A clear understanding of the economic essence and characteristic features of investments and investment activities is important for both micro and . Knowledge of investments and activities related to them is no less important for people who are investors in various projects or intend to become such. Let us examine in more detail what the economic essence of the investment process is, what classification is generally accepted, what are the signs of investment and other issues related to the theoretical principles and fundamentals of investment activity.

The economic essence of investment and its classification

Investments are a set of costs (tangible and intangible) aimed at implementation in the form of a targeted investment of funds in various areas of the economy and branches of activity for the subsequent receipt of profit and achievement of a certain result.

In other words, investments are capital investments in the understanding of the interpretation of this definition in the Russian Federation before 1991 (property and non-property rights that are invested in a certain area for subsequent income).

Signs of investment activity

The following signs of investment are distinguished:

1. Urgency of investment. Investments are made for a certain period of time and during the time the funds are in the investment object, the investor must receive an agreed profit.
2. Purposeful investment. The investor determines a specific industry or area where he plans to invest his own funds. In other words, capital has a direction to move in a certain direction.
3. Riskiness of deposits. The deposit will be risky in any case, regardless of the investment object. There are different investments according to the level of risk, but in all cases the investor risks funds within the limits of his own contribution.
4. Potential profitability. The main purpose of investing is to generate income. This is the primary task of all investors, regardless of the presence of other, indirect goals that investment activities may include.
5. Possibility of receiving passive income. Investing involves identifying a potentially profitable source of constant receipt of funds that are earned without the direct participation of the investor himself. This feature is present in all types of investment, from real estate to bank deposits.

There are different definitions of investment, each of which in its own way helps to reveal the essence of this concept and its main purpose.

Thus, investments can be considered as temporarily free funds of legal entities or individuals, which are intended to increase the owner’s profit and are used specifically for the implementation of this task. Based on this definition, investment funds can be cash, property or rights to it, licenses and copyrights, shares, bonds, shares and other securities, equipment, technological devices, etc.

Based on the essence of the previous paragraph, in the modern economy, investments are divided into:

1. Financial— presented in the form of financial and credit obligations, securities and cash directly.
2. Real- these are long-term investments in those industries that produce means of production (equipment, technologies, machines). Real investments can be realized with the help of the investment complex (sectors of the national economy that produce production means for construction or provide working capital and fixed assets, represented by equipment, objects of labor, etc.).
3. - funds that are invested in a specific area for capital growth. This category includes (gross less capital depreciation).
4. Private and— capital investments formed at the expense of private investors or the state budget, respectively.

Western economic literature divides investments into:

• Public or private;
• Domestic or foreign economic;
• Based on financial or intellectual value;
• Production (those used to purchase investment goods) and consumer (for personal use);
• Indirect (or portfolio) and direct. As a rule, direct investment refers to capital investments abroad.

We have considered two main interpretations, from which we can conclude what the economic essence and types of investment are: this is an activity that is valuable at both the micro and macro levels of the economy and is important for both the state and private investors. Investment activity for the state is an opportunity to carry out technical and technological re-equipment of enterprises, an increase in the number of incoming taxes to the state budget through taxation of profits from investments, for a private investor - an increase in equity capital and an increase in income. Note that this definition expresses the goals of investment - generating income in one way or another, regardless of the subject and object of investment activity, as well as achieving the necessary social, cultural or economic effect.

Investment classification

In the previous section, we briefly reviewed some of the existing options for classifying investments. Now we will take a closer look at what investments are and what they represent from the point of view of a potential investor.

1. By objects investments distinguish between financial and real investments. In the first case, funds are invested in financial instruments (debt obligations, securities, currency), investments in products made of precious metals or in collectibles. In the second case (real capital investments), capital investments are provided (in real estate or transport), investments in intangible assets (moral rights, know-how, rights to patents, licenses, etc.), as well as injections of funds into current assets.
2. By the nature of participation in the process investments are divided into direct investments (direct participation of the capital owner in the investment process is provided) and indirect investments (carried out through intermediaries in the form of banks, investment funds, currency funds, etc.).
3. By duration of investment distinguish between (up to 1 year), medium-term deposits (1-3 years) and long-term (more than 3 years) investments.
4. By type of ownership allocate funds from private investors, budget (state), foreign and.
5. According to the level of possible risk investments are divided into low-risk - such investment objects, the investment risk of investing in which is lower than the market average, medium-risk (those that provide for the existence of real risk when investing), and high-risk investments (providing for a high risk when investing and possible high levels of profit).

