Investment: What Is An Investment?

Investment
By JAMES CHEN
Reviewed By GORDON SCOTT
Updated Feb 27, 2020
What Is an Investment?
An investment is an asset or item acquired with the goal of generating income or
appreciation. In an economic sense, an investment is the purchase of goods that
are not consumed today but are used in the future to create wealth. In finance,
an investment is a monetary asset purchased with the idea that the asset will
provide income in the future or will later be sold at a higher price for a profit.

An investment always concerns the outlay of some asset today (time, money,
effort, etc.) in hopes of a greater payoff in the future than what was originally put
in.
Volume 75%

1:35
What's an Investment?
Understanding Investment
Investing is putting money to work to start or expand a project - or to purchase an
asset or interest - where those funds are then put to work, with the goal to
income and increased value over time. The term "investment" can refer to any
mechanism used for generating future income. In the financial sense, this
includes the purchase of bonds, stocks or real estate property among several
others. Additionally, a constructed building or other facility used to produce goods
can be seen as an investment. The production of goods required to produce
other goods may also be seen as investing.
Taking an action in the hopes of raising future revenue can also be considered
an investment. For example, when choosing to pursue additional education, the
goal is often to increase knowledge and improve skills in the hopes of ultimately
producing more income. This is also the main goal of reading articles
on Investopedia. Because investing is oriented toward future growth or income,
there is risk associated with the investment in the case that it does not pan out or
falls short. For instance, investing in a company that ends up going bankrupt or a
project that fails. This is what separates investing from saving - saving is
accumulating money for future use that is not at risk, while investment is putting
money to work for future gain and entails some risk
Investment is using money to purchase assets in the hope that the asset will generate income over
time or appreciate over time. Consumption, on the other hand, is when you purchase something
with the immediate intent of personal use and with no expectation that it will generate money or
increase in value.
Investment also helps grow the economy because it creates economic activity, such as the buying
and selling of goods and services and employing people. Employed people get paid and either save,
invest, or spend their money. If they spend their money, businesses make more profits. Businesses
can then reinvest the profits in further business activities that expand the economy.
Of course, too much of a good thing can be bad. If everyone is investing, then no one is consuming.
If no one is consuming, consumer-orientated businesses, such as restaurants and retail
establishments, will suffer. This may lead to layoffs. The key is to find the proper balance between
investment and consumption.
What is Investment?
An investment is an asset or item accrued with the goal of generating income or recognition. In an
economic outlook, an investment is the purchase of goods that are not consumed today but are used
in the future to generate wealth. In finance, an investment is a financial asset bought with the idea
that the asset will provide income further or will later be sold at a higher cost price for a profit.
Investment is elucidated and defined as an addition to the stockpile of physical capital such as:
 Machinery
 Buildings
 Roads etc.,
i.e. anything that sums up to the future productive ability of the economy and changes in the
catalogue (or the stock of finished commodities) of a manufacturer. Note that ‘investment
commodities’ (such as machines) are also part of the final commodities – they are not intermediate
commodities like raw materials. Machines manufactured in an economy in a given year are not ‘used
up’ to produce other commodities but yield their services over a number of years.
Investment decisions by manufacturers, such as whether to buy new machinery, rely to a large
extent, on the market place rate of interest. However, for simplicity, we presume here that
enterprises plan to invest the same amount every year. We can write the ex-ante investment
demand as:
I=ī
Whereas, ī is a positive constant which represents the autonomous (given or exogenous) investment
in the economy in a given year.
investment -- Physical investment is the current product set aside during a

given period to be used for future production--in other words, an addition to
the stock of capital goods. As measured by the national income and product
accounts, private domestic investment consists of investment in residential
and nonresidential structures, producers' durable equipment, and the change
in business inventories. Financial investment is the purchase of a financial
security, such as a stock, bond, or mortgage. Investment in human capital is
spending on education, training, health services, and other activities that
increase the productivity of the workforce. Investment in human capital is not
treated as investment by the national income and product accounts.
another definition...
Investment -- The purchase of a security, such as a stock or bond.
another definition...
investment -- an outlay of a sum of money to be used in such a way that a

profit or increase in capital may be expected.

Investment: What Is An Investment?

Uploaded by

Copyright:

Available Formats

Investment: What Is An Investment?

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Investment: What Is An Investment?

Uploaded by

Copyright:

Available Formats

Investment

investment -- Physical investment is the current product set aside during a

Investment -- The purchase of a security, such as a stock or bond.

investment -- an outlay of a sum of money to be used in such a way that a

You might also like