipts.

How financial investments are valued:

1. An analysis is carried out (it is better to entrust these actions to specialists) taking into account external and internal data. The economy and the state of a particular financial sector are studied, the forecast for the exchange rate and stocks, and management and financial reports are analyzed.
2. Determination of the effectiveness of financial investments. Investments that allow funds to steadily increase are considered optimal and successful. The economic evaluation of efficiency includes the following methods: calculation of the payback period, internal and estimated rate of return, determination of net worth and evaluation of the return on investment.

If you take into account all the results obtained, you can choose the most suitable financial investment instrument.

It is worth noting that in addition to making a profit, this type of investment allows companies to increase their influence on the current market segment. Economists recommend forming an investment portfolio from various types of financial investments. These can be, for example, purchases of shares, deposits and currencies. If the bank fails, then there will still be stocks and currency.

Smart investment

This type of investment implies Intellectual property can be private or collective. Objects for attachments:

• copyright patents;
• information property (knowledge, experience, useful ideas);
• property of a licensed nature (the right to use goods and services secured by a license);
• purchase of scientific and technical products (information software, know-how).

Objects of intellectual investment can be technological, technical or artistic. The latter, for example, include a previously unused design solution for a trademark or logo. To technical - improvement of equipment, mechanisms and instruments. Buying innovative software is also a way to invest money.

This type of investment is considered promising today, but it also carries many risks. After all, no one can guarantee that the acquired technology, for example, will be successful in production. However, the rapid development of the market simply forces us to look for new projects and ways to improve business, so investment in intellectual property is very relevant. The creation of special exchanges that trade ip-assets only confirms this fact. Intellectual investments are capable of making a "breakthrough" in the manufacturing sector with average financial injections. Such investments have a beneficial effect on the entire economy of the country as a whole.

It is very difficult to assess the effectiveness of this type of investment, because even experienced experts are not able to predict the success of this or that intellectual project. But investors with a certain degree of adventurism still take risks and, in most cases, win.

Separation of investments by risk and return

The conservative type of portfolio investments also includes government shares. It is not necessary to expect special incomes here, however, the risks are minimized. Diversified investments are based on the division of the degree of risk between different financial investment instruments, where the high profitability of some is secured by the reliability of others. The profitability of such a portfolio is equal to the average market indicator.

A conservative approach is inherent in investors who do not like risks. A moderate investment strategy involves the use of an equal share of risk-free and high-yield "dangerous" investments with high liquidity. The aggressive way of managing an investment portfolio is to get as much income as possible. But in this case, the risks are very high, because the portfolio is formed from the shares of "green" companies that have not yet gained credibility in the market, but are rapidly developing, as well as from new startups.

What types of investments are most popular in Russia today

1. Bank deposit. This method of investment is more familiar, but not very profitable. The risks here are very low, because the deposits are insured, and if the bank collapses, the depositors will receive compensation.
2. Real estate. In Moscow alone, over the past two years, prices for apartments, houses or commercial premises have increased by 30%. But the lack of diversification, the cost of maintaining a property in good condition and low liquidity are significant disadvantages of this type of investment.
3. . Traders' management manages the investor's money and divides the profits, according to the agreement. The annual return on such investments reaches 50%, and in some cases even 100%. It is recommended to invest in several accounts at once in order to spread the risks.
4. Investments in ETFs. Although this market is not yet very developed in our country, it is considered promising. The low cost of ETFs (3-5 thousand rubles), the possibility of currency diversification and the high liquidity of such investments make them very profitable today. Buying an ETF involves investing in several companies or foreign organizations at once, which reduces risks.
5. are considered low-risk, but require costs in the form of commissions for managers. However, relatively high dividends compensate for this shortcoming.
6. Bonds. This is a classic investment tool that has been popular for decades. Long-term securities can provide high returns here.
7. . Although such investments are equated with sitting on a barrel of gunpowder, but this is a very fast way to earn money. It is quite possible to double or even triple your capital in a year. Experts do not recommend limiting themselves to only one HYIP, but disperse the money across several promising projects.

Modern people are actively investing in the stock market, which allows you to act in several directions at once, and traditionally in gold. This type of investment, like buying a cryptocurrency, has become very popular just recently. Raging around him. Forecasts on this score are very different - some are sure that the future belongs to this type of money, and that the cryptocurrency will only rise in price, while others argue that this is another bubble that will burst in the near future.

