Investing: what is it, what are the benefits and how to invest correctly
Hello, dear readers of the financial magazine “RichPro. u "! Today we will talk about investing in business, start-ups and other business projects, where and in which business areas it is better to invest.
By the way, have you seen how much a dollar is already worth? Start making money on the difference in exchange rates here! or on cryptocurrencies (bitcoin) here!
After reading this publication, you will know:
- To invest in business - the main advantages and disadvantages;
- What types and methods of investing in business exist;
- What are the directions this year it is better to choose for investing in startups in Russia;
- What are the risks of such an investment and how they can be mitigated.
At the end of the article, you will find answers to frequently asked questions about business investment.
The publication will arouse the interest of everyone who is concerned about the problems of investing in business. It will be useful for both beginners and those who already have experience with such investments.
Why invest in business and is it worth doing ????
Investments in business can provide an investor with a comfortable existence. Such investments allow you to receive passive income. This is an activity that, if it is carried out correctly, requires a minimum investment of effort, but at the same time provides a stable profit.
Most people living in the former Soviet Union have a misconception about long-term investments that can provide a stable income. They believe that only those who initially own significant capital, certain talents and luck can become an investor. In addition, our citizens are confident that investing in business is risky, especially in the current crisis situation.
As a result, most of our compatriots do not take any steps to increase their well-being. They only dream all their lives about getting big money with a minimum of effort.
In fact, everyone has a chance to become financially independent. To do this, it is enough to radically change your thinking, switch to the financial field, stop working for others and start working for yourself.
Investing in the development of your own business allows you not only to receive income, which practically does not depend on the time and effort spent on it, but also to gain confidence in the future. Moreover, high-quality investments make it possible to implement even seemingly unrealistic ideas and plans.
Hello everyone, dear readers of the AFlife blog. u! For most ordinary people, the word "investment" is associated with complex financial processes and big money. This is partly true. Investing really requires a serious approach and a certain amount of knowledge. But do not think that only people with an exceptional talent for conducting financial affairs can become an investor and make a solid profit. Anyone can profitably manage their funds and increase them if they understand the whole essence of the process. Today we will talk about what investing is in simple words and how to properly manage your money in order to make a profit.
What is investment
Investments are investments and use of their material and non-material resources to increase them and make a profit.
A clear example is a deposit opened in a bank. Funds are saved and bring a certain income every day. Its value depends on the amount of the deposit and the interest rate. Also, an investment is the purchase of a share in the capital or a block of shares in a company. An investor invests money in a business and receives his dividends for this. At the same time, his invested funds are saved as a specific asset. Separately, I would like to highlight investments in their own professional skills and abilities. By spending time and money on additional education, a person expects to receive a higher level of income in the future.
It is believed that the only and ultimate goal of any investment is exactly profit. In fact, there are several main tasks:
- Save existing resources. It would seem that do not touch the money, hide it away in a box and live in peace - the capital is reliably protected. But in fact, even money hidden in the safest place does not cease to be exposed to the impact that significantly reduces its real value - inflation. In just a year or two, capital loses almost a third of its ability to pay. A good example is forgotten stash, which after a while has almost no value. Therefore, investors often invest in projects with minimal risks and low returns, but with a high level of reliability.
- Making a profit. If there is an opportunity to put funds into business and increase them, then why not use it. Many investors prefer to receive a stable, albeit not maximum income, but with less risks. It is important to understand that the more likely it is to hit the jackpot, the greater the risk of burnout.
- Speculation. In simple terms, "buy and sell". Earnings are the difference in price. These are most often not long-term projects and they carry great risks. It is not a fact that everything will be able to turn out as it should and come out with a plus. But if the plan works out, earnings can be a significant amount.
Investments never imply a 100% guarantee of their payback and profit. They only give a chance. And the higher the predicted profitability of the project, the greater the risk. Therefore, investors need to carefully study everything and pre-evaluate the investment object.
An investment object is any tangible or intangible asset in which you plan to invest. An investment entity is a legal entity or an individual performing operations with an investment object (funds, investors, management companies, etc.).
There are many types of attachments. They are classified according to a number of characteristics. The most significant is the investment object, according to which there are several types of investments:
- Real investments. This term implies an investment in something tangible. For example, the purchase of real estate for rent or a share of a business, the purchase of land, production equipment, special equipment for the provision of services, etc.
- Financial investments. This group includes all the processes associated with investing in securities and the use of various financial instruments.
- Speculative investments. Investing money in a short-term project. In other words, the purchase of an object for the purpose of its resale and profit from the difference between the cost of acquisition and sale.
- Venture investments. This is an investment in modern, promising projects. Usually these are new scientific developments or startups. The result of such investments will be noticeable only after years, or may not appear at all. But if everything goes well, the return on investment will be huge.
What are the benefits of investing
Not working and getting money - isn't it a dream? For some people, it has become a reality, and all thanks to passive income. This term refers to cash receipts that do not depend on the daily activities of the recipient. Passive income includes interest on a deposit, rent for leased property (residential or non-residential premises, vehicles, equipment, etc.), dividends.
It is the receipt of passive income, and in the future - material stability and independence, that is the main advantage of investing. The invested funds also have advantages for the investment object:
Why and how to attract investment is of interest to many novice startups. After all, not every “green” businessman can create a business at his own expense without the involvement of outside help.
When there is an idea, but there is no way to implement it, then you can:
- Sell the idea to some cool dudes.
- Get a loan.
- Fly to Silicon Valley.
