Investment is a broad and multifaceted concept. In general, investments are investments of funds with the aim of making a profit. Investments allow expanding the material base, creating new enterprises and pushing the boundaries of existing ones.
Instructions
Step 1
Don't confuse investments with short-term financing. In contrast, investments involve long-term investment. At the same time, funds can be invested both in real assets (real estate, business objects, copyrights, etc.) and in financial (stocks, bonds, shares, funds). Investments are equity (stocks, share in a business) and debt (bonds, loans, credits). From this point of view, a person who has taken out a loan from a bank becomes an investment object, an “asset of the bank,” bringing him a profit.
Step 2
Please note that the need for investment always arises when starting a new venture. In addition, the existing company can invest in new equipment, a production line that will generate additional income. Investments can be made in upgrading worn-out equipment to improve efficiency, reduce costs, and thereby increase profits. Investments can also involve significant costs of promoting a product to market in order to increase sales. We are talking about investments in advertising, the study of the product market, consumer demand. These activities allow you to increase sales, and therefore lead to an increase in profits. So, the ultimate goal of investing is always making a profit.
Step 3
Remember that investments can be direct or indirect. With direct investment, investments are made directly by participants in the investment process, i.e. owners of capital. Indirect investments are attracted free funds of citizens, enterprises, organizations by issuing and selling securities.
Step 4
Do not forget that the success of an investment depends entirely on future events. You cannot rely on past conditions and experience, it is possible that they will change and will not apply to the new project. In the process of investing, carefully analyze the changes in individual variables, such as sales volume, prices and cost of raw materials, etc. After all, investments are always a certain risk, and the longer the investment period and their volume, the higher the risk level.