What are the risks associated with different types of investments?

Risks are the probability of losing your capital due to specific events or for objective reasons. They are of several types: market, occurring for reasons independent of the investor (reforms, crisis, legislative changes), and non-market, which arise within the same company or organization (shortcomings in the business plan, force majeure).

Types of market risks:

• Inflation. Thanks to it, interest rates on loans are growing, citizens' funds are depreciating, and prices are rising. Inflation affects all market players, reducing real incomes. As a result, the payback period of investment projects grows, and almost all profits are "eaten up" by the increase in the circulation of paper money in the country.
• Political risks. Any more or less influential event in the political arena can come back to haunt investors. The adoption of various regulations and legislative amendments indirectly affects some types of investments.
• economic nuances. Tax rates are rising, the key rate of the Central Bank is rising, interest rates on loans are rising. Such aspects cannot but influence investments. The expenses of investors increase, the profit decreases along with the increase in the payback period of the project.

There are also currency risks, when exchange rate fluctuations affect the attractiveness of projects for investors. Therefore, it is recommended to invest in several types of currencies at once. Non-market risks include credit, personal, liquidity, niche and managerial risks.

A novice investor should still trust specialized specialists in choosing the optimal method and type of investment. Experts will help in choosing a strategy, tell you where you can make good money, and which projects are best avoided.

Of course, you can do without outside help if we are talking about small amounts of deposits. But if investing is the main source of income, then it's not worth the risk.

Financial consultants or managers in mutual funds will help you "make" good money. However, having economic knowledge does not hurt, so it is necessary to subscribe to thematic mailing lists, monitor the market, catch the latest investment trends and invest without regrets. After all, who does not take risks, he cannot be an investor!

Similar posts

Investment is key at both the micro and macro levels. These funds act as one of the main factors of economic development. Investment flows determine the future of the state, its individual subject, each enterprise.

Main functions

Investment is the exchange of a certain present value for a possible uncertain future value. In the field of training economists, the study of this phenomenon is one of the most important stages. Considering the role of investments in a broad sense, it should be noted that they provide economic development and financing the growth of the country's economic sphere. The intensity of these processes largely depends on how quickly financial resources are mobilized to meet the growing needs of the state itself and companies operating within its borders, as well as individuals. Thus, investment activity and economic growth are interdependent phenomena.

Strategy

One of the key conditions for sustainable economic growth is the activation of the investment policy of the state. This strategy presupposes a system of measures that determines the structure, volume and directions of capital investments, the increase in fixed assets, as well as their renewal in accordance with the latest achievements in technology and science. The investment policy regulates and stimulates the financing process, creates conditions for the sustainable development of the socio-economic sector of the country, region, a certain industry, and entrepreneurship in general. The most important areas envisaged in the strategy include:

Legal aspect

The most important condition for the activation of investment is the improvement of the mechanism of its legal regulation. The main laws in this area are Federal Law No. 39 and Federal Law No. 160. The first regulates investment activities in the territory of the Russian Federation, carried out in the form of capital investments, the second - provides conditions for the distribution of foreign funds. The legal foundations are also laid down in the Civil Code.

Real investment

These funds are impossible without financial investments. The latter, in turn, receive a logical conclusion in the implementation of the former. Currently, real investments are being made:

1. in fixed capital.
2. into intangible assets.

Classification

Depending on the goals of financing, the following types of real investments are distinguished:

Specificity

Any form of real investment, as a rule, is a long-term large financing. Investing assets in equipment and land, erecting new structures or buildings has a fairly long payback period. But not a single production will exist without real investments. In order to raise funds, in addition to the company's own proposal, it is necessary to justify their need, submit technical and economic calculations. The effectiveness of real investments is ensured through constant monitoring of the developed financial project. This process is of key importance in the effectiveness of the implementation of the company's strategy. In the course of monitoring, the effectiveness of real investments is assessed, the achieved results are compared with the planned ones. Depending on the results, the project is adjusted.

Implementation Features

Real investments act as the main tool for implementing the developed development strategy of the company. The main goal of this process is ensured through the implementation of effective financial projects. At the same time, the strategic development itself is directly a complex of implemented plans. An analysis of real investments shows that it is precisely this kind of investment that ensures the company's successful entry into new regional and commodity markets, a constant increase in its value. This method of financing is closely related to the operating activities of the company.

