Popular Investment Sectors
Thus, funds are most frequently invested in the following areas and projects:
- acquisition of land or real estate;
- company's fixed assets;
- construction;
- equipment;
- repairs.
Investments are also made in research, innovative developments, licenses and patents, employee training, etc. Such investments typically yield a return only after several years and require substantial amounts of capital.
Financial investments generally have a shorter payback period, rarely exceeding 12 months. This particularly applies to the stock market, currency, and other operations.
Investors can utilize specialized platforms for their investments. Funds can also be invested in mutual fund shares (unit investment funds).
Each mode of investment has its own characteristics. To make an informed decision, it's essential to examine the main methods in more detail.
Purchase of Securities
One of the most striking examples of long-term investments is the purchase of securities on the stock market. In this case, an individual buys shares at a specific price and later sells them at a different price, resulting in a decent profit.
When employing this method of investment, the key is not to panic and start selling securities during price declines. It is crucial to understand that prices can fluctuate significantly within a single day.
There is no need to worry about your investments during temporary volatility. Shares should only be sold if the price decrease appears to be permanent, which may indicate declining capitalization or profitability issues for the company.
The best time to buy shares is when their price has decreased significantly, provided that the company is not on the brink of bankruptcy. In this case, there is a high likelihood of a price increase, and consequently, profit.
Strategic Investing
Owners of large companies frequently engage in what is known as "strategic investing" to achieve their goals. Such activities are widespread abroad; however, this investment method has recently gained traction in the post-Soviet space.
In this scenario, investments are made with a strategic outlook in mind. Profit is not anticipated in the initial stages. The company invests resources into another entity with the aim of acquiring it. Gradually, shares of the target company are purchased on the stock market, and this process can take years.
This gradual accumulation results in a controlling interest that enables influence over the operation of the entire business and the making of critical decisions regarding its activities.
In the final stages, the acquired entity is merged with the company as a subsidiary or in another ownership structure. Ultimately, the investor can earn profits from the operations of the acquired organization or dissolve it if it obstructs their plans.
Real Estate Development
Generating income from real estate is a popular method of investing that is used by both individuals and large corporations.
Investing in the purchase of a property at the construction stage can significantly increase one's capital in the long run. This approach is known as equity participation.
Once the property is put into operation, it can be rented out or sold profitably. The first option allows for monthly income. However, it is essential to recognize that property generally depreciates over time and may require repairs. In this context, timely disposal of the asset is critical to avoid losses.
Funds can be invested in either residential or commercial real estate. Sergey Teryoshkin recommends purchasing property during market downturns or periods of stagnation. This approach allows acquiring assets at lower prices with the potential to sell them later at a much higher value.
Equipment and Machinery
Another common method of investment among entrepreneurs is leasing. In this case, vehicles and machinery are obtained through long-term rental with an option to buy.
Investors can either use the equipment themselves or sublet it, generating additional income. After the final purchase, the machinery can be sold, provided it is in good condition and fully operational.
It is advisable to sell the equipment before it begins to require frequent and costly repairs.
Production
Investing money in one's own production is an excellent way to generate stable income and grow capital. This requires modernizing existing equipment, purchasing new assets, and regularly enhancing the skills of the workforce.
As a result, a small company can evolve into a substantial business. However, it is essential to exercise patience. Initially, it is unlikely to expect profits; in addition to financial investments, business requires time. Only careful oversight and effective management can boost productivity and elevate the business to a new level.
Within 9-12 months, significant profits can be achieved, allowing the company to secure its position in the market.
When selecting a sector for long-term investment, it is important to thoroughly consider all aspects, gather the necessary funds, seek out specialists, and plan the budget accordingly. Caution is advised against hastily disposing of assets at the first sign of unforeseen circumstances.
