The basic principles of real investments are the long-term nature of investments, protection from inflation and stability of income. Real assets, such as real estate or gold, are usually stronger and more resistant to market fluctuations compared to financial instruments. This allows investors to preserve and increase their capital over a long period of time.
There are several main types of real investments, each with its own characteristics and advantages:
Preservation and increase of capital: protecting funds from inflation and receiving profits exceeding bank interest.
Generating passive income: receiving regular income from renting out real estate, dividends from shares, or royalties from the use of intellectual property.
Securing the future: saving for retirement, children's education, or a major purchase (such as a car or apartment).
Diversifying an investment portfolio: reducing risks by investing money in different asset classes.
Return on real investment is the percentage of profit an investor receives from investing in physical assets. It can be expressed in cash from renting an apartment or the increase in the value of a land plot over time.
The main sources of income from real investment:
Rental income. If an investor owns a home or commercial property, he receives regular income from renting it out.
Capitalization is the increase in the value of an asset over time. The value of an asset (real estate, land, precious metals, art objects) increases over time, and you can sell it for more than you bought it for.
Reinvestment of profit - the profit received can be invested in business development, which in the future leads to even greater income.
Return on real investment depends on external factors. For example, the state of the market. During periods of market growth, the return on real investment is usually higher than during periods of decline.
Internal factors also affect profitability. The yield depends on the type of asset: real estate can bring in income from 5% to 10% per annum, and business - from 10% to 30% per annum. The level of risk is also an important factor, because the higher the risk, the potentially higher the yield. Investments in high-tech startups can bring very high profits, but they are also very risky.
The yield also depends on the investment decisions of the investor. Competent management of the investment portfolio can increase the return on investment.
Real investment management is the process by which an investor or a company that specializes in it selects, acquires, improves, and sells a real asset to maximize its profitability. In other words, an investor does not simply buy real estate or equipment, but also does everything to ensure that these investments bring in as much cash as possible.
In real investment management, it is important to:
Choose the right object. You need to analyze the market, predict trends, and choose objects with good potential for value growth.
Consider the risks. There is always a possibility of unforeseen events that can reduce profitability or lead to losses.
Monitor and improve the condition of the asset. It is necessary to maintain and modernize objects so that they do not lose their value and bring in a stable income.
Be ready to sell. A good manager should always know when it is best to sell an asset in order to exit the investment profitably.
There are several basic strategies for managing real investments:
Strategy for obtaining current income. The investor invests in assets that generate regular income, such as rental properties or dividend-paying company shares.
Capital growth strategy. The investor invests in assets whose value should increase over time, such as shares of promising companies or land.
Capital protection strategy. The investor invests in assets that are traditionally considered reliable and less susceptible to market fluctuations, such as gold or real estate.
The choice of a real investment management strategy depends on investment goals, financial capabilities, acceptable risk level, and the current economic situation. It is important not to invest large amounts in assets that the investor does not understand. Therefore, before investing, it is necessary to carefully study the information about the asset and the market.
Real investments are an important element of any investor's portfolio, providing diversification and risk protection. The choice of a specific type of real investment depends on the investor's investment goals, risk level, and time horizon. Due to their sustainability and potential profitability, real investments remain an attractive option for those seeking to grow their capital over the long term.