Competent management of real investments allows to solve the problems of increasing production and sales volume, expanding the range of products, improving their quality, and reducing current costs. At the same time, the indicators of the upcoming operational process, as well as the potential for expanding activities, will largely depend on the financial projects implemented by the company. Real investments contribute to a higher level of profitability.

The ability to generate a significant rate of return acts as one of the incentives to continue entrepreneurial activity. Realized investments provide the company with a steady flow of net cash. It is formed at the expense of intangible assets and depreciation deductions from fixed assets, even when the operation of projects does not generate income. The assets under consideration are distinguished by a high level of anti-inflationary protection. As practice shows, under conditions of inflation, the intensity of price growth for objects of real investment not only corresponds to, but often overtakes its pace.

Negative Traits

Evaluation of real investments shows a high risk of obsolescence. He accompanies the activities both at the stage of project implementation and at the stage of their subsequent operation. Intensive technological process has created a tendency to increase the level of this risk in the course of real investment. Invested assets are characterized by the least liquidity. This is due to the narrow target orientation of most investment forms. Being incomplete, they have practically no alternative use in the economy. In this regard, it is very problematic to compensate for the mismanagement of real investments.

Acquisition of property complexes

This is one of the areas in which real investments are made. The acquisition of property (integral) complexes is an operation of large companies, through which regional, commodity or sectoral diversification of activities is ensured. The result of this form of investment, as a rule, is a "synergy effect". It consists in increasing the total price of the assets of both companies (relative to their book value) due to the ability to more effectively use the overall financial potential and reduce operating costs, mutual complementation of the range and technology of manufactured products, sharing the distribution network at different regional trading floors and other similar factors .

Construction

This investment operation is associated with the construction of new facilities with completed technological cycles according to a standard or individual project in specially designated areas. The company resorts to new construction in case of a cardinal increase in the volumes of its operating activities in the future period, its regional, sectoral or product diversification (formation of subsidiaries, branches, and so on).

Reconstruction

This form of investment provides for a significant transformation of the entire production process on the basis of modern scientific and technical achievements. The reconstruction is carried out according to a comprehensive plan to radically increase the production potential of the company, introduce resource-saving advanced technologies, significantly improve the quality of manufactured products, and so on. In the course of this process, individual buildings and premises can be expanded (if new equipment cannot be installed in existing ones), construction of structures and buildings of the same purpose can be carried out on the site of those being liquidated on the territory of the company, the operation of which, for economic and technological reasons, is further inexpedient.

Modernization

An investment operation of this type is associated with the improvement and bringing the operating part of the main production assets into a state that corresponds to the current level of technological processes. This is achieved through a constructive change in the main set of equipment, machines and mechanisms that are used by the company in the course of its operating activities. Reprofiling is considered to be a derivative process of modernization. During this investment operation, a complete change in production technologies is carried out for the manufacture of new products.

Individual hardware upgrade

This form of investment concerns the replacement (due to physical deterioration) or additions (due to an increase in volumes and the need to increase labor productivity) of the existing set of machines with their separate new types that do not change the general scheme of the process. The update characterizes mainly the simple reproduction of the active part of fixed assets.

Problem of choice

The investment forms listed above can be summarized in three main areas:

1. Innovative investment.
2. Investment in the growth of current assets.

The choice of a specific option is determined by the tasks of product, industry or regional diversification of the company's activities aimed at increasing the volume of operating profit, the possibility of introducing labor-saving technologies and new resources that reduce costs, the potential that sources of real investment have (capital in monetary and other terms, which is attracted for investment).

Long term security

Such investments are invested for a period of 3 or more years. Effective regulation of the company's activities ensures its successful development in a competitive environment. This directly relates to the complex process of long-term investment. Fast and correct implementation of activities in this area allows the company not only not to lose its main advantages in the competitive struggle for holding the market for the sale of its products, but also to improve existing production technologies. This, in turn, contributes to further efficient operation and profit growth.

All main regulatory functions are carried out within the framework of the developed strategic plan, which ensures the implementation of the main concept. Allocation of resources, coordination of the work of different departments, organization of the structure, relations with the market allow the company to achieve its goals, making the best use of available funds. Developing a long-term investment strategy is a rather complicated process. This is due to the influence of many external and internal factors on the financial and economic position of the company.

