What is Investment:
The word investment refers to investing, that is, to the action and effect of changing or using something in a different way. It is a word that originates from Latin investment.
The term inversion is used in different ways, for example, in some cases to indicate that a person is homosexual, as well as to refer to the changes that musicians make in the order of certain musical notes in a piece, in order to vary its original composition.
However, the most frequent use of investment takes place in the field of economics and finance.
Investment in economy
In the field of economics and finance, it is understood that an investment is the provision of capital in an operation or economic activity that generates long-term returns and profits.
Investment is an economic activity that carries risks and involves time and whose purpose is to generate a profit or benefit in the short, medium or long term.
An investment can be carried out in both a private and public company or by a person for a particular purpose.
Private investments contemplate three variables, which are: the expected return that responds to the profits and profitability that is expected to be achieved in the activity.
The accepted risk, which is the uncertainty and probability that one has about reaching or obtaining the desired profit and; the time horizon, which indicates the time that the investment will take to obtain the expected results.
The investment project is an action plan in which objectives are set and human, material and technical resources are used in order to generate economic returns in a certain term.
During the development of these projects, the different factors that intervene in an economic or financial activity are evaluated, in order to determine what are the steps to follow to achieve the objectives and achieve greater profitability.
The factors are: market study (supply and demand of a product or service), technical study (resources to be used), economic and financial study (budget to be used) and, organization study (internal order that will be established in the company or institution for when it starts its activity).
Foreign investment refers to the action of putting capital in a foreign country and is divided into two branches, direct foreign investment and indirect foreign investment.
Foreign direct investment seeks long-term relationships with important economic purposes in order to internationalize a company and generate, in the host country, benefits such as jobs, competition, exchange of technical and human resources, and even foreign exchange.
Indirect foreign investment, also known as portfolio investment, refers to loans that one country makes to another, which consists of transferring money or resources in public companies or placing official securities of the receiving country on the stock exchange of the country that provides the investment.
There are different types of investment according to the resources available to people or companies and according to the objectives that they wish to achieve.
The ideal is to make a brief analysis of the types of investment that can be executed and consider which of all is the most suitable according to your needs and future goals.
Investments according to time: investments are characterized by the time required to achieve their goals. There are short, medium and long term investments.
Investment fund: it is the base where a group of people place their capital resources destined to make a particular investment.
No investment fund is safe, but when they obtain the expected results, the profits are usually beneficial to all who participated.
Bonds: people who have considerable capital lend their money to those who issue the bond, therefore they access them and, in return, they receive payment of interest until they recover the money invested in its entirety.
See also Bonds.
Shares: through the acquisition of shares, people can invest in various companies, of which they will later become part. The benefits of stocks are long-term.
Low-risk investments: these investments allow interest to be generated on the money that is owned and even have a certain degree of liquidity. In these cases, the return is lower compared to larger investments.
See also Profitability.
Investment companies are public limited companies whose purpose is to capture, invest and manage resources and then invest them in financial instruments, whose returns are collective, that is, of all those who are part of the company.
Investment companies are also understood to be investment funds.