We can draw the following conclusion: the essence of investment is revealed through the signs and objectives of investment, and investments themselves have many varieties, depending on a number of interdependent various factors.

Not a single state with a developed market system is able to effectively carry out economic development without active investment activity. Therefore, it is advisable to consider investments: firstly, as the process of value movement itself, and secondly, as an economic category, that is, relations regarding the movement of value.

The very economic meaning of investment is justified by the goals pursued by the initiative associated with the investment of any funds.

The main purpose of investment is to generate income by placing assets in a certain type of business activity.

Investment goals can be classified in accordance with the strategy that is developed at the enterprise, according to which all investments are divided into the following groups:

• investments aimed at obtaining additional profit;
• investments for the purpose of diversifying activities;
• investments that increase capital;
• investments that help increase the liquidity of available funds at the maximum acceptable level for the investor;
• investments related to reducing business risk.

Achieving the first goal involves the stable receipt of additional income over a certain period of time. The instruments for this purpose are mainly short-term investment projects in which the frequency of financial receipts is calculated. For example, receiving interest on a bank deposit or accruing dividends on securities. Typically, this type of income is taken into account when drawing up a cash flow plan, as it has a direct impact on the solvency of the enterprise and its financial stability.

Investments for the purpose of diversifying the activities of an enterprise serve not only to increase profitability, but also as a means of reducing business risk. So, for example, in the event of a loss of part of the income from the main activity due to the influence of external or internal factors, the likelihood of a complete loss of income during diversification is significantly reduced. The tool for achieving this goal is an investment project aimed at activities that differ from the main type of production (providing services, performing work).

The purpose of investment investments, which is aimed at increasing capital, is achieved I through financial investments in objects that increase their initial value over a period of time. A striking example of such investments is the acquisition of shares of young companies, the expansion of which has a positive effect on the value of their securities. Also, as an example in this case, we can cite an investment project for the acquisition or construction of real estate for the purpose of their further use (rent, resale in parts, etc.).

Ensuring cash liquidity ensures the ability to quickly convert investments into cash without significant losses in value, as well as if it is necessary to quickly implement an investment project. This goal is entirely achievable only if investment (free) funds are invested in financial assets that have fairly stable demand in the stock and other markets.

Purpose of investment, aimed at reducing business risk, is ensured by investing in government programs. That is, as world practice shows, various government debt obligations are the safest. In this case, investing in government priority programs in order to obtain additional income is purely conditional in nature, since the income on government debt obligations does not exceed the current average market level. However, the end justifies the means, so the investment of investment resources minimizes the risk of unforeseen losses, because it is backed by government guarantees.

Shares of other issuers help generate greater income, but in this case there is a risk of not only not receiving a profit, but also of losing investment resources.

Whatever the purpose of investment activity, they are all united by a single direction - the use of available funds to generate additional income. And like any type of business activity, investing is associated with a certain risk, within which the investor operates. Naturally, the higher the expected return, the greater the likelihood of risk increases. Therefore, each investor, when choosing a goal, acts within the boundaries of acceptable risk on an individual basis. Reducing investment risks, that is, achieving the goal is possible when there is a careful selection of objects that guarantee the return of invested capital and profit at the level previously planned.

Investing in such objects not only reduces the risk of new investments, but also has a direct impact on reducing the risk of losses from the main activity. However, we should not forget that reducing risks to a minimum level does not always eliminate the likelihood of negative consequences completely. This goal is designed to achieve an acceptable level of losses while simultaneously ensuring the profitability expected by the investor.

Why should you invest at all? What are they? There are two main goals: making a profit and preserving your capital. Of course, additional goals for specific people can be very different. For example, helping loved ones, charity, providing for oneself in old age. By the way, the latter is now becoming more and more relevant for citizens of the Russian Federation: the latest innovations in pension legislation allow us to say with a high degree of confidence now that you and I cannot expect any sane pension from our beloved state. Alas.