Recently, models that contribute to assessing the prospects for investing in enterprises have become more and more popular. The main tasks in this area are the selection of solutions, forecasting priority targets and identifying reserves to increase the profitability of the company as a whole. The use of various kinds of matrices, the formation and analysis of models of initial system factors is quite popular. Each specific situation will determine one or another line of conduct in long-term investment.

In order to develop, a successful businessman needs to invest in new business and new projects. According to statistics, most of the richest people on the planet have made their money through smart investment. The best way to save and increase your funds is to invest in the real sector of the economy.

Real investment

If your money is not working for you, then you are losing it! This is explained quite simply - firstly, inflation reduces your capital, and secondly, the lack of investment in the development of an enterprise is the path to its collapse. This means that money must work.

The best way to make money work is to actually invest. Real investment is the investment of capital, for further profit in the production of services and goods. Real investments are directed, first of all, to increase the fund of the enterprise and its modernization and reorganization.

To make it more clear, let's look at an example. A certain footwear company spent a certain amount of money on the purchase of new imported equipment. This equipment will increase the output of finished products by several times. Such an investment in production, with a well-organized marketing process for finished products, will increase profits. This is real investment in production.

As a rule, this type of investment involves millions of dollars. Therefore, such investments are affordable, mainly for large or medium-sized businesses. Small businesses or individuals often cannot afford this.

Forms of real investment are quite diverse:

• construction of new facilities;
• purchase of plants, factories, livestock complexes and similar facilities;
• investments in the opening of subsidiaries and branches;
• renewal of existing enterprises;
• introduction of innovations;
• buying a new business;
• funding for research and development.

The difference between financial and real investing

Real and financial investments have some differences. Real investments, in the long run, bring more income and are less subject to market fluctuations. Since financial investment is an investment in various securities, under good circumstances they can bring an income of no more than 25% per year.

Since real investment contributes to the growth of the country's economy as a whole, the state encourages such investment. After all, investing in an enterprise helps to increase the number of jobs and, in general, helps to increase the income of the population.

Financial investment has little effect on economic growth. In fact, such investments are a banal speculation on the stock exchange, which allows you to earn income on the difference between the purchase and sale prices.

Read also: Imperative norm and dispositive norm of law

Types of real investment

Some types of real investments are mandatory. Examples include, for example, maintaining decent working conditions for staff or caring for the environment. Real investments are investments in the following activities.

1. Update. As a rule, such investment is carried out at the expense of the enterprise itself. It is aimed at upgrading equipment, introducing innovative technologies. For such investment, enterprises create a special fund, which accumulates funds for future investments.
2. Extension. Such investments are aimed at developing new market segments and increasing the number of product consumers. Usually, such investments take place if the company's products are in good demand. In this case, it makes sense to increase the amount of product produced. Funding is being raised for expansion.
3. General investment. This is general financing for the expansion, modernization and creation of production assets, an increase in material and commercial values.

Sources of financing

There are several sources for investment:

• investment of own funds;
• loan investment;
• investment of borrowed funds.

Let's take a closer look at each of these sources. To invest their own funds, enterprises create a special fund for the accumulation of money for subsequent investments. If own funds are not enough, then they take a loan for investment, especially if calculations show that investments will quickly pay off and bring profit. The attraction of funds occurs mainly at the expense of equity holders or co-owners, sometimes the state can also act as an investor.

Smart investment

In order for investments to be profitable, before investing money, it is necessary to carry out preparatory work. Below are the main points that are typical for such training.

1. Analysis. In order to evaluate the effectiveness of future investments, it is necessary to conduct a market analysis. Is there a need for the company's products and how much they are in demand.
2. Decide on the type of investment. It is necessary to decide for what purposes the funds from the investment will be directed.
3. Estimation of the size of future investments. It is necessary to calculate exactly how much money will be required in order to fully carry out the event for which the investment is directed.
4. Evaluation of return on investment. It is necessary to conduct a thorough analysis that will allow you to assess how quickly the investment will pay off.

After you have completed all of these activities, you can start investing. Otherwise, at any stage, serious problems may arise that can lead to the loss of all invested funds.

