When we have money and want to invest, they recommend us to invest in an Investment Company. What are the types of Investment Companies?
Investment Company is a company whose purpose is to invest in “debt instruments, currencies, shares of stock and non-stock companies.” In short, what you do is buy shares of a certain company, becoming a partner and making profits and losses that generate the investment made.
When you acquire the shares, the resources go to the purchase of Investment Objective Assets. These are securities, securities, documents, cash resources, assets, rights, credits and other things that are traded that are part of the assets of the Investment Companies. If the company’s shares go up, then they win. If on the contrary, they go down, then you lose. It will depend on how much you invest in the company to make a profit, as there will be other investors like you who will buy shares.
There are different companies with different types of Investment Companies. The National Banking and Securities Commission recognizes four types of Investment Companies.
Equity Investment Company
In the Equity Investment Company, the funds are invested in the stock market. In these companies the Investment Objective Assets are invested, which are composed of debt instruments, with shares; This implies that the profits are the interest generated by the debt instruments, as well as the dividends or increases in the value of the shares. This type of investment is usually used in the medium term, due to market risks.
Investment companies in debt instruments
In this type of Investment Companies can invest natural or legal persons. In it, the funds give returns by investing in instruments that represent a debt or obligation for the issuer (Federal Government, bank or private companies). The profits that are obtained come from interest or the purchase and sale of securities. In this type of Investment Company the earnings are smaller but more constant and less volatile, compared to the Investment Company of variable income.
Capital Investment Companies
In this type of Investment Company, the funds operate with shares or social shares, obligations and bonds of the companies that promote the Investment Company. These companies need resources in the medium and long term, and the profits are directly related to the performance of the companies, because their investment is in the capital of the company (shares, social shares or obligations). This type of Investment Company is more risky than the Equity Investment Company and the Investment Company in debt instruments, but the profit tends to be greater. The administration of this type of Company is carried out by a shareholders meeting, originated by a Board of Directors.
Limited purpose Investment Companies
These Investment Companies work with securities and documents that are issued by companies that need long-term resources, and that have the objective of investing in the National Development Plan. These societies are created by the union of several people who seek a common goal, and who want to create a way to finance or invest in something that benefits their productive activity. To do this, the partners give loans, credits or issue securities representing a debt.
Now that you know the types of Investment Companies, you can decide to invest in one of them. It is necessary that you know well the risks and the profits that they can produce, depending on the type of Society that you choose. Some are safer than others, but the profits are lower. Invest your money wisely.