Have you been searching for the fail safe path to financial freedom? There are a lot of books and websites and other media that swear they know the fail safe path to financial freedom and they are willing to share it with you for a fee. But most of those books and websites don’t have any special insight into the path to financial freedom they are just selling financial tips and financial information.

You can find the fail safe path to financial freedom for yourself if you educate yourself about personal wealth management and you can learn how to use your personal wealth to your advantage. Investing and saving money are definitely steps on the path to financial freedom. Investing is necessary because it’s really difficult for a person to save enough money to find financial freedom without a large influx of cash from something like a settlement, an inheritance, a property sale or an investment return.

The bigger the chunk of cash is that you start with the more money you can invest and the bigger that chunk of cash will grow. So the fail safe path to financial freedom involves investing your money in a low risk and high return investment that will help your money continue to grow. Another component of the fail safe path to financial freedom is being responsible with your money. If you are responsible in how you spend money, if you regularly add money to your savings account and you invest wisely you can achieve real financial freedom but there is no one thing that will bring financial freedom you need to have a whole wealth management plan in order be on the fail safe path to financial freedom.

Some people that think the only way to really achieve financial freedom is to have a lot of money to invest in the first place but that’s not necessarily the case. Ordinary people with ordinary jobs and savings accounts can put themselves on the fail safe path to financial freedom just by making sure that they add to their savings account regularly and make safe investments and live frugally, saving money where they can.

Once you have achieved financial freedom you can stop watching every penny that you spend but until you get there it pays in the end to be careful when you make purchases. Compare prices, make sure that you really want or need an item before you buy it, and never buy anything over $100 until you have waited for 24 hours and you’re sure that you still want the item. Those are all fail safe ways to put yourself on the path to financial freedom.

Even if you don’t have a lot of money to start with you can still find financial freedom so if you want to get on the fail safe path to financial freedom start taking control of your finances and learn about how to manage your personal wealth so that you can eventually find financial freedom.

Reflecting on our standing in life brings us to a point where we are forced to describe our goals. For self-made millionaires, they have written off the goal of financial freedom in their lives long before other people realized its importance.

However, while others are starting to catch up on the trend of wealth creation, financial freedom is just too abstract a concept without the right mental shift. Called the millionaire’s mindset, it involves a lot of different approaches to one’s lifestyle while learning financial strategies through searching for opportunities. By turning goals into reality and acting responsibly, financial freedom seems a much closer idea than before.

Yet, the philosophy of financial freedom is still too large a concept for people to grasp. One can ask what freedom really means. Then we can search the meaning of financial freedom for each one of us. While financial freedom can be measured through one’s monetary standing, people do not realize that the philosophy behind financial freedom relies on our attitude towards money. In order to achieve financial freedom, we must describe our priorities which include how we look at money.

Caring for Money

The first fundamental perspective of a millionaire’s mindset is thinking that people are interested and should be interested in money. Why not? Money is a vehicle to make your life work and to make our system go round and round. But then more people do not value money the right way. People who seem to be satisfied with the money that they have end up getting rung down in the bottom of the financial pyramid. For some, money represents your paycheck that pays your bills. These people often find an ethical standard since they don’t care for money.

However, ethics and interest and money should not be removed from each other. The reality is, money is a vehicle not only to make a living, but also to make a quality life. Learning to value money gives us a perspective that makes us responsible with our finances. Finding the balance of how much money means to you is important in seeking financial freedom.

Making Money Work for You

A millionaire’s mindset always assumes that money should always work for you and not the other way around. While hard work is important, people who stop thinking and continue pounding their routine end over and over again. Hard work and struggle begets more hard work and struggle. Being a slave for money can just be the same problem for greedy people and hardworking people. The critical key however is to find ways to rise over it and make money work for you. Learning to empower yourself with the resources that you have will give you more room to help yourself and inspire others.

The Love of Money is the Root of all Evil

This is a saying that has stood for thousand of years. Until today it stands true. Yet what is more important to believe that financial freedom is NOT love for money. Why? Freedom over money is about seeing money as a tool and a means to and end. Meanwhile, love for money is seeing money as the end. Thus, love for money continues to put you under the spell of getting more money that you become a slave for it. Remember that we cannot eat money. Being a slave for money is far from the concept financial freedom.

For many, money is tangible. We all see it, we all have it, and we all see it go away. For the simple minded, money is a medium to buy what we want making it an integral tool for trading in a wealthy economy. However, a millionaire’s perspective looks at money rather differently. By putting the idea of money in our priorities and in the right balance, one can be effective in setting up financial strategies to achieve financial freedom.

Homeowners who are re-financing their home for the first or even the second or third time should thoroughly research all of the available options to ensure the best possible interest rate and terms are secured. Homeowners are sometimes lazy when it comes to re-financing.

There may a large drop in interest rates or a change in the financial situation which warrants a re-finance. Although the homeowner may be aware that a re-finance is warranted, the homeowner may not be aware that it sometimes takes a great deal of work to find the best possible rates and terms.

