Investing means the act of committing money or capital with expectation of obtaining an additional income or profit. It also considers making priorities for your money. Warren Buffett, one of the greatest investors, defines investing as “… the process of laying out money now to receive more money in the future.” Investments are several types differed with risk, gain, etc. They can be stocks, bonds, interest-bearing accounts, mutual funds, derivatives, real estate, land- anything an investor believes will generate income, usually in the form of interest or rents, or become more valuable.
Private equity is type of capital that is not listed on a public exchange. Therefore, Private equity firm manages equity securities (private equity) of companies that are not listed on a public exchange. Private equity is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity. Institutional and retail investors provide the capital for private equity, and the capital can be utilized to fund new technology, make acquisitions, expand working capital, and to bolster and solidify a balance sheet.
Process of identification, analysis and acceptance or justification of uncertainty in investment decisions is called Risk Management in financial world. Essentially, need of risk management arises when an investor or fund manager analyzes and attempts to measure the potential for losses in an investment and then takes the appropriate action (or inaction) given his investment objectives and risk tolerance.
Financial analysis is the process of evaluating budgets, businesses, projects and other finance-related entities to determine their performance and suitability. Generally, financial analysis is being conducted to analyze whether an entity is stable, solvent, liquid or profitable enough to warrant a monetary investment.
Within a company financial analysis is made by company executives, competitors, creditors, managers and potential investors. Financial analysis is done according to financial statements and the four basic financial statements are: income statement, balance sheet, statement of cash flows, statement of retained earnings. Each of them is made once a year.
A security is a certificate or other financial instrument that has monetary value and can be traded. In another terms it represents any proof of ownership or debt that has been assigned a value and may be sold. For the holder, a security represents an investment as an owner, creditor or rights to ownership on which the person hopes to gain profit. Examples are stocks, bonds and options.