Multiplying their own and others' financial resourcesby investing in any projects, are engaged in investment companies. This is a relatively new concept for the domestic securities market, but the experience of foreign investors shows that this type of activity is beneficial to all participants.
Types of investment companies
Often, all investment companies are divided into two types: closed and open.
Private investors can not cooperate withorganizations of a closed type. Such companies consider as their instrument only their own or borrowed (bank loans) finances. In other words, the activities of closed joint-stock companies do not provide for trust management.
Organizations of the open type, on the contrary, work withmoney of private investors, taking them into trust management. This means that the owner of the capital can entrust his money to the investment company in order to invest it in some project, and then return it with profit.
Investment companies are the best choicefor cautious and patient investors, since their activities are not characterized by high profitability indicators, but are characterized by a relatively low level of risk.
How Investment Companies Work
To attract capital from outsideinvestment companies sell their own shares on the securities market. The collected amount they spend on the purchase of shares, bonds and other financial instruments belonging to various enterprises and banks. Thus, receiving income from these securities, the financial and investment company can return to its investors the amount they invested with dividends. In fact, the organization is managing the funds of its customers.
Feature of the activities of investment companiesit can be called that they never invest all the money in the shares of one or two enterprises. As a rule, there are much more investment objects. This method is a certain insurance for all participants of the process, since the loss from the price drop of one type of securities can be blocked by the profit received from the increase in the value of others.
Investment companies and funds that offer investors share participation differ only conditionally. Often they are distinguished based on the size of the organization and the amount of capital that it disposes of.
Investment activity of the company: where do they invest money
Asserting their "blood" management organization,The depositor may not care whether the shares in which his finances were invested grew or fell. This involved professionals working in an investment company. Their duties include tracking trends in the securities market and making the most profitable transactions that will bring the company and its customers guaranteed profits.
Some branches of businessrepresent for investors the greatest interest, for example, construction, insurance, production of goods. This is due to the fact that investment companies are organizations whose activities are aimed at making profit with minimal risk, and large firms become reliable objects for long-term cooperation. Securities with a low level of risk and with a low yield are considered the best option for placing free funds.
Insurance Investment Company
For many domestic depositors,The help of insurance investment companies remains a new and unusual activity. Investing in insurance policies is extremely popular in England, which is why this method is sometimes called English. Its essence lies in the purchase of policies or financial portfolios through the intermediary of the insurer.
Insurance investment company can actas an object of investment, that is, the investor buys shares of this particular organization. Or it performs the tasks of a management company that manages other people's money and acquires securities of other enterprises.
For the investor, the advantage of such a method of investment is getting the right to a number of tax benefits.
Features of the investment and construction company
Organizations that are engaged in the design andthe construction of various buildings and other objects and at the same time attract financial resources from outside, they are called investment and construction companies. Let us dwell on this question a little more.
Investment and construction company allowsdepositors to participate in the construction of buildings for various purposes: cottages, high-rise buildings, industrial and commercial facilities. The responsibility of such an organization is to ensure that the construction is carried out legally, in compliance with the necessary rules and regulations (licenses and work permits, coordination and approval of projects).
Investment and construction company is much more attractive to investors than other organizations. Indicators of its profitability are quite high, and the risk is relatively small.
Open Investment Companies: Types
Исходя из того, что частному вкладчику доступно cooperation only with an open investment company, he should know about the main types of this structure. There are three types of organizations that are able to manage the financial assets of their clients:
- Really managers of clients.
- Hiding some of the information about the nature of their activities.
- Leading no investment activity.
Real Trust Management
Managing investment company with thistrust management is an organization that really cares about the efficient management of their depositors' money. The operations that they conduct in the market are reliable and can be confirmed in fact. The usual practice of such companies is to provide customers with reports, monitoring or accounts themselves. Investors working with such a company, in 90% of cases, see exactly the income that was earned with the help of their funds.
Pseudo-trust investment companies
The specificity of such organizations is that they are not interested in real investment, and the profit shown to investors is not reliable.
Their words can not be verified, and the documents,provided as evidence of operations, reflect only a small part of the real picture. Often, such companies are omitted to falsify reports, steymen and other documents. Their main goal is to convince customers of the high efficiency of their activities. A tool for convincing can be a small number of real documents that confirm their investment activity. For example, they invest about 20% of the financial assets in stocks, but the rest remain motionless on the account.
In most cases (80%), investors receive money from other investors as a profit.
Financial pyramid: characteristics and main features
The third type of open investment company includes organizations that are not at all engaged in buying and selling financial instruments.
Sadly, but today this kindinvestment organizations is the most common. Their employees do not even try to falsify reports and monitoring in order to prove to investors the legitimacy of their activities. The organizers of some such companies directly inform their customers that they are invited to participate in the financial pyramid. The rest prefer to hide this fact, moving away from direct answers or resorting to outright lies. Declaring that their investment companies are not a financial pyramid, they are not able to provide any convincing evidence.
The profit they show to investors is 100% made up of funds contributed by other customers.
How to choose an investment company
Thinking about cooperation with organizations withthe goal is to protect your finances from the influence of inflation and at the same time to earn money, you should carefully consider the choice of the company. Experts say that you can make a good profit, even by participating in the financial pyramid. But such an activity is considered very risky and requires specific knowledge and skills.
If the investor is interested in long-term cooperation with the company, he should opt for the company of the first type.
To the elementary recommendations allowing to weed outobvious unreliable partners, can be attributed to checking the reputation of the organization. A lot of useful information can be given even by a superficial examination of how long certain investment companies have been working on the market. Feedback and comments left by customers, as well as willingness to provide advice will allow a potential investor to form an opinion on the quality of service and service policy of the company.
Profit or calm?
The lower the level of risk that characterizes the activities of an investment company, the less profit will be from investment. In addition, it will take a long time to wait.
However, this greatly simplifies the managementinvestment, which is great for novice investors. These types of deposits are often chosen by people who do not consider investing as an opportunity to receive basic income. Cooperation with companies characterized by a low level of risk helps to get into the essence of investing and orient yourself in the securities market.
Higher profits promise societies withlimited liability (LLC). An investment company whose business is to carry out more risky operations with securities can bring its customers a good, quick profit or loss.
For successful cooperation with such organizations, depositors need a set of specialized knowledge, including various aspects of the stock market.
