Private investments are assets that are not on the company's stock exchange. They occupy a certain share in the capital of the company. Investments involve a long investment of money for subsequent profit, they are also the main part of the existing structure of the economy.
Private investment is ...
Investments can be different in categories, they include repurchase, which is financed, capital to finance newcomers, capital for further growth.
Private direct investment has a real difference from loans. It consists in the degree of risk of the person who makes the investment, since it is necessary to regularly give loans and interest on them at specific times. In this case, income is possible only when the money not only leaves, but also comes back. Investment at a loss can simply disappear.
Investment activity involves the constant investment and receipt of money back, against which the profit appears.
Classification
There can be many classifications of private domestic, net investments.
First of all, they differ in the object that they invest:
- Real investments that involve the acquisition of real capital in any form - in the form of material goods, payment for construction or restoration in the form of repair, investment in intangible spheres, contribution to human capital.
- Cash private domestic investment - various securities, loans or leasing.
- Speculative investments - currency, a variety of expensive precious metals, as well as securities (stocks, certificates, etc.).
Private investments are those investments that differ in the objectives and goals pursued:
- direct;
- portfolio;
- non-financial;
- real
- intellectual.
Differentiation of investments is carried out according to the investment period - short-term, long-term and medium.
According to the chosen option of ownership of the provided investment assets:
- private investment;
- state;
- foreign;
- public-private investment.
Basic concepts
Venture financing involves long-term capital investments that carry high risk. Most often, the option is applicable for updated small companies that have high potential, as well as good technical equipment. They also focus on the production and production of highly scientific products. If a company wants to develop and increase production volumes, then medium-sized private investments can also provide it.
Leasing - a certain type of financing, which involves the transfer of property for rent for a long period of time, and the object can redeem it or return it.
The usual scheme of the leasing process assumes that a person will acquire property over time by purchasing it. The period of validity of a lease agreement can be varied, since it all depends on the amount that pays for the property.
In addition to the direct leasing described above, there is also a leaseback, which is characterized by the fact that an object having high-quality equipment or an item can at any time sell it to a leasing company. The company simply resells his property to the same person for rent, and as a result it turns out that he can use both the property and the money received for it.
Types of Private Investments
Private investment is a concept that resembles gross private investment. They mean an appraisal by a specially trained person of all property that was acquired to increase own production.
The latter implies the difference between gross investment and the price of equipment already used, which can no longer be in production and leaves it for the same period of time.
Advantages
Private investment is an economic phenomenon that has advantages and disadvantages.
The advantages of private investment are conditionally evaluated by the following points:
- Capital investment is the main form of generating passive income over time. If the money is invested in the right way, then the profit comes very quickly, and the investor is almost not straining in the process. Investing is a profitable business.
- Investing perfectly helps to find different sources of income. Working in this way, everyone can easily find not one or even two sources of profit. This is especially true of net private investment, which provides the opportunity to do everything with minimal risk.
- Investing expands the range of interests and helps to acquire new knowledge. The process itself is quite interesting for many people. By investing small amounts of money, it becomes possible to get financial erudition, as well as a good income.
- There is a lot of free time that you can spend for the benefit of yourself. Investors are mostly not in the office, as they can solve all issues through calls or via the Internet.
disadvantages
- It is quite possible to lose a lot of money, since there is always risk in private investment. Private investment is a risky option in some ways earning. Moreover, it does not matter how developed the enterprise is, it can always lose all finances and even go into the red.
- The process of making a profit from investing is quite complicated, and the profit is not guaranteed. The investor can only predict the likely outcome of the investment, but he cannot be sure until the end. Sometimes it seems that the transaction will be successful, but there is no money at the end.
- When opening a business related to investing, you need to invest in your business. This is necessary so that the company always has free money that needs to be frozen and held for a long period of time.
Also, the work of the investor is quite difficult, which causes stress and depression. There is always a constant fear of losing finances, and living with such fear is very difficult. To become an investor, you need steel nerves and temper, as well as a solid and decisive character.
Attraction
Attracting private investment is necessary when the investor does not have enough finance to increase his production. This option is a real solution to a serious problem of the company.
The existence of fraudsters among modern investors has affected the speed of response from a foreign investment. Companies do not want to risk and lose money, so they can ignore the offer even from an experienced company that has been in this business for a long time.
In order for the idea to succeed, you must clearly understand how developed the company is, what kind of help it needs. This is necessary in order to attract various private investments at each stage of the enterprise’s development in order to always stay afloat.