The main criterion for choosing an investment object is the level of profitability of a specific project and possible risks of capital loss. The payback period of investments plays a special role in this case. Based on these criteria, investments in production become the best option for large private investors and funds. Guarantees of stability in receiving income are ensured by the continuity and speed of turnover of funds in enterprises of the manufacturing sector.
The production sector is diverse enough to choose a suitable investment object. Regardless of the type of production, the essence of investing in it comes down to one simple scheme - the investor makes capital investments in a specific enterprise. At the same time, the manufactured products must be sold as quickly as possible and converted into financial resources, which will ensure profit for both the enterprise and the investor.
It is important to understand that the size of profit and the speed of turnover of funds largely depend on the timing of product sales, and, consequently, on the availability of demand for manufactured goods and the solvency of the target audience of buyers.
When developing a production investment strategy, the investor should ensure that the contributed capital is directed to:
improving product quality;
reducing the cost of the product;
increasing useful properties;
advertising, etc.
Depending on the scale of production projects and types of manufactured products, a distinction is made between private and shared investment.
As for collective investment, this more common type is called share. It is characterized as a safer and more reliable type of capital investment. The safety of equity investments is based on the collective nature of deposits - in case of bankruptcy, all investors of a particular enterprise will bear the "burden of losses". However, this approach also significantly affects profitability - there is a need for proportional distribution of profits between all investors. Collective investment in enterprises of the manufacturing sector can be expressed in the form of: a mutual investment fund; a joint-stock investment fund;
a common fund of bank management;
an investment bank;
a pool of investors;
any other association of private investors.
The essence of this type of capital investment is that a specific legal entity, uniting several investors, accumulates invested funds in a single fund with a specific focus - investing in securities, agro-industrial complex, foreign exchange transactions, etc. Manufacturing is no exception. Such funds do not stop at specific organizations and have assets of many enterprises in their investment portfolio. Unlike private investors, large industrial investment funds invest in assets of enterprises in all areas of industry and production - food, light, chemical, heavy, metallurgy, fuel, etc. Due to the diversification of capital investments, they receive colossal profits, despite the long-term nature of the cash injections.
Undoubtedly, investments in production imply that the investor has a relatively large capital. At the same time, the investor himself invests money for only one purpose - to receive additional income. Needless to say, determining the profitability of a financial project is an important part of the upcoming capital investments in the production of goods!
When making a decision to invest and studying the rationale for an investment project, a potential investor must make sure that: the rate of return on the investment object is higher than that of bank deposits and other, more reliable investment instruments;
the payback period or liquidity of the investment project is acceptable for him and meets the set goals;
the amount of expected income is higher than that of other alternative investment projects;
the level of possible risks is acceptable for the investor; financial documentation is in order and freely available.
Thus, despite all the prospects and attractiveness of investing in production, this method of investing funds will be of interest to investors who not only have the necessary amount, but also have experience, knowledge, a clear team of lawyers and financiers who are able to quickly identify and correctly evaluate a worthwhile investment project in the production sector. And in this matter, the final decision should be influenced not only by profitability factors, but also by indicators of the social usefulness of investments.
