The topic of investment has been granted a lot of attention lately. This can be explained by one simple reason: in the capitalist world, this is the only factor that can help realize something at an enterprise that promotes its progress. Only with investments is there an expansion of production, the replacement of old equipment with the new, and the opening of new directions and even new companies. Besides, the investment climate also affects the economic situation of an entire country. The paradox of thrift says that preserving capital hinders the development of the economy, while the desire to invest leads to the prosperity of a nation.
To put it simply, investment is the contribution of resources in order to
create and obtain net profit in the future that exceeds
the total initial capital invested.
Investments are classified according to several criteria:
#1. By ownership: private or public.
This distinction indicates who provided the funds for projects or contributions.
#2. By the subject: real, financial and speculative.
The first one involves the purchase of a title, real estate, or patents. Speculative investment is based on a change in the price of assets (fluctuations in the quotations of currencies, or the value of precious metals). Financial investment means dealing in precious metals, shares or currencies.
#3. By the duration of investing
By the duration of investing: short-term (not more than one year), medium-term (not more than 5 years), and long-term (more than 5 years).
#4. By the purpose of investment.
By the purpose of investment: direct investment (commercial or residential real estate), real investment (in the construction of manufacturing or in raw materials), and non-financial investment (intellectual projects and scientific developments).
#5. By the degree of risk.
By the degree of risk: conservative, moderate and aggressive.
Let's take a more detailed look at the introductory article and the basic terms and concepts that are used in this area:
* Assets are everything that can bring profit to an investor: shares of companies, various real estate, and precious metals.
* Dividends are a certain part of the net income of a commercial company that is distributed to its shareholders. This concept does not apply to profits received in investment projects.
* Quotation is the price or fixed rate of an asset or financial instrument for which the transaction is planned.
* A trader is a person who engages in active trading financial markets, operating investors’ money.
* Exchange is a market of various financial assets (currency, gold or shares). It is a legal entity that is a kind of intermediary between investors, sellers and buyers of financial assets.
* Liquidity is a term that denotes the ability of a certain asset to be quickly sold on the market, if necessary.
* A kitchen is an investment company that does not conduct any transactions in the real market, playing against its own clients.
* Aggressive investors are players who are willing to take any risk to get high profits.
* A fiduciary is a person that during the term of the transaction manages assets for a specified percentage fee, but the owner retains the funds.
* A deposit is a certain amount that is deposited in the depository of a bank for safekeeping and can yield income in the form of interest.
And some additional terms for those who have started to enjoy it:
* Hype projects are specially designed investment programs that can bring big income. The overwhelming majority of investors consider them risky financial pyramid schemes.
* A Ponzi scheme is a structure in which investors make profit by attracting new participants. It was actively used in the early 90's, attracting people to making big profit in the minimum period of time (the notorious MMM or Hoper-Invest).
* A manager's offer is an agreement prepared in a special way with an investor, which specifies a percentage (or an amount) of income received, profit distribution rules and other important provisions.
* Investment funds are specialized companies that attract money investments with their further placement in PAMM accounts, start-ups, the participation in stock transactions and other projects.
Some introductory information which, I hope, was useful! Follow the updates; we will learn together!