Direct Investment (1 Viewer)

[sk8ie_boi]

What is the difference between "direct investment" and "portfolio investment"?

direct investment is long term and portfolio is short term?

portfolio = buying of land and shares in existing companies..

I sorta understand a bit .. but not clear on it ..

 

[blue16]

What is the difference between "direct investment" and "portfolio investment"?

direct investment is long term and portfolio is short term?

portfolio = buying of land and shares in existing companies..

I sorta understand a bit .. but not clear on it ..

Direct investment is the purchasing of firms, businesses, industries or a substantial amount of shares (10% or more). It is a longer term investment and the individuals who invest want to be involved in the management of the firm, industry etc.

Portfolio investment is more speculative and is based on the short term. It is the purchasing of a small amount of shares (less then 10% ), loans and the purchasing of other forms of securities. The people who invest in this form usually do not want to be involved in management.

Remember, if i am correct that is if my text book is correct, portfolio invesment is growing faster then direct after the deregulation of the $A in the 1980's.

Good luck. The info is out of my text book so i hope its right.

 

[sk8ie_boi]

Yepz .. thanks .. dat just cleared my head hehe ..

 

[underthebridge]

Important not to confuse portfoli investment and finance as well. Finance trends generally deal with portfolio investment in the short term that are for speculative reasons where as portfolio investment implies a long term investment, used for saving money.

 

[delfick]

I have a question here about direct and portfolio investement which i am struggling to answer....

"What advantages does direct investment have over portfolio investment? Are there any disadvantages?"

thnx for help...

 

[passion89]

I have a question here about direct and portfolio investement which i am struggling to answer....

"What advantages does direct investment have over portfolio investment? Are there any disadvantages?"

thnx for help...

Well, in Direct investment, there is SOME form of control over your investment (>10%) whereas, in portfolio, the holdings of securities are usually passive with little to no control.

 

[delfick]

yes true....

but the question is referring to the effect onto the economy....
(u can tell by looking at the questions around it, sry for not making that clear)

 

[delfick]

Thankyou for that, that was very helpful....I was able to answer the question and then had no trouble with the question after that....So no more economic homework for these holdays!!! (I'm in Western Australia, we have holidays at the moment)

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