Private investment is an asset that is not listed on a company's stock exchange. They hold a certain share in the capital of the company. Investments involve a long-term investment of money for subsequent profits, they are also the main part of the existing structure of the economy.
Private investment is…
Investments can be categorized and include buyouts that are funded, capital to fund newcomers, capital to grow.
Private direct investment has a real difference from loans. It lies in the degree of risk of a person who makes an investment, since it is necessary to regularly repay loans and interest on them within a specific timeframe. In this case, income is possible only when the money not only leaves, but also comes back. Investments at a loss can simply disappear.
Investment activity involves constant investment and getting money back, against whichprofit appears.
Classification
There can be many classifications of private domestic, net investments.
First of all, they differ in the object 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 repairs, investing in intangible areas, investing in human capital.
- Money private domestic investment - various securities, loans or leasing.
- Speculative investments - currency, a variety of expensive precious metals, as well as securities (shares, certificates, etc.).
Private investments are those investments that differ in their objectives and goals:
- straight;
- portfolio;
- non-financial;
- real;
- intelligent.
Investments are differentiated according to the terms of investment - short-term, long-term and medium.
According to the chosen option of ownership of the investment assets provided:
- private investment;
- government;
- foreign;
- public-private investment.
Basic concepts
Venture financing involves long-term investments of capital that carry a high risk. Most often, the option is applicable for updated small companies that havehigh 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 it can also be provided with medium-sized private investments.
Leasing is a certain type of financing, which involves the transfer of property for rent for a long period of time, and the object can buy it back or return it.
The usual scheme of the leasing process assumes that a person will eventually acquire the property by buying it. The period of validity of the leasing agreement can be varied, as it all depends on the amount that pays for the property.
In addition to the direct leasing described above, there is also a returnable one, which is characterized by the fact that an object that has high-quality equipment or an item can at any time sell it to a leasing company. The company will simply resell the property to the same person, and in the end it turns out that he can use both the property and the money received for it.
Types of private investment
Private investment is a concept that is similar to gross private investment. They mean the evaluation by a specially trained person of all property that was acquired to increase one's own production.
The latter implies the difference between the gross investment and the price of equipment already used, which can no longer be in production and leaves it forthe same period of time.
Dignity
Private investment is an economic phenomenon that has its advantages and disadvantages.
The merits of private investment are conditionally assessed by the following points:
- Investment is the main form of receiving passive income over time. If the money is invested in the right way, then the profit comes very quickly, and the investor almost does not strain in the process. Investment is a profitable business.
- Investing is great for finding different sources of income. Working in this way, everyone can easily find more than one or even two sources of profit. This is especially true of pure private investments, which provide an opportunity to do everything with minimal risk.
- Investing expands the circle 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 to your advantage. Investors are mostly out of the office, as they can resolve all issues by phone or via the Internet.
Flaws
- It is quite possible to lose a lot of money, as there is always a risk in private investment. Private investment is a somewhat risky way to make money. And it doesn't play a rolehow developed an enterprise is, it can always lose all finances and even go negative.
- The process of making a profit from investing is quite complicated, and the profit is not guaranteed. An investor can only predict the likely outcome of an investment, but he cannot be completely sure. Sometimes it seems that the deal will be successful, but in the end there is no money.
- When starting a business related to investment, 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 sometimes long period.
Also, the work of an investor is quite hard, 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 nerves of steel and temper, as well as a firm and determined character.
Attraction
Attracting private investment is necessary when an investor does not have enough finance to increase their production. This option serves as a real solution to a serious problem for the company.
The existence of scammers among today's investors has affected the responsiveness of foreign investment. Companies do not want to take risks and lose money, so they may ignore an offer even from an experienced firm that has been in the business for a long time.
In order for the idea to succeed, it is necessary to clearly understand how developed the company is, what kind of help it needs. This is necessary so that at each stage of the development of the enterprise to attract different privatean investment to always stay afloat.