Evgeny Smirnov

# Investments

The essence and forms of real investment

In Russia, the most popular real investment destinations are mining, 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 investment
• Investments in the real sector of the economy, assets and business
• Investment projects for real investment portfolio
• Leasing as a method of financing real investments
• Methods for evaluating 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, people understand this concept as 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 money 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 better price. And 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 values. If you look at investments from the point of view of macroeconomics, then these are investments in the overall 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 directed to the acquisition or creation of both tangible and intangible assets (intellectual property objects - production licenses, works of art, software, etc.).

Real investment is, in most cases, financing of large expensive projects. If, when making financial investments, you can buy securities in small lots for literally several thousand or even several 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 finance projects for the construction, modernization and expansion of industrial 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, each of which can have several areas for investment.

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

1. material investment. They are 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. Non-material investments. These are investments in the intangible sphere, which is important for doing business. An example of this is investment in advertising that promotes better sales of goods, the purchase of a license to use foreign technologies in production, the cost of staff 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, and not 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 foreign technologies (license rental) and software.

Real investments include the following investments:

• purchase of equipment;
• purchase of land plots, including mineral deposits;
• purchase or construction of buildings and structures;
• investments in the modernization of production;
• 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 much more profitable than financial investments. Although they do not always provide a higher level of profitability in comparison with financial ones, they are less risky. First, they are little affected by short-term market fluctuations. Secondly, objects of real investment 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 earn exclusively on market fluctuations, 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 buying shares, an investor is only interested in the prospect of their rise in price, then for investments 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 really earn money should be closely connected with the management of the enterprise. An investor needs not only to understand exactly where his money will go, but also to 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 is either the original owner or receives a shareholding with voting rights in exchange for his investment.

Forms of real investments and features of their management

There are various ways to invest in the real sector of the economy. These methods are separate forms of investments.

The most understandable and illustrative option is the acquisition of a manufacturing enterprise. Although it is possible in principle for a wealthy individual to acquire a small workshop, store, or other business complex, in practice it is more common for one enterprise (or its tangible assets) to be acquired by another, larger enterprise.

An important aspect of this form of investment is that it is not a separate property that is bought, but an entire economic complex, fully or partially ready for the production of products or the provision of commercial services. This type of investment is well suited for experienced entrepreneurs, who can save time and effort by rebuilding a purchased business instead of building their own from scratch.

Next, we should mention such a form of investment as the purchase of individual tangible assets - buildings, land, machine tools, vehicles, etc. It is resorted to in cases where it is not advisable to purchase a ready-made economic complex. For example, a factory needs 100 new machines. Obviously, buying another factory just for the sake of this equipment is stupid. You just need to contact the manufacturer of this type of machine and buy the right 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 is unable to purchase them. For example, an agricultural enterprise needs its own granary. And if there is no such object in the district, in principle, then it is impossible to buy it. Similarly, you cannot buy a road between two production halls 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 expanding the enterprise. In this case, the goal is not to increase the number of fixed assets, but to improve them or replace them with more advanced and suitable for modern technical realities. Although increased production volumes are often the result of such investments, the main goal is to reduce production costs by optimizing production processes and reducing raw materials, personnel and energy costs.

Constant modernization is the only kind 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 business expansion, constant technical re-equipment is still necessary both in the kitchen and on the trading floor.

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 investment

Analysis and risk management in the implementation of real investments is one of the main tasks of the investor. Although, compared to the financial sector, investments in the real economy are considered more reliable, 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 managing them is a separate science.

When implementing any investment project, it is necessary to take into account the possible risks that investments will not be able to pay for themselves due to reasons that have arisen at the macroeconomic and local levels. 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. There are the following types of risks:

1. The risk of insolvency. It implies the possibility that in the process of implementing 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 significant errors in the business plan or technical design, which can greatly affect the profitability or even the possibility of carrying out the original project.
3. Execution risk. Unskilled performers can disrupt all original plans by doing poor quality work, taking too long or excessively increasing costs.
4. marketing risk. The possibility that consumer demand for the product under which the project is being created will be lower than expected.
5. inflationary 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 or an increase in existing ones, which will cast doubt on the economic feasibility of the project.
7. Structural operational risk. During the operation of an already implemented project, current operating costs may increase for various reasons and reduce its profitability.

And these are just some of the most common issues that have to be taken into account when analyzing and managing risks.

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

• scale;
• direction of the project;
• the nature and content of the investment cycle;
• 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 kind of investment include scientific and technical research, the development of new improved types products and services, advertising, sales network expansion, company reorganization, staff training.