Homeowners are often inclined to re-finance with the same lender who granted the original mortgage or with the same lender who handled prior re-finances. The theory behind this reasoning is along the same lines as,”If it ain’t broke, don’t fix it.”

These homeowners figure their current mortgage is adequate and they are happy with the current lender so there is no need to investigate further options. However, this cavalier attitude can be quite costly for the homeowners.

Try All the Options
Homeowners who are considering re-financing their home should contact a number of lenders and obtain rate quotes from each of them. When soliciting quotes the homeowners should consider all of their available options but should limit these options to established lender.

While a newer lender may be offering fantastic rates and loan terms it is considered quite risky to go with this type of lender as opposed to a more established lender.

Homeowners who wish to further investigate smaller lenders who do not have an established history should proceed with caution. Unless the lender has trusted friends or family members who are willing to vouch for the lender, the homeowner should investigate these smaller lenders carefully.

Visiting a website address is not the best way to ensure credibility. Designing a professional looking website is a fairly simple process. Most website designers could design and upload such a website in less than a day.
Friendly Competition
When comparison shopping for the most favorable rates, homeowners should make it well known that they are shopping around for rate quotes and are not making a decision immediately.

Lenders who know they have some competition may be more likely to offer a lower interest rate than they would if they did not think the homeowner was considering other options. Although this may not seem quite fair to the lender, the business of re-financing is a competitive business.

Just like a plumber might offer his most competitive rate if he knows the homeowner is seeking estimates from a number of different plumbers, lenders are apt to do the same. They make their money from homeowners and having a homeowner re-finance their mortgage does not help them out at all financially.

Some lenders may think the homeowner is bluffing and may not offer the best rate initially. However, if the homeowner rejects the offer and states they have a better offer with another lender, the first lender may be enticed to offer an even lower interest rate just to see if they can sway the homeowners.

While cost is certainly important, it is not the only factor to consider. Some homeowners might re-finance with a lender who offers slightly higher rates if the homeowner feels as though this lender is more responsive to his needs.

Many a time, a company or business organization needs to purchase expensive vehicles for the purpose of meeting the various business requirements. Business vehicle financing is a viable option in such cases. The construction companies, sanitation companies and several other companies require business vehicle financing to meet the various requirements of their work.

The world of business vehicle financing, at times is quite confusing. Therefore you need to give vital importance for getting loan to buy business vehicles. There are some reliable financing companies that provide you better terms for business vehicle financing through simple application procedures and fast approval of applications.

There are number of business vehicles that require financing. Ambulance financing may be required by medical industry. An ambulance should ideally contain the latest medical equipment. Since the cost of ambulance is near to six figures, it is often essential to go for loans. However it is important to select a reliable financing company that offers immediate loan approval without any cumbersome procedures.

Business vehicle financing is essential in case the company wishes to buy a garbage truck. A recycling garbage truck is often essential for collecting specialized wastes like glass, paper, aluminum, asphalt and plastics for the purpose of recycling. These trucks are essential for some industries that need to recycle the wastes of the manufactured products. The recycling trucks are very expensive and thus help of financing companies is essential.

Business vehicle financing is also essential for buying hearse if your business is providing services for funeral purposes. Driving a hearse down the road followed by cars always brings respectful feeling. But you may not have even heard the word ‘Hearse financing’ since hearse is a limited use vehicle. However some reputed financing companies provide hearse financing too. You can get one or many hearses from such companies without any tiring procedures.

Boom truck financing is required for a business that provides tree trimming services or loading and unloading tasks. Boom truck is far better than heavy cranes. However it is expensive and so it is important to go for loan to get the boom truck for your business purposes.

Business vehicle financing is particularly important in the construction industry. Mixer trucks are used in the construction business for mixing and pouring concrete and so on. They are very costly and so mixer truck financing is a must. However, it gets very difficult to acquire financing for buying mixer trucks as they are used for very limited purposes. But some legitimate financing companies provide loan for mixer trucks too.

Commercial vehicle financing is essential for the purpose of buying buses, vans, dump trucks and bull dozers for meeting the various business requirements. One needs an expert’s help to get financial help for acquiring commercial vehicles. Commercial, recreational vehicles are often expensive and so they require the assistance of financing companies. Before going for a loan, make sure that the financing company has been in existence for longer period of time. Also ensure that there is no cumbersome procedure for getting the financial help. Fast approval of procedures and lower interest rates characterize good business vehicle financing companies.

Chris Fletcher is an Account Executive at a national equipment finance company providing new and used Business Vehicle Financing at http://crestcapital.com/catalog/Business_Vehicle_Financing as well as financing for many other equipment types and industry verticals.

The very terms “software leasing” and “software financing” are confusing to many businesspeople. This is due to the fact that software is typically not seen as something that is purchased over time.

This view is shared by both end-users, and the developers of software. Companies who think nothing of financing a vehicle or a new computer system will stress over how they will pay for expensive new business software. And the producers of software see no need for offering a software leasing or a software financing option.

