Business management a Type of investment

By: julianne
The investment decision (also known as capital budgeting) is one of the fundamental decisions of business management: Managers determine the investment value of the assets that a business enterprise has within its control or possession. These assets may be physical (such as buildings or machinery), intangible (such as patents, software, goodwill), or financial (see below). Assets are used to produce streams of revenue that often are associated with particular costs or outflows. All together, the manager must determine whether the net present value of the investment to the enterprise is positive using the marginal cost of capital that is associated with the particular area of business.

In terms of financial assets, these are often marketable securities such as a company stock (an equity investment) or bonds (a debt investment). At times the goal of the investment is for producing future cash flows, while at others it may be for purposes of gaining access to more assets by establishing control or influence over the operation of a second company (the investee).

Type of Some Investments

Bank savings

The simplest kind of short term (or cash) investment is a savings account. Returns are low compared to other investments, but returns are guaranteed by the bank - so your investment won't drop in value in the short term like others might. You can withdraw part or all of your money whenever you want (total liquidity). This makes them ideal for short term savings goals, or as a place to keep your emergency fund - They're not a good investment option for medium or long term goals.

Property

Owning property rented to individuals or businesses can be a safe and profitable investment. Returns from property investment come from rental income, after deducting expenses, and from the increase in the value of property over time.

Shares

By investing in shares in a public company listed on a stock exchange you get the right to share in the future income and value of that company. Your return can come in two ways:

* Dividends paid out of the profits made by the company.
* Capital gains made because you're able at some time to sell your shares for more than you paid. Gains may reflect the fact that the company has grown or improved its performance or that the investment community see that it has improved future prospects.



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