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

A key feature of investments in real business in comparison with investments in financial assets is a direct connection with the real sector of the economy. While securities speculation 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 not understand at all how the enterprise whose shares he has bought works. For him, only the overall financial results of the enterprise, as well as the state and prospects of the sector of the economy in which it operates, matter. For a real investor, absolutely all aspects are important, up 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 an expert in the industry in which investments are made. Or you need to hire such experts as consultants.

The investor must also take into account that investments in real assets have extremely low liquidity. It is difficult (and often completely impossible) to convert them 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 with securities can enrich specific individuals, but only investments in the real sector of the economy - in the construction of buildings, the production of goods and services - can ensure a general increase in production in the country.

Investment projects for real investment portfolio

The portfolio of real investments is a set of several investment projects in the real sector of the economy, subject to certain tasks and goals. Theoretically, such a portfolio can be owned by a private investor who invests his capital in various enterprises in order to minimize risks while maintaining high rates of return on investments.

Nevertheless, in practice, a portfolio of real investments is, as a rule, a set of investment projects implemented at a particular 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 represents zero value as a speculative asset and can only bring profit to the investor in the medium and long term. This is due to the fact that the only way to profit from these investments is the production and sale of products (services) of the enterprise in which the funds were invested.

The 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 (an individual or other legal entity) or the company itself.

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

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

• purchase new tractors;
• purchase additional land plots for new 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 at the expense of funds raised from outside through the mechanism of issuing shares and bonds, or with credit funds. Well, all together these projects are combined into a single portfolio, which at the same time is the general 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 conditions of economic stagnation with high inflation and high rates on bank loans, leasing makes it possible to successfully implement 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 long-term investment project. If the company does not have enough own working capital for such a project, it only has a bank loan. But due to high interest rates, investments in real assets can turn out to be unprofitable.

Leasing is the way out. The third party investor purchases the relevant property (eg industrial machines) and leases it to the industrial enterprise. As a result, the investor receives a rental income that covers the inflation rate, and at the same time remains the owner of the property, which can be sold at the end of the lease agreement.

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.

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

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

Methods for evaluating the effectiveness of real investments

The criteria justifying the expediency 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 (FS). This is a document that reflects rough aggregated calculations of all major production indicators, as well as costs and revenues.

An important element in calculating the effectiveness of investments is the preparation of 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 the current plan during the implementation of the project and the final plan at the beginning of the operation of an already implemented project.

The key methods for evaluating the effectiveness of investments in terms of profitability are based on the calculation of the following indicators:

• yield index;
• payback period;
• net present income;
• internal rate of return on investment.

Comparing different projects according to these indicators, the investor chooses the most suitable and profitable one in order to implement it in the first place.

As for risk assessment in the implementation of real investment projects, it also occurs through a comparison of the main indicators of profitability. To do this, select the 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 the point of view of risk, the analysis of the effectiveness of investments is reduced to the preparation of three business plans:

• pessimistic;
• optimistic;
• average or realistic.

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

Real investments represent investments of financial resources in specific objects in full. It should be remembered that financial investments differ from real investments. Real investment is the provision of an increase in capital capacity, and with financial investment, capital growth may not be observed. We are talking about the country's economy as a whole, and not just about the principles of investing in business sectors.

Real investments involve financing both tangible and intangible assets and objects. Let's focus on intangible assets. They are not tangible values, are used for a long time, and are not intended for sale. These include carriers of intangible nature, which have good prospects in terms of making a profit. For example, these can be patent or copyrights, licenses, databases and software products, creative projects, nature management objects. A prerequisite is the assignment of an intangible asset to some organization, company.

Modern investors successfully invest in intangible objects. The analysis of the profitability of an intangible carrier comes to the fore here. If you can objectively assess the prospects of such an intangible medium, you can get a decent return on investment.

