How to reuse profits in capital - briefly on the main
Reinvestment is a way to increase the profit of an investment project, which consists in the repeated or additional investment of capital received after the completion of any investment plan. The use of such technology contributes to a significant increase in the return on initial capital, regardless of its size.
A feature of reinvestment is that with each new investment in a project, funds are added to the initial deposit, but at the same time, interest is calculated on the amount available on the account. Therefore, in order to get the greatest profit, it is necessary to observe the following points:
increase the frequency of investments (monthly, preferably weekly);
control the initial investment amount, as interest will be accrued as long as it exists;
the higher the amount and duration of the initial investment, the more effective the reinvestment will be.
The main purpose of reinvestment is to obtain a large income for a minimum period as a result of an organized cyclical investment of funds that were earned from a previous investment.
Depending on the object of reinvestment, they are divided into:
The real ones. They consist in investing capital in real assets of enterprises and organizations, for example: in modernization or expansion of an enterprise; increase in assortment, production volumes and market, etc.
Financial. This is an investment in various financial instruments, such as: Forex, securities, deposits, stocks.
They can take the following forms:
Bank deposits. In this case, we can talk about reinvestment of interest, i.e. making a profit by constantly increasing the amount of investment by accruing interest income.
Depending on the amount of reinvestment, reinvestment can be:
Complete. Perhaps in the case of re-investment of all the profits in the next investment project.
Partial. Only part of the profit is invested in reinvestment, and the rest remains with the investor and is used by him at his discretion.
Despite the fact that reinvestment is a good tool for generating income without additional labor costs, it is associated with some problematic situations:
The amount of income and the likelihood of risk. Before doing reinvestment, it is important to calculate not only the size of the profit, but also the possibility of risks and losses. It should be remembered that the more risky the investment, the higher the probability of a large profit.
Duration of reinvestment. This is one of the important parameters when investing money, which is associated with the possibility of early withdrawal of the due profit without affecting the main investment amount, or without it.
The amount of initial investment. The amount of profit depends on the size of investments, which again can be reinvested and well earned.
Reinvesting is a great way to get a good income without significant labor and time costs. The main thing is to choose the right investment tool and calculate the ratio of possible risks and income.