Riqueza for Financial Consulting prepares portfolios for various investment opportunities that are presented in detail to review the opportunity and alternatives

About Investment

Investment is a capital used in the production or provision of services and goods. It may be a fixed investment such as preferred stock and bonds or a variable investment such as property ownership.Investment is defined as the assets that individuals and enterprises purchase in order to obtain current or future income, as investment seeks protection of money from the purchasing power decline resulting from inflation as it depends on the achievement of capital profits and returns to maintain the purchasing power of the investor's money and the continued development of financial wealth through:

- Achieving acceptable financial returns coincided with an increase of the capital value to reach the highest value of the current income which is the focus of investors on investments that achieve their greatest financial returns without paying attention to any other considerations such as risk ratio.

- Protection of income from taxes as the investment seeks to let investors be availed by the benefits of taxes resulting from applicable legislation. If the investment was applied in an inappropriate field, this may lead to a high tax rate.

- Access to the largest growth of wealth; speculators in the financial market are highly concerned with achieving this goal of investment are they are interested in choosing high-risk investments and they accept all results from their choices.

- Securing the future, through investments associated with individuals who are on retirement where the objective of investment is to secure the future by investing money through the purchase of securities that offer medium returns with the lowest risk.

- Therefore, the investor must study investment opportunities and alternatives in order to choose the best investment opportunities within the available potentials and resources

What are investment opportunities? and what is the concept of the alternative opportunity cost?

Opportunity cost can be defined as the expected cost value that could be lost in an existing project if another alternative was chosen, i.e. the cost of the alternative chosen vs. the benefit lost from the first alternative and the return which the second option would yield.

What is the benefit of alternative opportunity cost calculation?

This theory is used in administrative, investment and accounting decisions. It is also used to evaluate alternatives, but it is not presented in calculations or records, but in reports and studies when planning for making a specific decision and also used in personal life to make decisions. In case that several options exist, we should choose best of them and exclude the others in order to make a higher benefit. It is notable that a concise study must be conducted for the options from different aspects and then we shall sacrifice and know whether the alternative option was better or not after application and implementation.

How to calculate the alternative opportunity cost?

Identifying the different available options. When you have to choose from two options, you have to calculate the potential gains, resulting from both of them. Since you can only choose an option, you must lose the potential gains of the other one. That loss is the alternative opportunity cost. 

Evaluation of non-financial resources. Alternative opportunity costs are often calculated to evaluate all financial decisions. However, companies can use the alternative opportunity cost to adjust their use of other resources such as working hours, time or production. The alternative opportunity cost can be determined through any limited resource in the company.

Companies must make decisions on how to transfer these resources to different projects. The time consumed for a project is cut off from something else.

You should evaluate your time if you are a businessman who will spend all time in his new business. However, this time could have been spent in a different job. It represents the cost of your alternative opportunity. If it is more likely to earn more money if you have a different job, you must determine whether your new business is worth sacrificing.