What is a real investment?

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

Very often, specialists literally understand investment as a way to part with a significant amount of money in order to receive significant income in the future. All monetary investments are conventionally subdivided into real and financial ones. In this article, we will take a closer look at such a type as real investments.

Definition

Real investments are some capital that is invested in tangible assets. The financial option is different in that it is a contract drawn up on paper (for example, bonds, stocks, etc.). The investor himself determines his goals and, based on them, chooses one policy or another. Of course, before making such a responsible decision, the investor must carry out significant preparatory work, which consists in drawing up a financial project, calculating possible risks, and studying the level of profitability. At the moment, experts believe that it is real investments that are stable, but their profitability does not always meet expectations.

Shapes of realinvestment:

- New product lines.

- Gradual expansion of production volumes or increase in the range of goods.

- Creation of such working conditions under which the enterprise itself will bear slightly lower costs. This category includes the following parameters: modernization of equipment, improvement of technological solutions, improvement of working conditions for employees, use of completely new materials. Such real investments are primarily aimed at increasing the competitiveness of the entire enterprise as a whole, therefore, its position in the market will be somewhat higher compared to other organizations.

- Financial investments necessary to create such a system of labor protection and environmental safety, which will comply with all regulatory requirements that currently exist in the territory of any country. The main task of this kind of investment is to meet the requirements and regulatory conditions that the state puts forward.

Management of real investments. Main advantages and disadvantages

According to experts, today real investments are financial investments in innovative equipment, technologies, intangible assets, which will subsequently improve the work of employees, increase sales, reduce the cost of goods, which, ultimately, always leads to an increaseinvestor income. The main disadvantage is considered to be the urgent need to study the market and all related nuances that are directly related to the company's activities. If you look at it from the other side, then the profit from real investments (long-term) can be fully received only after a few years, but only if the climate in the country is favorable from a financial point of view.