But times are changing.

Third party equipment finance companies – companies who offer small and medium size businesses equipment financing and working capital – have responded to a need for software financing and software leasing. Thus, they are starting to include software amongst the equipment they finance or lease. There is one big overriding reason for this shift:

The High Cost of Buying Software

The simple fact is this: Software can be very, very expensive. Oftentimes more expensive than the hardware that runs it.

Now, keep in mind that when we are talking about software in this way, we are generally talking about “vertical software”. Vertical software is software that is written for a specific, narrow industry (this can include industry-specific point-of-sale software, ERP systems, specialized databases, etc). It is not software that’s available on the shelf at your local office supply store (the software you see there, even the business programs and operating systems, are “horizontal software” – they can be used across a variety of industries, and are relatively affordable.)

A good, clear example of vertical software is an auto parts store – they use software that’s specifically written for the auto parts industry. Another example is your local jewelry retailer – they likely use a point-of-sale system specifically made for the jewelry industry.

To understand how software financing and software leasing can positively affect a business, it is important to understand the advantages of vertical software first.

For most businesses, Vertical Software usually means far more efficient business processes. In the case of an auto parts store, for example, the software will already anticipate the thousands of automobile makes and models. And will almost certainly be updated every year. The jewelry store’s software will differentiate the subtle differences between two diamonds by any number of categories. And so on.

In fact, these “vertical” software programs are so effective, and become so crucial to day-to-day operations, that businesses often need this type of software to remain competitive. In many cases, it’s not an option to do without.

However, since the software is so narrowly focused, it usually comes with a hefty price tag. The developer will sell relatively few copies as opposed to a word processing program (which will sell in the millions), so they must get a premium for their work. Vertical software can sometimes reach five figures for a single license.

This brings an obvious problem: “Businesses need the software, but it’s very costly to buy outright.”

And that’s where software leasing and software financing come in – business don’t have to “buy” it upfront.

The Advantage of Software Leasing and Software Financing

The advantage of financing or leasing software is clear:

Software leasing and software financing take the huge up-front cost of new software out of the equation. Like most other business equipment, software is now beginning to be seen as a tangible asset (this was not always the case.) This means software can largely be treated as any other equipment purchase in the case of financing or leasing. A business can finance that new ERP system instead of having to budget a huge cash outlay.

This can be very beneficial to the bottom line, as software generally pays for itself over time. In fact, since “vertical” software almost always reduces the cost of doing day-to-day business, leasing or financing said software can actually create a positive cash flow right away.

But Who Offers Software Financing or Software Leasing, and how does it Work?

It’s true that software developers have been very slow to embrace the business model of software financing or software leasing. They would prefer to be paid up front for their software.

Likewise, banks, being part of an “older” industry, are also largely reluctant to finance software.

However, third party equipment finance companies who specialize in small and medium sized business equipment financing often offer attractive software lease and software financing packages. What happens is the equipment finance company pays the developer in full, and then provides the software to the end user under a finance or lease agreement, often at very attractive rates. In all actuality, it’s fundamentally the same as financing or leasing most other equipment.

Of course, like any other financing, the agreements can (and will) vary from traditional fixed rate financing to a “software lease” with a buyout at the end, etc. And the rates and terms also vary – your individual equipment finance company will have more details.

All in all, software financing and software leasing have definitely entered the business consciousness, and because it is so friendly to the bottom line, it is a business model that is here to stay.

Finance, Credit, Investments – Economical Categories. Modern Interpretation

Scientific works in the theories of finances and credit, according to the specification of the research object, are characterized to be many-sided and many-leveled.

The definition of totality of the economical relations formed in the process of formation, distribution and usage of finances, as money sources is widely spread. For example, in “the general theory of finances” there are two definitions of finances:

1)            “…Finances reflect economical relations, formation of the funds of money sources, in the process of distribution and redistribution of national receipts according to the distribution and usage”. This definition is given relatively to the conditions of Capitalism, when cash-commodity relations gain universal character;

2)            “Finances represent the formation of centralized ad decentralized money sources, economical relations relatively with the distribution and usage, which serve for fulfillment of the state functions and obligations and also provision of the conditions of the widened further production”. This definition is brought without showing the environment of its action. We share partly such explanation of finances and think expedient to make some specification.

First, finances overcome the bounds of distribution and redistribution service of the national income, though it is a basic foundation of finances. Also, formation and usage of the depreciation fund which is the part of financial domain, belongs not to the distribution and redistribution of the national income (of newly formed value during a year), but to the distribution of already developed value.

This latest first appears to be a part of value of main industrial funds, later it is moved to the cost price of a ready product (that is to the value too) and after its realization, and it is set the depression fund. Its source is taken into account before hand as a depression kind in the consistence of the ready products cost price.

Second, main goal of finances is much wider then “fulfillment of the state functions and obligations and provision of conditions for the widened further production”. Finances exist on the state level and also on the manufactures and branches’ level too, and in such conditions, when the most part of the manufactures are not state.

