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What is Investment Recovery?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 05 December 2016
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Often referred to as asset recovery, investment recovery is a working strategy aimed at managing current assets in a manner that makes it possible to recover as much of the original capital investment as possible. The term is utilized in a number of investing and business settings. In all applications, the goal is to offset the original investment as much as possible.

In terms of business operations, investment recovery is a key component of dealing with the obsolescence of older manufacturing equipment. As machinery and other production components are replaced with newer and more efficient devices, there is a need to recoup some of the original cost of the older machinery. This is often accomplished by selling the replaced equipment at pricing as close to the original purchase price as possible. Doing so allows the company to increase the overall gains or profits that were generated by the equipment during the years the devices were in active use.

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In terms of making investments, investment recovery is the practical consideration of recouping the original cost of purchasing stocks, bonds, or commodities. Since the aim of any investment activity is to increase the overall value of the financial portfolio, it is important to select options that are likely to increase in value over time. Should a particular investment fail to perform as anticipated, the investor may find it necessary to sell the option. When that is the case, the goal is to sell the option for at least as much as the original purchase price per unit. This makes it possible for the investor to at least recover his or her original outlay of capital, thus preventing a loss to the value of the investment portfolio.

The concept of investment recovery can be applied to finances of any type. Along with playing the stock market or purchasing operating equipment, the idea also applies to retirement fund management. Many retirement funds are grown through the process of investing in various financial markets. Managers seek to manage the amount of capital placed into a 401(k) or other pension fund so that all contributions are invested wisely. This helps to ensure that the value of the fund never falls below the level of the total number of contributions. Just as any investor would attempt to recoup the original capital used to secure an investment, fund administrators would do the same with any investment made with the capital assigned to a retirement plan.

One of the functions of a financial advisor is to assist clients in arranging their investment activities so that they always realize investment recovery. This usually takes place by counseling a client to sell an asset before it drops in value, or to avoid acquiring a given asset that will not likely resell for at least the same unit price.

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sneakers41
Post 3

Moldova-I agree with you.I wanted to add that investment fraud recovery firms are abundant today.

With the increase in securities fraud there are more law firms that specialize in investment recovery service that help people who have lost money while investing with fraudulent asset managers.

These investors received what looked like legitimate income statements from the fraudulent firm and offered a very high return initially.

This actually encouraged investors to invest even more of their life savings until the Ponzi scheme could not continue.

This is what happened to the investors who chose to invest with Bernie Madoff who is now serving a life sentence for the billions that he defrauded from his investors.

There

was an investment fraud recovery network that not only auctioned off his properties to pay back the investors, but they also recovered hidden assets overseas that he was trying to continue to hide.

He will go down in history as the biggest crook of all time. But the old adage still rings true, “If it is too good to be true, it probably is.”

Moldova
Post 2

Stare31- Keynesian economics never works because the public sector does not stimulate the economy, the private sector does.

Only businesses create jobs, not the government. The more governmental intervention there is as in the Keynesian approach would suggest, the worse the economy gets.

The transportation investment generating economic recovery was a creation of Obama in order to develop infrastructure projects.

He felt that this investment in building bridges and working on roads would actually bring economic recovery. This was part of the stimulus that was tracked by the Department of Transportation.

A better approach would have been to offer tax breaks to the American people as well as businesses, but this supply side economic theory is diametrically opposed to the current Keynesian economic theory of high government regulation and taxes that we are experiencing today.

stare31
Post 1

The American Recovery and Investment Act of 2009 was the US's attempt at investment recovery. By pushing money into the economy the US government hoped to create jobs, increase spending and otherwise stimulate the economy. That Keynesian approach, however, didn't seem to work.

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