portfolio investment, securities
Portfolio investments represent the investment of funds in securities of third-party organizations for profit.
They differ significantly from direct investments, which aim not only to obtain a percent of the profits, but and the opportunity to make decisions connected with its activity. Portfolio investment, forming the investor's portfolio, represent the passive holding of the shares of the companies, as a rule, without the possibility to take part in the management of the organization.
The purpose of portfolio investments
The purpose of a portfolio investor is to obtain revenue from increase of value of purchased shares, as well as the receipt of dividends on these shares. To reduce the risks of the investment under portfolio investment the investor invests in assets of different companies.
Types of portfolio investment
Investment portfolios depending on the profitability and risks are divided into:
high-yield portfolio, focused on obtaining high profit, usually with great risks.
constantly profitable portfolios, focused on reception of the average income usually consist of set of reliable securities, the risks in this type of investment, much less.
the combined portfolios, investments of this type takes place in a company with different levels of profitability and risk, to minimise the risk.
International portfolio investment.
The main advantage of portfolio investment is possible for the investor to choose the country for investment, which will be optimal income, with minimum risk. Also the investment can be used as a means of protection against inflation. At the present time for implementation of international must overcome several obstacles:
psychological, such as ignorance of politics, economy, culture, language, methods of trade, etc.
information, the investor is quite difficult to obtain reliable information about foreign markets, in contrast to the national.
legal, related to the complexity of the allocation of capital in another country and return it, together with the income of their own. After all, the income will be taxed at first taxed in the country of investment, and then another, and in the home country.
increased costs of service, this includes the remuneration of the mediators, a higher fee for the registration of agreements (in connection with many currencies), communication costs.
Ways of portfolio investment.
All the operations themselves, which requires continuous monitoring of the composition of its portfolio, a level of profitability, etc.
Transactions with the investment Fund, the advantages of such an investment:
ease of management
reduction of risk through diversification
reduction of costs due to the magnitude of the Fund
gains remain in the Fund, which reduces the cost of intermediate taxation.
Currently, portfolio investment are many categories of professionals: economists, traders, analysts, mathematicians, etc. With proper placement of investments profit in times greater than Bank interest, and the risks when weighed approach, practically the same.