V. M. Rodionova has a different position about this subject: “real formation of the financial resources begins on the stage of distribution, when the value is realized and concrete economical forms of the realized value are separated from the consistence of the profit”. V. M. Rodionova makes an accent of finances, as distributing relations, when D. S. Moliakov underlines industrial foundation of finances. Though both of them give quite substantiate discussion of finances, as a system of formation, distribution and usage of the funds of money sources, that comes out of the following definition of the finances: “financial cash relations, which forms in the process of distribution and redistribution of the partial value of the national wealth and total social product, is related with the subjects of the economy and formation and usage of the state cash incomes and savings in the widened further production, in the material stimulation of the workers for satisfaction of the society social and other requests”.

In the manuals of the political economy we meet with the following definitions of finances:

“Finances of the socialistic state represent economical (cash) relations, with the help of which, in the way of planned distribution of the incomes and savings the funds of money sources of the state and socialistic manufactures are formed for guaranteeing the growth of the production, rising the material and cultural level of the people and for satisfying other general society requests”.

“The system of creation and usage of necessary funds of cash resources for guarantying socialistic widened further production represent exactly the finances of the socialistic society. And the totality of economical relations arisen between state, manufactures and organizations, branches, regions and separate citizen according to the movement of cash funds make financial relations”.

As we’ve seen, definitions of finances made by financiers and political economists do not differ greatly.

In every discussed position there are:

1)      expression of essence and phenomenon in the definition of finances;

2)      the definition of finances, as the system of the creation and usage of funds of cash sources on the level of phenomenon.

3)      Distribution of finances as social product and the value of national income, definition of the distributions planned character, main goals of the economy and economical relations, for servicing of which it is used.

If refuse the preposition “socialistic” in the definition of finances, we may say, that it still keeps actuality. We meet with such traditional definitions of finances, without an adjective “socialistic”, in the modern economical literature. We may give such an elucidation: “finances represent cash resources of production and usage, also cash relations appeared in the process of distributing values of formed economical product and national wealth for formation and further production of the cash incomes and savings of the economical subjects and state, rewarding of the workers and satisfaction of the social requests”.  in this elucidation of finances like D. S. Moliakov and V. M. Rodionov’s definitions, following the traditional inheritance, we meet with the widening of the financial foundation. They concern “distribution and redistribution of the value of created economical product, also the partial distribution of the value of national wealth”. This latest is very actual, relatively to the process of privatization and the transition to privacy and is periodically used in practice in different countries, for example, Great Britain and France.

“Finances – are cash sources, financial resources, their creation and movement, distribution and redistribution, usage, also economical relations, which are conditioned by intercalculations between the economical subjects, movement of cash sources, money circulation and usage”.

“Finances are the system of economical relations, which are connected with firm creation, distribution and usage of financial resources”.We meet with absolutely innovational definitions of finances in Z. Body and R. Merton’s basis manuals. “Finance – it is the science about how the people lead spending `the deficit cash resources and incomes in the definite period of time. The financial decisions are characterized by the expenses and incomes which are 1) separated in time, and 2) as a rule, it is impossible to take them into account beforehand neither by those who get decisions nor any other person”. “Financial theory consists of numbers of the conceptions… which learns systematically the subjects of distribution of the cash resources relatively to the time factor; it also considers quantitative models, with the help of which the estimation, putting into practice and realization of the alternative variants of every financial decisions take place”.

These basic conceptions and quantitative models are used at every level of getting financial decisions, but in the latest definition of finances, we meet with the following doctrine of the financial foundation: main function of the finances is in the satisfaction of the people’s requests; the subjects of economical activities of any kind (firms, also state organs of every level) are directed towards fulfilling this basic function.

For the goals of our monograph, it is important to compare well-known definitions about finances, credit and investment, to decide how and how much it is possible to integrate the finances, investments and credit into the one total part.

Some researcher thing that credit is the consisting part of finances, if it is discussed from the position of essence and category. The other, more numerous group proves, that an economical category of credit exists parallel to the economical category of finances, by which it underlines impossibility of the credit’s existence in the consistence of finances.

N. K. Kuchukova underlined the independence of the category of credit and notes that it is only its “characteristic feature the turned movement of the value, which is not related with transmission of the loan opportunities together with the owners’ rights”.

N. D. Barkovski replies that functioning of money created an economical basis for apportioning finances and credit as an independent category and gave rise to the credit and financial relations. He noticed the Gnoseological roots of science in money and credit, as the science about finances has business with the research of such economical relations, which lean upon cash flow and credit.

Let’s discuss the most spread definitions of credit. in the modern publications credit appeared to be “luckier”, then finances. For example, we meet with the following definition of credit in the finance-economical dictionary: “credit is the loan in the form of cash and commodity with the conditions of returning, usually, by paying percent. Credit represents a form of movement of the loan capital and expresses economical relations between the creditor and borrower”.

