Definition, Function, purpose, and types of Investments – The sense of Purpose, function, And type of investment Benefits along with the most complete 5 – In today’s modern world, investing a lot once searched and executed for his business fields. because in invest not only money can be invested but it can be like gold, property, apartment, and so on to provide capital to invest. But in doing so that your investment is successful in investing should know the basics of what it is an investment, such as what is described here. Therefore let us refer to the existing reviews below.
Investment is often referred to by the term capital investment or capital formation is a second component that determines the level of aggregate expenditure. Savings from the household sector through the financial institution of the institution will flow to a sector of the company. If entrepreneurs are using the money to buy capital goods spending, is called with the investment.
1. The functions of the Investment a spending-spending to buy capital goods and a production equipment aiming to replace and add a capital good in an economy that will be used to produce goods and services in the future.
2. The functions of the second Investment i.e. curve that shows a relationship between the level of investment and the level of national income.
The function of investment that this one is distinguished into two:
- Parallel to the axis of the flat
- Shape up to the right
- To get a fixed income in each period, that among other things such as interest, royalties, dividends, or rent etc.
- To establish a special fund, for example, funds for an expansion of social interests, interests.
- For the control or control other companies, through ownership of a portion of the equity of a company.
- To guarantee the availability of a raw material and to get the market for products that are produced.
- To reduce competition between the companies of a similar type.
- To maintain the relationships between the companies.
Types Of Investment
- 1. Types of Investments based on Assets
Types of investments based on assets, namely its investments in terms of aspects of capital or wealth. Investment based on its assets are divided into two types, namely as follows:
- Real Asset as intangible investments namely the buildings, vehicles, and others.
- Financial Assets i.e. document (letters) claims not directly from the holder of a real activity of the party that issued the securities.
- 2. Type of investment based on its influence
These types of investments according to the influence that is based on investment factors that affect or have no effect on an investment activity. Types of investment based on its influence can be divided into two kinds, namely as follows:
- Autonomous investment i.e. investments not affected by the level of income, which is speculative. Examples include the purchase of securities.
- Investment Induced investment that is affected by the increase in demand for goods and services and in the level of income. An example of this investment income, namely transitory, a revenue obtained apart from work, such as flowers and so on.
- 3. Types of Investments based on cost
These types of investments based on the source it costs this is an investment that is based on an origin of the investment is acquired. This type of investment can be divided into two kinds, namely, investment sourced from foreign capital and investment capital is sourced from within the country.
- 4. Type of investment based on its shape.
Types of investment based on its shape is an investment that is based on a way of instilling his investment. This type of investment can be divided into two kinds, namely as follows:
- Investment Portfolio that is done through the capital market with instruments securities, for example as in stocks and bonds.
- Direct investment i.e. Forms of investments made by building, buying, or acquired a company.
Benefits Of Investment
- It could be a long-term earning potential
- Could Surpass inflation
- Can provide a fixed income
- Can adjust to a changing needs
- Can invest in accordance with a State of your finances
The investment of a great many benefits to business and companies to let her run the business expanded and advanced.
That’s the reviews about the sense of Purpose, function, And type of investment Benefits along with the most complete 5. Hopefully what reviewed above are beneficial to readers. All this and thanks.