Forms of real investment

Real investment can be carried out in certain forms. The principle, method of investment, its prospects will depend on them. Consider the main forms of real investment:

1. Construction. In this case, real investment is an investment in the construction of a new facility, which has an individual project, a completed technological cycle. Enterprises begin new construction, when the volume of work expands, its direction changes, and a branch is created.
2. Real investments can be made in the form of acquiring integral property sets. Such financial transactions are carried out by large enterprises when there is a diversification of work, regional or commodity. In this case, there is an increase in the company's assets, since the overall financial potential begins to be realized more efficiently. At the same time, it is possible to reduce operating costs, as well as expand the sales market.
3. Also, real investment can be directed to equipment upgrades. The technological process remains unchanged, but the equipment is replaced due to wear and tear, as well as due to obsolescence.
4. Reconstruction of the enterprise also involves real investments. This investment operation is carried out when the technological process is being transformed, cardinal changes take place. This is different than simply replacing hardware. The reconstruction plan is being approved, new efficient technologies are being introduced. Sometimes there is an expansion of production areas, new premises are built. Everything is done to optimize performance. For an investor, such an investment can be profitable, since the reconstruction is aimed at optimizing the operation of the enterprise, after which it is planned to increase profits.
5. Financial investments require the process of reprofiling. Then, in connection with the release of new products, a complete change in the technology of the production process is needed.
6. Modernization also involves real investment. When the active parts of production facilities need to be made modern, corresponding to new requirements, various design changes are carried out. A modernization project is being developed, new equipment is being purchased.
7. The forms of real investment also include financing the increase in the volume of tangible assets that are in circulation. The volume of assets increases to balance the development of current and non-current assets when investment work is underway. When the production potential increases, more products can be produced. But this is possible only if the expansion of the volume of a number of tangible assets is ensured: for example, semi-finished products, production materials, raw materials.

The types of real investments include financial investments in intangible assets. There are two key forms of such funding:

• development of new products of a scientific and technical nature;
• acquisition of finished products, patents for inventions, etc.

The technological process can be significantly optimized if real investments are directed to the financing of intangible assets.

Experts note that such a list of real investments can be reduced to a more capacious scheme. The types of real investments are:

1. financing the increase in current assets;
2. innovative real investment;
3. capital investments.

It is extremely important to timely, competently, in full accordance with the real conditions of production and the market, the financial environment, determine the most optimal forms of real investment, choose promising, reliable objects for investment. Then the work will be effective, and the investment will quickly justify itself.

Real Investment Management

Only competent management of real investments determines the success and performance of an enterprise or business. Now we will consider the main stages, methods of managing real investments that provide the most effective financing.

Analysis

First of all, a detailed analysis of financing is carried out. The real state of investment for a certain previous period of work is analyzed. Real investment management policy involves a thorough study of existing experience. It is important to assess the degree of investment activity of the company, as well as to determine the degree of efficiency and effectiveness of programs that have already been launched and completed at the previous stage of work. The analysis is carried out in several stages. Real investment management should be based on objectivity:

1. First, they examine the dynamics of financing in the growth of real assets, as well as the percentage of real financing in the total investment of the enterprise.
2. Then the level of effectiveness of individual financing programs, the degree of their successful implementation is examined.
3. Then it is important to find out how past investment programs have been implemented. It is necessary to determine the exact amount of investments that are necessary to complete the programs.
4. At the fourth stage, the final one, an analysis of the effectiveness of financing programs that have already been completed is carried out. It turns out how they correspond to the planned indicators at the stage of operation.

Definition of forms of financing

The specific forms of real investment are precisely clarified. It is important to use the available types of financing accurately. They are chosen taking into account the specific areas of the company's investment work, which become the basis for the expansion of current, intangible assets.

It is necessary to pay attention to statistics, the dynamics of the enterprise. If we are talking about an intangible object of investment, it is necessary to give a competent analysis of its prospects as a source of profit.

Clarification of the full volume of real investments in a given period of activity

Experts determine the optimal amount of investment. Of great importance will be the volume of growth of key assets of the enterprise, which is planned for this period. Be sure to take into account the dynamics of growth in the volume of investments that have not yet been completed.

Selection of specific investment projects

A competent real investment management policy is also based on the precise selection of specific investment programs, which must fully comply with the forms and goals of real financing. Detailed business plans are being created. When the financing project is small, the plan can also be short, but with the obligatory coverage of all key points.

Specialists examine current offers on the financing market, consider the prospects for the purchase of assets, select investment objects with great potential, and carry out a thorough check of all selected investment objects.

Evaluation of the effectiveness of projects

When investment projects have already been selected, it is necessary to evaluate their effectiveness as objectively as possible. Be sure to take into account all the risk factors that need to be pre-determined. The main evaluation criterion is to ensure the growth of the company's market price. It is also important to check how the level of each project corresponds to the degree of planned profitability.