This is the traditional definition of credit. In the earlier dictionary of the economy we read: “credit is the system of economical relations, which is formed while the transmission of cash and material means into the temporal usage, as a rule under the conditions of returning and paying percent”.

In the manual of the political economy published under reduction of V. A. Medvedev the following definition is given: “credit, as an economical category, expresses the created relations between the society, labour collective and workers during formation and usage of the loan funds, under the terms of paying present and returning, during transmission of sources for the temporal usage and accumulation”.Credit is discussed in the following way in the earlier education-methodological manuals of political economy: “credit is the system of money relations, which is created in the process of using and mobilization of temporarily free cash means of the state budget, unions, manufactures, organizations and population. Credit has an objective character. It is used for providing widened further production of the state and other needs. Credit differs from finances by the returning character, while financing of manufactures and organizations by the state is fulfilled without this condition”.

We meet with the following definition if “the course of economy”: “credit is an economical category, which represents relations, while the separate industrial organizations or persons transmit money means to each-other for temporal usage under the conditions of returning. Creation of credit is conditioned by a historical process of fulfilling the economical and money relations, the form of which is the money relation”.

Following scientists give slightly different definitions of credit:

“Credit – is a loan in the form of money or commodity, which is given to the borrower by a creditor under the conditions of returning and paying the percentage rate by the borrower”.

Credit is giving the temporally free money sources or commodity as a debt for the defined terms by the price of fixed percentage. Thus, a credit is the loan in the form of money or commodity. In the process of this loan’s movement, a definite relations are formed between a creditor (the loan is given by a juridical of physical person, who gives certain cash as a debt) and the debtor.

Combining every definition named above, we come to an idea, that credit is giving money capital of commodity as a debt, for certain terms and material provision under the price of firm percentage rate. It expresses definite economical relations between the participants of the process of capital formation. Necessity of the credit relations is conditioned, from one side, by gathering solid quantity of temporarily free money sources, and from the second side, existence of requests of them.

Though, at the same time we must distinguish two resembling concepts: loan and credit. Loan is characterized by:

·         Here, the discussion may touch upon transmission of money and also things form one side (loaner) to another (borrower): a)under the owning of the borrower and, at the same time, b) under the conditions of returning same amount or same quantity and quality of the things;

·         The loaning of money may bear no interest;

·         Any person may take part in it.

With the difference with loan, credit, which is somehow a private occasion of the loan, represents:

·         One side (loaner) gives to the second one (borrower) only money, and _ for temporal usage;

·         It may not bear no interest (if the assignment doesn’t foresee something);

·         In it creditor is not any person, but a credit organization (at the first place, banks).

So, a credit is the bank credit. To our mind, it is not correct to use “credit” and “loan” as the synonyms.

Banking crediting is the union of relations between bank (as a creditor) and its borrower. These relations touch upon:

a)      Giving a certain amount of money to the borrower for definite purpose (though, we meet with the so-called free credits, aims and objects of crediting are not appointed in the assignment);

b)      Its opportune returning;

c)      Getting percentage rate from the borrower for using the sources under his/her disposal.

The essential foundation of the credit essence and its important element is existence of trust between the two sides (in Latin “credo”, from which comes the word “credit”, means “trust”).

From the position of circulation of money forms (in the abstraction, historical process of formation economical relations and social budget and banking systems expressed by them) comparing different definitions of finances and credit, the paradox conclusion appears: credit is the private occasion of finances. And truly, from the position of movement of the money forms, finances represent the process of formation and usage of the funds of cash means. Very often such movements are fulfilled without returning, but sometimes, it is possible to give loans from the budget for the investment projects of other needs. Also, when a manufacture or corporations use their cash funds and we mean the finances of industrial subject, such usage may be realized as inside the manufacture or corporation (there is no subject about returning or not returning of the usage), so gratis under conditions of returning. This latest is called commercial form because of transmitting the sources to others, but even in this occasion, it is the element of financial system of the manufacture and corporation.

From the point of cash means movement, main character of credit is the process of formation and usage of the funds of cash means under the conditions of returning and, as a rule, taking the value-percentage. If gating the credit value doesn’t take place (even in the exceptional occasions), according to the movement form, credit becomes a private occasion of finances, as from the net financial funds (consequently from the state budget) the loans which bear no interests may be used. If gating credit value takes place, by the appearance form, credit is discussed to be financial modification.

From the historical point of view, finances (especially in the sort of the state budget) and credit (beginning with usury, later commercial and banking) were developing differently for considering credit to be the part of finances. Though, from the genetic-historical point of view, previous loaners, before giving loan, needed gathering the permanent capital not returning, that is the net financial foundation. The banks analogously needed concentration of the important own capital for influxing the consumers’ means and for getting higher percentage rate under the conditions of returning. Herewith, exactly on the financial basis, in the sort of financial fund (which later partially becomes loan fund) part of the bank capital appears to be the reservation (insurance) part of the fund, which by nature is financial and not loan. So notwithstanding the essential distinctions between finances and credit form the genetic-historical point of view, credit appears to be formed from finances and represent their modification.

