Investment Definition

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Definition Of Investment:

1. Money committed or property acquired for future income.
2. Trade off between risk and reward while aiming for incremental gain and preservation of the invested amount (principal). In contrast, speculation aims at 'high gain or heavy loss,' and gambling at 'out of proportion gain or total loss.' Two main classes of investment are (1) Fixed income investment such as bonds, fixed deposits, preference shares, and (2) Variable income investment such as business ownership (equities), property ownership. In economics, investment means creation of capital or goods capable of producing other goods or services. Expenditure on education and health is recognized as an investment in human capital, and research and development in intellectual capital. Return on investment (ROI) is a key measure of a firm's performance.Other definition of Investment- Anasset or item that is purchased with the hope that it willgenerate income or appreciate in the future. In an economicsense, 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 appreciate and be sold at a higher price.Thebuilding of a factory used to produce goodsandthe investment one makes by going to college or university are both examples of investments in the economic sense. In the financial sense investments include the purchase of bonds, stocks or real estate property. Be sure not to get 'making an investment' and 'speculating' confused. Investing usually involves the creation of wealth whereas speculating is often azero-sum game; wealth is not created. Although speculators are often making informeddecisions, speculation cannot usually be categorized as traditional investing.

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