Also, the goals directly when investing are:

— Profit maximization. Profit is usually calculated as a percentage of invested funds for a certain period of time: per year, month, week. The higher this indicator, the more successful the investment can be considered.

— Minimizing the return on investment period. The shorter the period of time in which you can return your initial capital, the more attractive the investment.

— Risk minimization. One of the most important components of the investment process. The lower the risks of losing initial capital and not receiving income, the more successful the investment. A very relevant goal for investors, especially older ones, who cannot afford aggressive, high-yield investment strategies. This parameter is often inversely proportional to profitability, that is, the riskier the investment, the more interesting in terms of profitability it is positioned and vice versa. Although with skillful risk management you can achieve almost 100% level.

For me personally, the following investment goals are most relevant:
1. The most important thing is to preserve and increase capital.
2. Creating assets that generate passive income sufficient to cover all my living expenses.
3. Accumulation of capital capable of ensuring my complete financial independence. This becomes especially important as you approach old age.

And my immediate goals, expressed in exact numbers, are the following:
1. In three years, create a capital of $100,000.
2. During the same time or earlier, reach a passive income of $2000 monthly.

What do I need for this? Oddly enough, the investor’s main resource is not money, as it might seem. What then? The most important thing is time. Unfortunately, I no longer have as much of it as I would like. The second most important resource and tool of an investor is the head. Knowledge, experience, financial literacy, ability to find and make decisions, establish relationships with other people.

To reflect the objective state of affairs, it is necessary to describe the initial conditions with which I begin to solve the assigned problems. So, introductory:

- Capital. Currently approximately $12,000.
- Passive income. About $100 monthly.
— Knowledge in the field of investments. I rate them as quite superficial - there is a lot to learn.
- Experience. Small, but already very versatile.
- Age. I'm 32 years old, it's time to push it.
- Obligations. None. Ideal financial situation in terms of debts.

I plan to periodically publish reports on my progress towards my goals. I don’t know yet how often I will do this. I think at least once every three months. In any case, I think that these are quite achievable within the specified time frame, and a very exciting journey awaits me.

Financial success to everyone!

The term "investment" comes from the English verb to invest, which means "to invest".

In accordance with Federal Law No. 39-FZ dated February 25, 1999 “On investment activities in the Russian Federation carried out in the form of capital investments” investments - these are funds, securities, other property, including property rights, other rights that have a monetary value, invested in objects of business and (or) other activities in order to make a profit and (or) achieve another useful effect.

Economic essence investment is expressed in two aspects of capital movement: 1. investments are embodied in the created investment object of entrepreneurial activity, forming the investor’s assets; 2. with the help of investments, resources and funds are redistributed between those who have them in abundance and those who have them limited.

Meaning investments is that they are a necessary condition and basis for: 1. balanced development of all sectors of the economy; 2. expansion of reproduction; 3. acceleration of scientific and technological progress; 4. ensuring the defense capability of the state; 5. development of financial markets, banking sector; 6. improving the quality of goods and services, ensuring their competitiveness; 7. protection of the natural environment, solving environmental problems; 8. increasing employment, reducing unemployment; 9. international cooperation; 10. development of the social sphere (education, healthcare, culture, sports, housing construction, social security, etc.).

Goals investments can be: 1. the company's desire to increase profits; 2. expanding the scope of the company’s activities; 3. desire for prestige, social influence, power; 4. solving social problems, for example maintaining and increasing jobs, reducing unemployment, increasing the cultural and educational level of people; 5. solving environmental problems, etc.

4. The investment sphere is the basis for the reproduction and development of the economic system.

Investment activity expresses the investment of investments in a business and the implementation of practical actions to obtain profit or other useful effect. It can be aimed at internal and external development of the enterprise. Investment activities aimed at internal development include: replacing or maintaining the level of operation of existing equipment; expansion of production capacity, increase in product output, including new types; reconstruction of existing production; expenses for research, development and technological work, etc. Investment activities aimed at external development include: acquisitions of other companies; acquisition of shares of third party issuers; contributions to the authorized (share) capital of other enterprises; placement of capital abroad; environmental protection, etc. The transition of other investment companies to external investment involves the implementation of the following operations.