From the essential position of expressing economical relations of finances and credit, we meet with cardinal distinctions between these two categories. Which mostly expressed by the distinction of the movement forms notwithstanding they are returnable or not. Finances express relations in the aspects of distribution and redistribution of social product and part of the national wealth. Credit expresses distribution of the appropriate value only in the section of percentage given for loan, while according to the loan itself, a only a temporal distribution of money sources takes place.

Herewith, there is a lot of common between the finances and credit as from the essential point of view, so according to the form of movement. At the same time, there is a significant distinction between finances and credit as in the essence, so in the form too. According to this, there must be a kind of generally economical category, which will consider finances and credit as a total unity, and in the bounds of this category itself, the separation of the specific essence of the finances and credit would take place.

Funding of the cash means is common to the researched economical categories. It takes place in any separate system of finances and credit, which have been touched upon during the analyses of defining finances and credit. Word combination “funding of the cash sources (fund formation)” reflects and defines exactly essence and form of economical category of more general character, those of finances and credit categories. Though in the in economical texts and practice, it is very uncomfortable to use a termini, which consists of three words. Also, “unloading” with an information hardens greatly its influxing into the circulation even in the conditions of its strict substantiation and thoroughness.

In the discussing context we consider:

1)      wide and narrow understanding of economical category of the finances;

2)      discussing finances in narrow understanding under general traditional meaning;

3)      discussing finances, as funding of the cash means, in wide understanding, which concerns finances – in narrow meaning and credit – in complete meaning.

Termini “funding” and its equivalent “fund formation” are used by us as the purposeful structuring of cash means, which is based on two poles – accumulation of money sources (gathering) and its usage for definite purpose in the way of financing and crediting.

We have established a new termini – “finance-investment sphere” (FIS). Analyses about interrelation of finances and credit made by us give us an opportunity of proving, that in the given termini, the word “financial” is used with the meaning of funding cash sources, its purposeful structuring. In this process we consider at the same time financial, credit and investments’ economical categories.

Let’s sum up middle results of discussing new concept – “finance-investment sphere” and discuss its investment consisting parts.

The concept “investments” was brought into the native economical science from the West. In the Soviet economical science they for a long time used in the place “investments” the termini “capital placement”, which expressed the usage of the industrial factors in the sphere of real industrial activities during realization of capital projects. From one glance, this termini in its concept is identical to the “investments”, consequently it is possible to use them as synonyms. Though the termini “investments” and “investing” have the advantage towards the termini “capital placement” from linguistic and philological points of view, because they are expressed with one word. This is not only economical and comfortable in the process of working with the termini “investment” itself, but also it gives an opportunity of termini formation. More concretely: “investment process”, “investment domain”, “finance-investment sphere” – all these termini are much more acceptable.

Changing native economical termini with foreign ones is purposeful, if it really matters (by keeping parallel usage of the native termini for the inheritance). Though we must not change native economical termini into foreign ones all together, when by ordinal traditional language easy to explain private and narrow concrete processes and elements get their own termini. The “movement” of these termini is approved in the narrow professional bounds, but their “spitting out” into the economical science may turn economical language into the tangled slang.

Let’s discuss termini – “investment” and “capital placement’s” usage in the economical literature.

Investments are placement of funds into the main and circulation capital for the purpose of getting profit. “Investments in material assets – are the placements of funds into the mobile and real estate (land, buildings, furniture and so on). Investments in financial assets are the placements of funds into the securities bank accounts and other financial instruments”.

We don’t meet with the termini “investments” in the earlier economical dictionary, but we meet the combined termini “investment policy” – the union of the industrial decisions, which guarantee main directions of the capital investments, the activities of their concentration in the determinant suburbs, on which the reaching of planned rates of development of the society production is depended, balancing and effectiveness, getting more and more production and profit of the national income for every lost Ruble”. For today, in the most actual definitions, the capital investments are bounded only by financial means, when not only financial, but also the investment of natural, material-technical and informational resources takes place. Labour resources take an actual place in the investment process. They themselves fulfill this or that investment process.

A positive side of the discussed definitions is that they connect investment policy and capital placements (investments):

-          economical development according to the key directions to the concentration;

-          providing high rates of economical growth;

-          raising an economical effectiveness, which is expressed:

a)      by growing the throw off of the production and national income for every lost Ruble;

b)      by fulfilling the branch structure of the investments;

c)      by improving their technological structure;

d)     by optimization of their further production structure.

Compared with such definition of the investments (capital placement) the definition of investments in the dictionary attaching the “Economics” seems to be unimproved: “investments  – the expenses of gathering production and industrial means and increasing material reserve”. In this definition current expenses (production expenses) are mixed with the investment (capital) expense. Also, not the investment expenses but (though the investments are followed by the appropriate expenses) exactly advancing. It differs from the expenses by that the means (means) are put by returning the advanced values, also, under the conditions of growth, to which the concept-advanced capital is corresponding. the advancing may be realized in the money, natural-material and informational forms.

