Financial investments and their features

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The productive activity of organizations that are not investors has a functional focus that defines it as a priority form of making real contributions. The choice of such an option is directly related to the need for the efficient use of appropriate resources generated for selected projects.

Financial investments are ongoing business activities to acquire securities, corporate rights or other monetary instruments. Investing in them free funds can provide for various purposes. The main ones are the following: the transformation of savings into highly liquid property documents, the receipt of possible future income, as well as control over the issuing institution. In addition, financial investments are a form of application of the organization's free capital. It has some features:

- allows you to make external investment both within the country and abroad;

- enables the company to achieve strategic goalsdevelopment, while saving their own funds;

- requires a minimum amount of time to take the necessary management actions (compared to real projects);

- is done in the later stages of an organization's development, after its needs are met;

- financial investment - an independent type of economic activity;

- allows you to invest in speculative instruments without risk and pursue a policy as a serious conservative investor;

- needs the speed of making various decisions in the process of financial transactions.

To solve the problems of evaluation, formation and implementation of sponsorship policy, it is necessary to take into account the classification characteristics of deposits. Forms of financial investment are divided into two main groups.

By type of property:

- public financial investments are investments made by authorities and management at the expense of borrowed funds and extra-budgetary funds, as well as enterprises at the expense of their own capital;

- private deposits are made by non-governmental organizations, citizens, societies and unions, business associations and other legal entities operating on the basis of collective property;

- foreign financial investments are made by legal entities of other countries and other states;

- total investments refer to citizens of thator another country of which they are residents or not.

By ways of participating in the investment process:

- direct investments are operations of economic activity that provide for the investment of capital in the authorized capital of a legal entity (funds are exchanged for corporate rights);

- portfolio investment involves the purchase of securities and other financial assets in the stock markets.