Investments are such funds that can be invested in a seemingly profitable event in order to make a profit in the future. Economics as a science considers the concept and types of investment. It is customary to include here not only currency notes but also securities and rights that can be estimated in monetary terms. In addition to profit, investments can be a source of other beneficial effects.
The sources of investments
As the main sources of investment, you need to allocate the funds that the entrepreneur receives when implementing the project. In addition, most types of investment consider taking into account money coming into the organization from outside. As the specialists of FinanceWorld mark, the main sources of the investments here are:
- Investor money, from which the share capital is formed;
- Subsidies provided free to a business entity from foundations, organizations, individuals. This includes the flow of foreign investment by type;
- Debt obligations involving loans, loans to be returned in a strictly specified period of time, subject to key conditions;
- The property transferred to the company on the rules of leasing, and subject to return on the conditions declared by the contract;
The key to success
If the types of investments are small, insignificant, investment does not play a role in the enterprise as a whole. Big sums will be reasonable to use for the construction of new facilities, reconstruction of existing ones, as well as for updating the technical stuff of the enterprise. Money is spent on equipment, tools, surveys, project creation, and other large-scale events that allow the company to develop with confidence taking into account the standards of the present and forecasted future. These types of investments are essential for a successful business. Additionally, specialists distinguish the so-called capital-forming investments. These types of investments are capital investments.
Investments as work
For a person with money, it is important not only to know about all types of investment, classification of them but also to be able to correctly use this knowledge in practice. This involves investing in existing or projected enterprises and it is called investment as well. If it aims to create, support fixed assets, then it involves working with capital-forming investments. The sources for the project are investors. The customers and performers, users, suppliers are all involved in the process. Individuals, legal entities, domestic and foreign take part in these activities. In a fairly large project, the investment component is implemented at the state or even at the international level.
Difficult task
The system of the classification of the investment is pretty complicated. It is allowed to allocate it into groups. Sometimes, we can call them simply small, large; dependent, independent investments.
Property
These are the types of investments (foreign and domestic), which are involved in the production process. The money is directed to the purchase, modernization of equipment, accessories, used to create stocks of components, consumables. Such investments are directed to the creation and maintenance of buildings and constructions. Property investments can grow and develop.
It assumes that the person or a company invests precisely in the financial component of the enterprise. In particular, he can buy debt rights or invest in the right to participate in the affairs of a company. This is realized through securities, assets in banks, loans.
Investments: intangible assets
These should include money invested in the training and attraction of highly qualified personnel. These are funds aimed at improvement, research, marketing, and promotion of goods in the domestic and foreign markets.
Potential intangible investments involve investing money in the future. A distinctive feature of potential and real investments of this type is the difficulty of correlating investments and results. It is not easy to estimate the future result, which complicates the analysis of the effectiveness of investing in a project.