Except the termini “investments”, there are two more termini related with the investment. They are shown below.

 “Human capital investment” – any activity provided for rising the workers labour productivity (in the way of growing their qualification and developing their abilities); at the expenses of improving the workers’ education, health and raising the mobility of the working forces”. It is very useful to use the mentioned termini, though it needs one correction: the human capital investments do not concern only workers, but also the servants, representatives of every kind of labour.

“Investment commodity, capital goods – a capital.”

In the official manuals of political economy of the reformation time the capital investments are discussed as “expenses for creating new main funds and widening, reconstruction and renewing the active ones”. In this definition the investments (capital placements) during separation of the forms (types) of further production of the main funds are bounded only by main funds (without increases of the circulation funds and insurance reserves): a) creating new ones; b) widening; c) reconstruction; d) renewing. Also, the concept of the industrial gathering appears, at the expenses of widening of basic, circulation funds and also insurance reserves takes place”.

You’ll meet below the definitions of investments from “the course of economy”: the investments are called “placements of fund into the basic capital (basic means of production), reserves, also other economical objects and processes, which request long-termed influxing of material and cash means. “According to the division of capital into physical and money forms, the investments too must be divided into material and cash investments”.

They apportion investment commodity, to which belong industrial and nonindustrial building objects, vehicles purposed for changing or widened technical park and the furniture, increasing reserves and others.

“They call the total investments of production an investment product, which is directed towards keeping and increasing the basic capital (basic means) and reserve. Total investments consist of two parts. One of them is called the depreciation; it represents important investment resources for compensation of renewal till the level of before industrial usage, wearing out and repairing of the basic means. Second consisting part of the total investments is represented by net investments – capital investments for the purpose of increasing basic means”. Depreciation is not a compensation resource of wearing the basic funds out, but it is the purposeful financial source of such resources.

Human capital investment is “a specific kind of investments, mostly in education and health protection”.

“Real investments are the investments in the economical branches and also, they are kinds of economical activities, which provide influxing the increases of real capital, that is increasing material values of the industrial means”. We can agree with such definition with one specification that material and nonmaterial values too belong to the real capital (wealth), consequently science-researching experimental-construction results, various information, education of he workers and others. Such service as organization of the excitable games, also the service of redistribution social wealth from one private person to another (except charity).

“Financial investments represent placement of funds into the shares, obligations, promissory notes, other securities and instruments. Such investments, of course, do not give increases of the real material capital, but they help getting profit, consequently at the expenses of changing the course of the securities in the time of speculation, or distinguishing the course in different places of sell and purchasing”. We share wholly such definition, hence it follows that financial investments (if it is not followed by real investments as a result) do not increase real material wealth and real nonmaterial wealth. According to this context, the expression below is very important: “we must distinguish financial investments, which represent placement of the funds in the ways of selling and purchasing the securities for the purpose of getting profit and financial investments, which become cash and real, moved to real physical capital.”

In the “economical course” quoted before long and short-termed investments are separated. Recognizing the existence of the bounds between them, the authors ascribe short-termed investments to “one month or more” investments. If we get such conditioned criteria, that we can call the investments which overcome the terms of some months, long-termed ones, which is very doubtful and we don’t agree with it. A long-termed character of the fund placement is a significant feature of the investments (short-term doesn’t combine with the concept of investments). Principally, it would be better to point out quick compensative, middle termed compensative and long-termed compensative investments:

-          less then 6 months – quick compensative;

-          from 6 months up to the year and a half – middle termed compensative;

-          more then the year and a half – long termed compensative.

We stopped at the definition of the investments in the capital work “economical course” for the special purpose, as, in it the author tried to discuss the concept of investments systemically and quite completely, herewith the book is published just now.

We’ll return to the discussion the definition economical category of “investments” in different publications in the following chapter. The definitions given here are quite enough for having a notion of the level of lighting up the given category in the economical literature.

What conclusions may be made according the definition of the mentioned economical category in the published works, except the made notions and specifications?

There is quite deeply, concretely and thoroughly defined the concept of “investments”, different definitions in the economical literature; but mostly in every works about the investments discussed by us until now, there is not opened the essence of investments as an economical category. In every monograph, even if it has a title investment, as an economical category, there is given only the definition, concept of investments. But, as the Academician Vasil Chantladze explains, “a concept is a discussion, which proves something about the distinguishing feature of the researched object. A concept out of much essential characteristic features represents only one, and essential in it is only – definition”.

But the categories are much wider; it is “a key, the most fundamental concept of every science”. Economical categories theoretically represent real, objectively existed productive relations. A category is the defining of occasions of existed characters, connections, relations of the objective world. Generally, any educational process is fulfilled by the categories, which give opportunities for dividing the processes and occasions semantically, for expressing the definitions of a subject and realize their specific peculiarities and economical relations of a material world.