Acquisition of other companies - the purchase of a controlling stake in a third-party company for the following reasons:

An attempt to monopolize the market or its individual segments; supplementing the missing link in the technological chain, placing temporarily free funds in financial instruments of the money market and capital market; strengthening partnerships, an attempt to change or expand the scope of activity. The purpose of purchasing equity securities from third-party issuers is to invest funds to obtain stable current income (in the form of dividends and interest) without performing any activity. This strategy is less risky, but also less profitable. Investment activities are aimed at increasing the efficiency of the enterprise, and ultimately at increasing profits and its market value.

Investment goal– this is where any type of investment begins. Experts believe that without this it is impossible to achieve financial goals. And investing without goals is no longer investing.

The goals of investment activities are the financial problems that the company seeks to solve. The set goals determine the set of investment instruments and form the investment horizon, that is, the period for which the investor is ready to invest.

Main investment goals

The most common investment goals include:

• Saving money for big purchases in the future.
• Increase in current income.
• Accumulation of funds to ensure a comfortable retirement.

Let's look at each goal separately.

Saving money for shopping

The most common investment goal is to preserve your financial resources to make large purchases in the future. Very often, people are forced to save money for years to buy their own home, car, pay for children’s education, buy an expensive trip, or open their own. If the final amount of money is known, then you can choose the type of investment with which you can achieve your goal. For purposes such as purchasing real estate or paying for your children's education, it is better to choose an option with minimal investment risk. You shouldn't risk your savings. The best option is to keep money on deposit in a bank. For all other purposes, investments in mutual funds are suitable. But this option has certain risks. An investor cannot predict the final outcome in advance.

Increase your income

A fairly common investment goal in Russia is to increase current income. Many fellow citizens do not risk investing their money in long-term investment projects. They prefer to receive a stable additional income and spend their earnings on current expenses. This goal of the investment project is typical for retirees who are looking for an additional source of income. You can increase your current income through interest and dividends. Investors of retirement age choose projects that guarantee high income with minimal risk. Their pension benefits are less than the income they received before retirement.

Saving for retirement

For Russia, such an investment goal as saving money for retirement is quite rare. Our fellow citizens are accustomed to the fact that their old age is provided for by the state and employers. A completely different situation is observed in European countries. It is absolutely normal for their residents to invest in order to accumulate pension payments. You must understand how much pension the state can guarantee you. Will this benefit be enough to meet your needs? If you are not confident in your comfortable old age, then you need to create an individual investment program. And it is important to remember that the earlier you start investing, the higher the chances of saving the required amount of money.

General goals when investing

The listed investment strategic goals are not the only ones. For Russian reality, such a goal as preserving one’s savings from inflation and receiving income that will cover possible losses from the devaluation of the national currency is very relevant. It is very important that your investment goals are clearly defined and achievable.

The objectives of the investment process depend on the following factors:

• the age and life goals of the investor;
• the level of income and stability of the investor’s financial condition;
• the level of financial literacy and life goals of the investor;
• level of projected income;
• what level of risk is acceptable for the investor;
• psychological characteristics of the investor.

Let's look at choosing an investment goal using a separate example. A successful businessman plans to complete his entrepreneurial activity in five years. By this time he expects to receive a certain amount of money. For a businessman, it is enough to receive 50 thousand dollars. Thus, the investment goal chosen is to save $50,000. To achieve his goal, he agrees to invest in a portfolio that is 50/50 composed of speculative stocks and blue chips. The projected income level is 25% per annum. He plans to reinvest the income from the investment in full for the entire 60 months.

So, we can summarize:

• Expected profitability – 25%.
• The acceptable level of risk is 50% speculative stocks and 50% blue chips.
• The principle of income distribution is that everything will be reinvested.
• Thus, the investment goal is clearly defined, all criteria are indicated.

Experts note that the more precisely the investment goals, the level of desired income and the acceptable level of risk, and the principle of income distribution are set, the easier it is to develop an investment plan and strategy to achieve the goals. Every investor who begins his activity in the investment market needs to remember this. If you do not do this, you will not be able to complete the assigned tasks.

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