At this stage, it is imperative to identify all the risks that may accompany real investment in general. The role of such an analysis is very large, since financing is often associated with the investment of capital in investment objects in significant volumes. If all the risks are not taken into account in advance, the solvency of the enterprise may fall sharply. When borrowed capital is involved, this also leads to the risk of reducing the financial stability of the company. It is important to calculate in advance how investment risks can affect the financial stability, solvency, profitability of the enterprise.

Formation of a real investment program

The competent formation of a real investment program is of great importance. All projects are evaluated, after which they are distributed depending on liquidity, risk, level of profitability, as well as compliance with the key goals of the company's financial policy. Objective limitations are taken into account, that is, the possible volume of formation of investment resources, the total volume of the given real financing. It is planned to increase the market price of the enterprise.

Well, if the formation of a real investment program went well, it meets the key goals of the enterprise and takes into account all the risks. Then it will not need optimization. But it is not always possible to immediately achieve the effectiveness of the program. In this case, individual parts change depending on various factors that have emerged during the implementation of the project.

Implementation of projects, investment programs

The stage of implementation of individual projects and the investment program as a whole is coming. Here are the key tools with the help of which programs, projects, the entire investment plan of the enterprise in general are implemented:

• project schedule;
• capital budget;
• financing scheme.

In the calendar schedule, all key periods are necessarily determined when it is necessary to carry out the specified types of work. Everything is done on the basis of the functional responsibilities that are defined in the contract.

The capital budget is calculated most often for one year. It reflects the receipts, expenses that are associated with the implementation of a particular investment project.

The financial base is prescribed in the financing scheme.

If you are going to invest in a particular enterprise, it is worth evaluating the level of analytical work, the overall dynamics of activities, and the prospects of their financing plan.

Control over the implementation of the investment program

Then, when all the main work has already been done, they must constantly monitor the implementation of the project, all its tasks. This stage of managing real investments is also extremely important for the implementation of the program, maintaining profitability, and increasing the market value of the enterprise.

Sources of real investment financing

Let's consider the main sources of financing real investments, which are actively used in the modern market economy.

There are three key sources:

• borrowed;
• involved funds;
• company's own funds.

Let's take a closer look at the sources.

Own funds

Most often, own investments are formed due to the depreciation of fixed assets, as well as using their own profits. Large companies use any available funds, including finances from social, pension, and insurance funds.

Involved funds

Raised funds are widely used sources of financing real investments. Shareholding plays a big role here. It is in demand in the implementation of large-scale projects. This is a good alternative to a loan. However, credit is still used more often, although corporatization requires lower costs.

Shareholding has various advantages:

• it is possible to attract new funds in noticeable volumes;
• there are no restrictions on the use of funds by time;
• it is very important that payments for the use of money will directly depend on the result of the work of the joint-stock company;
• the price of attracted funds will be lower for larger issue sizes.

Investors have a negative attitude towards a new issue of shares if the company has been operating for a long time. As a result, the company's stock price may fall.

It is possible to carry out budget financing. It is widely demanded in the social, manufacturing industry. You can apply this method in times of economic crisis. It is good to use budget financing when a specific region, industry, or promising enterprise is developing. Such a method is relevant when a company produces strategic, science-intensive, scarce products.

Borrowed sources

Often use credit funds, leasing. Unlike borrowed funds, borrowed funds must be repaid within a certain period, and the amount of payments does not depend on the results of work. You can also use bonds. Loans can be taken in large volumes. But you have to provide guarantees for the return of funds, difficulties may arise at the stage of registration. The risk of bankruptcy of the enterprise also increases significantly if the loan is not repaid on time.

The popularity of foreign investments is growing more and more. Sometimes existing businesses are taken over, and sometimes new companies are organized. There is also leasing. Its objects are immovable, movable property.

You can issue bonds. It also has its advantages:

• mass issuance of bonds of well-known enterprises allows attracting funds from the population;
• bonds can really be profitable, in demand;
• bonds are easier to distribute than stocks;
• Buying bonds is less risky for investors than buying shares.

Investors, for their part, can make better offers to enterprises by providing loans on good terms. This approach justifies itself if there is a prospect for the progressive development of the enterprise, increasing profits. Then in the future business cooperation can become permanent, mutually beneficial.