- Or start attracting investments in your business here and now.
If you have a business idea or prototype that has been waiting for a generous investment for a long time to "live" - read the step-by-step instructions for finding financing, in which everything about investments, their types, myths about investors and mistakes of entrepreneurs ...
What are investments and their purpose
Investments are no longer a luxury, but a necessity in order to be confident in the future, to live the fullest possible life, not to live in poverty in retirement. Therefore, both workers and businessmen carefully think about where to send their assets to "work". And they think twice more when it comes to investing in startups.
Investing in startups pays the best dividends.
Silicon Valley (or Silicon Valley) is the epicenter of projects and investors who participate in an endless cycle of ideas and money. It was here that Hewlett-Packard (HP) appeared in a garage near Stanford and Google at Stanford itself. And later, attracting investment in your business became the most popular activity here among ambitious people who came and novice businessmen.
For a project to be successful, finding an investor is not the main task. It is necessary to attract investments from individuals and individuals, and not just from a single person, in order to quickly raise the amount to launch a startup.
The real goal of attracting an investor
Attracting investments from different people protects a new business from negative consequences if one of the business investors leaves the project.
The more you attract investments at the initial stage, the more investments will come at each subsequent stage.
I agree, many will now begin to say that it is possible to combine these two directions and will undoubtedly be right. Business and investing in reliable tools is good, but let's try to understand in detail the pros and cons of each of these areas.
On the pages of my blog, I tell you about investing in stocks, bonds and other instruments, but recently I have become closely involved in business, which allows me to compare the two areas of income. Today I want to tell you what is more profitable and what brings more difficulties.
I want to start by thinking about what is easier, investing or building your own business? I will say right away, without too much water, nothing is easier and there is nothing difficult in these areas. Everywhere there are difficulties and everywhere there are advantages.
Investments require attention and money, as well as take a lot of time and nerves. Business requires both, and much more. But each of these areas has its own charms and prospects. These two directions can perfectly interact with each other and even complement, but let's talk about everything in order.
Investments as a form of making a profit
Investments require an initial investment in order to start earning. Yes, this is the main disadvantage of this direction. You will not get profit until you invest a large amount of money. Agree, it is difficult to live on the profit from a portfolio of 10,000 rubles. You need to invest about 500,000 rubles to feel at least some income.
In business, by the way, the same story, business constantly requires investment of money. But in business, you can start with a much smaller amount to make money. There are plenty of examples when people invested very little and received colossal profits.
An example would be the banal sale of Christmas trees for the New Year (the investment is minimal, the "exhaust" is huge). With investments, this will not work. Here you need to be able to wait, or invest the entire amount in very risky assets, which would be a big mistake.
Also, in business, you can contact investors or for a loan from a bank to start your own business. By launching your project, you will be able to gradually return money from profits. It is extremely forbidden to use borrowed or credit money in investments, since you can lose everything in one day and it will be very difficult to return it.
Business as the main source of income
Business is an interesting, long-term activity that can replace your work and investment. A well-run business can bring you much more fun and money than just investing money in anticipation of possible returns.
In order to achieve this, you will need to invest a lot of time and effort in the development of your business. I wrote about how difficult it is to do business in one of my previous articles. Read an article about business ...
Over time, when you grow to the level where there will be free money, you can easily start investing and this will be the right decision, money should work. Why it is worth investing money in stocks and other instruments, I wrote in this article. Read the article on profitable stock investing ...
What is an investment, where can you invest money? Today investors have a huge choice: banks, the stock market and much more are at their service. It would seem that you cannot figure it out on your own without professionals. But we will still try to share some ideas with you.
First idea: investments, where to invest profitably and reliably
Let's start with the most important immutable rule of the financial world, which is worth remembering: the higher the yield, the greater the risk. This law always acts like the law of universal gravitation on our planet.
It should be taken quite literally in many cases. If the bank offers 1-2 percent in foreign currency, then most likely you will get your money back. And if the company is ready to lend someone's hard-earned money at 100-200 percent, then definitely not. Because if there was a guaranteed opportunity to receive such income, all financial institutions of the country and not only would line up for this company. There are no miracles.
Second idea: deposits in banks are not always profitable
You don't have to think about anything and take the money to the bank. Then in a year it will be possible to get about 4-6 percent per annum in rubles and no more than 2 percent in foreign currency. Of course, this is an easy way, but is it always correct?
The bank is suitable when money must always be at hand. The safety of deposits within certain limits is guaranteed by the state. It would seem, what could be better? However, the downside of a high level of reliability, as always, in finance is low profitability, which rarely covers inflation, and even less often - the devaluation of the national currency.
Idea three: investments for different periods
When making investments, deciding where to invest money, we always hope to get it back, and with some advantage. At the same time, the investor is often ready not to withdraw his deposit for a certain time, of course, if the situation remains predictable and reliable. The longer the investment period, the greater the potential risk, and therefore the higher the profitability.
You can use this idea if you select more long-term financial instruments. As a rule, the stock market can fluctuate significantly over the course of one day or week or even a month. Therefore, it is better for non-professionals to forget about short-term investments right away. However, in a more or less long term, the market will necessarily level out. And the largest companies, when fast, when slowly, but still continue to develop.
Thus, it turns out that if there is an opportunity to wait, the market will recover late or early, even if at some point the quotes decrease. At the same time, it is possible to receive an appropriate reward for the risk: the most successful investors earn both ten and twenty percent per annum, but, of course, without any guarantees.