International economics and management

1. Concept, essence and classification of investments

In its broadest sense, the word "invest" means: “Part with money today in order to get a large amount of it in the future ". Two factors are usually associated with this process - time and risk. We have to give money now and in a certain amount.

The remuneration comes later, if at all, and its value unknown in advance. In some cases, time will be the most important factor. (for example, for government bonds). In other situations, the main is the risk (in particular, for options to buy common stock). In some cases, two factors are significant at once - time and risk. (for example, for ordinary shares).

An investment is any instrument in which to place money, hoping to save or multiply their value and / or provide a positive amount of income. This is a broader definition of investment. Here under investment means any investment of capital. Moreover, the capital must increase. Here the essential attribute of an investment is not character investments, and the connection of investments with the increase in capital (income).

It should be noted that the productive nature is inherent not only investments in real assets (investments in fixed assets, growth working capital, etc.), but also investments in certain financial instruments (for example, securities of real sector enterprises, allowing to attract capital to the business activity).

At the same time, some real investment (investment in the purchase real estate, precious metals, collectibles), as well as part of financial investments (speculative financial tools) are not productive. Since the data investments are associated with obtaining income as the target setting of the investor, from the standpoint of an economic entity, they act as investments, although macroeconomic level, their implementation does not mean an increase, but redistribution of total income.