Our goal is exactly to substantiate investments – as an economical category and also, as a financial category in the narrow understanding.

Here we apply for another manual thesis made by the academician Vasil Chantladze: “every financial relation is an economical one and every financial category is and economical one, but not every economical relation and economical category is financial relation and financial category”.

In the process of defining the investments, it is important to take in mind the sides of resources, expenses and incomes, because investment, from one side, is the result of the manufacture’s activity, and, from another one, – a part of income, which, in this case, is not used for usage.

Another occasion: it is advisable to discuss investments in two aspects: as a category of reserve and flow, which will reflect exactly the connection between “placement of funds” and “investments”.

As we’ve mentioned above, not long ago, in the well-known Soviet literature the concepts of “the placement of funds” and “investments” were accepted to be the synonyms and concerned to be investment of sources for further production of the main funds and formation of the turnover funds. We meet with such understanding of the concept of “investment” (here, they separate three types of the investment expenses: investments in the basic capital of investments, investments in the house building and investments in the reserves) in the modern economical publications and it is mostly used on the macro level during a statistical analyze of economical processes. In this concrete occasion investment is the category of reserve.

According to the aspect of flow the investments may be discussed in the process of analyzing industrial activity, when it is necessary to learn the variety of the economical relations related with the investments’ further production and formation, sources, objects and subjects, that is on the micro level.

Main distinguishing criteria of different methods of approach towards the concept of “investment” the aspect of prolonging of measuring this showing. Is it possible or not to measure the investment showing separate from the term factor (the norm of gathering, the volume of capital property, the reserves of production and so on). If it is possible, then it is the category of reserve, and if it is not, then it is measured in the section of time and belongs to the category of flow.

Thus, investment, as an economical category, is quite consuming concept. It concerns the elements defining the regularities of function and regulation of the investment domain, privately:

First, resources and values put into the industrial activity. Here, investments may be realized in the following ways:

1.      mobile and real estates (buildings, constructions, furniture and other material values);

2.      cash sources, purposeful bank accounts, credits, shares and other long-termed securities;

3.      owners rights according to the author’s rights, licenses, Now-How, experience and other intellectual values;

4.      the rights for using land and other natural resources, also other owners rights.

Notwithstanding any forms, investments are results of capital gathering. Leading investments – regularity of gathering defines its volume and dynamics and, generally, whole investment activity.

Second, the incomes ruling volume and dynamics of the resource investment. Herewith, we must underline the circumstance, that the process of getting profit, the regularity of its creation, isn’t a constant of the concept “investment”. The factors of production (also the conditions of exploitation of capital values) and selling (market conjuncture), also the process of capital gathering is the leading and important condition only for the investment formation. Though, we underline again, that the process of getting and distributing the income is a significant component of the investment activity.

The transformation of investments makes the basis for the investment activity, which concern the following circles: resources – investment (expense) – capital property – income. The practice of realization such circles of the investments transformation is exactly the investment activity (investing). The investment activity, except the investments itself, concern motivation and stimulation of the capital gathering, relations of capital gathering and ruling, also, totality of the defined level of profitability on the capital and the goals of capital growth.

According to the mentioned above, in the definitions of the investment as economical category sometimes the needed exactness and clearness is not felt, some categories of the wealth are represented tightly enough. For example, real prosperity is bounded only by material estimation. This leads us to the unvalued investment resources in the era of transformation industrial society into the investment one; also to the recognition of yet uninvolved valuable scientific researches in the production, securities turned into speculation objects, and unreal property in the consistence of one and the same parts; to there equalization. On the basis of the made analyses, we can cite a wide definition of the investments together with the leading categories.

Investment resources – are values, invested into this or that project in this or that kind for the purpose of getting profit beginning with material ones, finished with cash.

Kinds of the prosperity are equal to the kinds of the investment resources and is divided into real and cash, consequently into financial resources.

Real investment resources concern all kinds:

-          natural resources;

-          labour resources;

-          material resources, the usage of which is possible in the economical development (buildings, constructions, vehicles and furniture, transport and communication means and so on;

-          investment resources (in the widest understanding, that is from scientific-research and experimental-construction works, till the education potential of the society and till all kinds of gathering useful information, written about every possible, that is typing and electronic bearer).

Cash, consequently financial resources concern every cash means for usage in this way in definite conditions or directed in the sort of investments.

Cash means (resources) turn into the financial resources in the case of structuring of funds of purposeful destination foreseen for investments of this or that kind.

After defining investment resources we can make wide definition of the investments as economical category.

Investments – are the placements of real, financial and intellectual resources into the projects, the fulfillment of which leads us to getting the increases from real wealth, in the material and informational forms. It is followed by a cash (financial) prosperity or its increases (at the expenses of the distribution of the cash means).

As an economical category, investments express economical relations, which are created in the ways of using and formation of the investment resources between the participants of the investment process for the purpose of improving and widening of the enterprise.