A strategy for reinvesting taxpayers' funds in the country's domestic assets.

Reinvestment is the of profits earned from a previously made investment. There are two types of it: full and partial. The effectiveness of reinvestment is influenced by various factors: timing, amount of funds, investment instruments and the external environment.

Let's analyze the basic concepts and formulas that an investor needs to understand in order to make decisions. Alternative profitability is the benefit that the investor is deprived of when the money is used differently. So, if he buys a car, instead of opening a bank deposit, then the interest not received from the deposit must be added to its cost. Risk-free rate - the theoretical interest rate on such investments that have no risk of no return.

Return on Investment (RI) is calculated using the formula:

RI = IC (1 + i) ⁿ, where-IC is the initial investment, i is the% rate and n is the duration of the investment. So, with IC = 100 thousand rubles, i = 7% and n = 2 years, the investor will receive income from reinvestment 14.5 thousand rubles.

Net Present Value (NPV). This indicator allows you to bring the amount of cash receipts planned in the future to the current value and compare them with the start-up investments. Determined by the formula: NPV = ∑FV / (1 + I) ⁿ - IC, where

FV is the future receipt, IC is the initial investment, I is the discount rate, and n is the number of the year at the end of which the money is received.

So, for a project with an initial investment of $ 1 million, I = 12%, a implementation period of two years and a planned income of $ 700 thousand in the first year and $ 800 thousand in the second, NPV will be: 700 / 1.12 + 800 / (1.12) ² - 1 million = 263 thousand dollars.

Let's give an example of using these indicators in practice. Let's say the investor received an income from the previous project of 1 million rubles. He analyzes the factors that we listed in the first section, and decides not to buy a car, but to reinvest the funds. First of all, he considers the profitability (RI) of the investment project proposed for him. Let's say the RI is positive and equal to 120 thousand in two years. However, how does this indicator compare with inflation, risks and other factors? Therefore, he further looks at the risk-free OFZ rate, which, according to the results of trading on the Moscow Exchange at the end of August 2020, is about 5%. That is, an investor without risk can receive about 50 thousand per year. Therefore, this project is not suitable: why take the risk if it is easier to invest in state-guaranteed OFZs. He is looking for an alternative project, more risky, but with a yield of 700 thousand per year for two years. But for its accurate assessment, it is necessary to calculate the NPV and PI. Therefore, he then calculates the discount rate: 5% + inflation 4% + risk premium 5% = 14%. We get NPV = 153 thousand, and PI = 1.153. In this form, the project can be recommended for implementation.

Fund Analytics Investment Management LLP reviews

Investment Fund-an international fund with active investment activities. This is a unique project with a clear mathematical and strategic model, based on real financial instruments. We are preparing the most ambitious revolution in the field of Internet investment, one that can eradicate all outdated financial foundations.

Fund Analytics Investment Management stuff

An investment analyst is a specialist who evaluates investment assets based on a thorough study of the financial indicators of investment objects. He also calculates the cost of an investment project, analyzes the possibility of issuing and placing a company's shares on the stock exchange (IPO) and solves many other issues depending on his specialization.

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When you choose assets for investment, consider right away what is there with reinvestment in order to make the right choice. Add habit and patience to this, and you will see how your capital multiplies several times.

Fund Analytics Investment Management employee reviews

When you choose assets for investment, consider right away what is there with reinvestment in order to make the right choice. Add habit and patience to this, and you will see how your capital multiplies several times.Many investors measure their returns at annual interest rates. But the reinvestment mechanism teaches that annualized returns are not everything. The earning period and the length of time you hold your money often play an even greater role in the bottom line than the rate.