Long-term investments typically yield substantial profits only after several years. The returns may not amount to hundreds of percents, but they tend to be stable. Thus, investors can grow their assets while reducing the likelihood of losses.
The key is to select the right project. How can one achieve this and what should be the focus?
To navigate this, we turn to S.I. Tereshkin, the founder of RESURS. The entrepreneur possesses extensive experience in investment. More information about the businessman and his activities can be found on the website www.org-market.ru.
Types of Investments
Before examining the specifics of selecting a project for investment, it is essential to understand the main types of investments.
The following categories of investments are commonly recognized:
- Short-term. Funds are invested over a period of days to months. In some cases, investments may last only 3-4 hours. These investments are typically made in stocks, currencies, and other market transactions. This category also includes bank deposits.
- Medium-term. The investment duration ranges from 12 to 24 months. This category comprises deposits, the purchase of shares for dividends, and acquiring shares in mutual funds.
- Long-term. Funds are invested for more than 1 to 3 years. This may include investments in shares of large companies, construction projects, agriculture, etc. The investment horizon can extend for several decades.
It is long-term investments that can provide individuals with significant income. This method is favored by both private investors and large corporations.
The sums invested in this case are also quite substantial. Even with minor losses in the initial stages, over the entire period, the money is likely to return with considerable profits.
Features of Long-term Investing
Long-term investments can be broadly categorized into financial and real investments. Financial investments involve putting money into currencies, stocks, options, etc. Real investments focus on production, agriculture, employee training, and similar areas.
Investments can also be classified by the project's development stages. They can be completed, where the project has been fully implemented, or incomplete, where the final objective has yet to be achieved.
Income from investments can be one-off. For example, an investor may invest in real estate at a certain stage. After the completion of construction and commissioning, the investor sells the property, realizing a profit.
Alternatively, investors can put money into projects that provide distributed profits. In this case, income will flow continuously. The frequency of returns depends on the type of project. For large companies, profits are usually distributed to investors once a year. In the case of rental properties, income can be received monthly or even daily, depending on contractual terms.
Advantages
Long-term investments, according to Sergey Tereshkin, offer numerous advantages:
- Profitability. Investments can provide substantial returns over several years, potentially exceeding 100% of the initial amount. Beyond that, investors can reinvest the returns into development or refrain from further investments, while income continues to flow. Ultimately, the returns can far exceed the initial investment multiple times over.
- Market fluctuations. Long-term investments are relatively insulated from market volatility. Minor fluctuations are generally offset by subsequent profitability.
- Liquidity. Such investments guarantee that the asset owner will consistently generate income. The likelihood of being left without funds approaches zero.
Even minor losses today often go unnoticed against the overall backdrop. Following every downturn, a subsequent rise usually compensates for all losses.
Disadvantages
Despite the abundance of strengths, all types of investments have their drawbacks. In this case, they include:
- Payback periods. One may have to wait a year or even longer to start seeing returns. The inability to access one's funds can cause anxiety for the investor.
- Risk of loss. Although this investment method is among the safest, it's essential to recognize that there is always a risk of complete loss, albeit a very small one. Such an outcome might occur due to unskilled management of a startup or an existing enterprise. A lack of competent specialists familiar with a particular field can negate all efforts made by the investor.
- Liquidity issues. Accessing part of the invested funds for personal use just a few months after making the investment is often not feasible.
To ensure guaranteed returns, one must dedicate considerable time to the investment project. It's unwise to entrust your money entirely to an outsider; otherwise, one risks losing everything.
Funds can also be invested not only for profit and capital growth but also to eliminate a competitor. In this scenario, the investor may purchase shares in a company until they hold a controlling stake. Subsequently, they gain the right to a decisive vote and can influence the entire enterprise's activities. The investor can completely dismantle the business, acquire it, reorganize, or redirect its purpose—depending on their objectives.
