Main investment assets: instruments

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

What are the main investment assets? In short, these are monetary or financial resources, tangible property, raw materials, materials or intellectual property that belong to a certain person. But this is clearly not enough.

Introduction

Perhaps everyone reading this article knows that investments are investments aimed at increasing capital or obtaining a certain benefit. Based on this formulation, it is not difficult to reach the logical conclusion that an asset is an object to which material we alth is directed. This is done in order to achieve the goals that the investor sets for himself. The main property of an asset is its ability to ensure the fulfillment of its tasks. So, if the initial goal is to get the maximum possible income, then it is necessary to ensure that it has high profitability. If the task is to obtain a certain social effect, then investments should provide it. There are many approaches to ensure a successful investment. For example, you canact independently, studying and analyzing information. Or, as an option, invest in the assets of an investment fund, so that professionals are already thinking about where to send the funds. That is, there is always a certain set of options. The preferred activity follows from them.

So what are the main investment assets?

There are several classification approaches. The most popular is the following:

1. Tangible assets. These include real estate, equipment, inventories, raw materials, materials, jewelry.

2. financial assets. These are cash, bank deposits, bills, bonds, shares.

3. Intellectual assets. They understand copyrights, licenses, patents and much more. An investor can provide a basis for developing a certain technology, writing a song, a book, creating a unique product. After that, thanks to the consolidation of property rights, it is possible to receive passive income for life.

4. Business assets. Investments in them are characterized by high profitability and significant risks. The most common option is a franchise, that is, the use of a proven strategy and work under the name of a promoted name (brand), which is often accompanied by partner support. But building a business from scratch is also possible. In this case, one should assess the associated risks, prospects and make decisions based on the data obtained.

What do you needattachments?

There are a lot of options for possible goals: income generation, capital preservation, advertising, PR and much more. For each of them there is a range of acceptable instruments. Some of them are effective for generating income, while others are suitable for saving capital. At the same time, the more literate the population in economic and financial terms, the higher the standard of living in the country, as well as the more potential assets that can be used for investment. For those who do not want to spend time studying the nuances and constantly monitoring the market, it is possible to use the services of special organizations - mutual funds. There are others, but these are the most popular and are also considered the first step in investing. Mutual fund assets are managed by professionals, who usually receive a certain percentage of the income.

How to choose, in favor of what to choose?

Evaluation will help in this difficult matter. It is necessary in order to select exactly the asset that meets all the requirements of the investor. It should be noted that the evaluation procedure can only give a quantitative picture of the situation. Therefore, it should not be limited only to it. So, if the potential profit is impressive, and the value of the asset is high, then this is not at all a guarantee of the success of investments. For example, society may additionally treat him negatively. This is observed when starting production facilities that poison the environment. Wednesday.

Assessing the asset

How to do it? In short, the valuation of investment assets should be carried out according to the following principles:

1. Take a critical approach to the collection and analysis of information that will be used.

2. Carefully compare the results of the assessment with the statistical data of enterprises operating in the market.

3. To get correct numbers, use several mathematical evaluation methods.

All this will not eliminate the risk, but it is quite possible to reduce it significantly. Among the methods, you can advise to pay attention to:

• evaluation of contingent claims;
• discounted cash flows;
• comparative.

A little about the specifics of different assets

Each species has its own characteristics, due to which their reaction to various external and internal factors, information and news background, political statements and the like differ. Therefore, the concept of investment portfolio diversification was coined. In other words, it is necessary to have a variety of assets in order to reduce risks and minimize losses. In this case, if something went wrong somewhere, then other investments can always compensate for possible losses.

The so-called distressed assets are especially relevant from this position. They arise from business owners, securities, material forms of ownership due to financial difficulties or even bankruptcy. Distressed investment assetsare of interest, if only because they sell them at a low price. But it is better to work with them for experienced professionals who are well aware of the market situation. After all, they are highly likely not to make a profit, but only one loss (partial or complete).

A little more about classification

Attentive readers may have noticed that the investment assets discussed earlier are divided on a too general basis. To understand what is being discussed, this approach will do. But for an in-depth study of the situation - no. Therefore, other approaches are also used. For example, grouping assets into categories (also known as classes). Stocks, bonds, commodities and currencies stand out here. Each asset class reacts differently to incoming economic news. They can also be classified based on certain specific features. For example, by industry (energy companies, agricultural enterprises, and so on). If you buy shares in the financial markets, they are considered as direct investments. Whereas bonds are fixed income investments. At the same time, real estate can also be distinguished as a representative of an interesting situation. Why? The fact is that they are both a type of tangible assets and a category for investment. And so it can go on for a very long time.

Working with various attachments

If uncorrelated assets are combined within one portfolio, then in this waydiversifying risk exposure in different markets. This is due to the fact that the price dynamics for them is rarely synchronous. For example, if the value of shares goes down, then the cost of raw materials does not always follow this trend. In addition, different classes do not react in the same way even to the same news: some may rise, others may fall. It should be noted that distressed assets often arise during economic downturns. Their value falls even though there is no correlation between them. But at the same time, if there is no long work experience, you should start small. In this case, there are two approaches to which attention should be paid first of all: individual and collective-professional. Let's take a look at each one.

Individual investing

In this case, you have to act independently, taking all responsibility, losses and income. In the Russian Federation, for citizens wishing to master this area, a preferential instrument is provided, which is called an “individual investment account”. In the case of him, for example, tax breaks are provided. This is done in order to interest a larger number of citizens. For example, the direct benefit in the most optimal case can reach several hundred thousand rubles - you must admit, this is very good. The most popular reason for such investments is to increase savings. This is achieved in two ways - by increasing the value of property or by paying interest on investment assets. If we talk about abroad, then there is very common earnings on the price of shares, bonds and othervaluable papers. Whereas percentages are seen more as a nice addition. This accounting for investment assets is due to greater instability, so these two factors are more or less equalized.

Collective professional investment

Here, the best example would be the activity of a mutual investment fund (PIF). What is its essence? There is a group of people who want to increase their capital. But there is no desire to manage it. In this case, they create an association (without registering a legal entity), deposit funds and transfer them to trust management of professionals. They purchase the assets of the investment fund. After a certain time period (usually a quarter), the results of the activity are summed up, and all income (losses) are divided among the participants in proportion to their contributions. Investment management of this type of assets has its risks (fraud, incompetence), but with due care and careful selection, it is well suited for beginners.

What are portfolios made of?

When this issue is resolved, the chosen strategy has a great influence: safe, moderate, risky. Asset management of investment funds in the first case consists in investing in, albeit not highly profitable, but reliable instruments. Usually - allowing to cover inflation and bringing a few percent of profit per year. In this case, the probability of losses is minimal. Whereas the risky strategy involvesinvesting in dangerous assets that can potentially bring big profits in the future. Most of them turn out to be an unsuccessful place to allocate funds. But with a competent and successful approach, it is possible to find a project that allows you to provide hundreds and thousands of percent of the profit. This is a desirable goal for any investment company. An asset of this quality allows you to significantly improve your financial situation and get a significant gain. But all this comes with significant risks.

Conclusion

So it was considered what the main investment assets are, what specific divisions exist, how certain goals are achieved, certain moments of individual and collective activity and interaction. This is quite enough to get a general idea of the subject of the article.