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'''Investment''' is the investing of [[money]] or capital in order to gain profitable returns, as interest, income, or appreciation in [[value]]. [1] It is related to saving or deferring consumption. Investment is involved in many areas of the [[economy]], such as [[business]] management and [[finance]] no matter for households, firms, or [[governments]]. An investment involves the [[choice]] by an [[individual]] or an organization such as a pension fund, after some [[analysis]] or [[thought]], to place or lend money in a vehicle, instrument or asset, such as property, commodity, stock, bond, financial derivatives (e.g. futures or options), or the foreign asset denominated in foreign [[currency]], that has certain level of risk and provides the [[possibility]] of generating returns over a period of [[time]].[2]
Investment comes with the [[risk]] of the loss of the principal sum. The investment that has not been thoroughly analyzed can be highly risky with respect to the investment owner because the possibility of losing [[money]] is not within the owner's control. The [[difference]] between speculation and investment can be subtle. It depends on the investment owner's [[mind]] whether the [[purpose]] is for lending the resource to someone else for economic purpose or not.[3]
In the case of investment, rather than store the [[Things|good]] produced or its [[money]] equivalent, the investor chooses to use that good either to create a durable consumer or producer good, or to lend the [[original]] saved good to another in exchange for either interest or a share of the profits. In the first case, the individual [[creates]] durable consumer goods, hoping the [[services]] from the good will make his life better. In the second, the [[individual]] becomes an entrepreneur using the resource to produce goods and services for others in the [[hope]] of a profitable sale. The third case describes a lender, and the fourth describes an investor in a share of the [[business]]. In each case, the consumer obtains a durable asset or investment, and accounts for that asset by recording an equivalent liability. As time passes, and both prices and interest rates [[change]], the value of the asset and liability also change.
An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a future return or interest from it. The [[word]] [[origin]]ates in the [[Latin]] "vestis", [[meaning]] garment, and refers to the [[act]] of putting [[things]] ([[money]] or other claims to [[resources]]) into others' pockets. The basic [[meaning]] of the term being an asset held to have some recurring or capital gains. It is an asset that is expected to give returns without any [[work]] on the asset per se. The term "investment" is used differently in [[economics]] and in [[finance]]. Economists refer to a real investment (such as a [[machine]] or a house), while financial economists refer to a financial asset, such as [[money]] that is put into a bank or the market, which may then be used to buy a real asset.
==Notes==
# Arthur O' Sullivan, Steven M. Sheffrin, [http://www.pearsonschool.com/index.cfm?locator=PSZ3R9&PMDbSiteId=2781&PMDbSolutionId=6724&PMDbCategoryId=&PMDbProgramId=12881&level=4 Economics: Principles in Action] ISBN 0-13-063085-3
# Graham, Benjamin, and David Dodd (1951). Security Analysis. McGraw-Hill Book Company. ISBN 0071448209
# Graham and Dodd (1951). Security Analysis. McGraw-Hill Book Company. ISBN 0071448209
[[Category: Economics]]
'''Investment''' is the investing of [[money]] or capital in order to gain profitable returns, as interest, income, or appreciation in [[value]]. [1] It is related to saving or deferring consumption. Investment is involved in many areas of the [[economy]], such as [[business]] management and [[finance]] no matter for households, firms, or [[governments]]. An investment involves the [[choice]] by an [[individual]] or an organization such as a pension fund, after some [[analysis]] or [[thought]], to place or lend money in a vehicle, instrument or asset, such as property, commodity, stock, bond, financial derivatives (e.g. futures or options), or the foreign asset denominated in foreign [[currency]], that has certain level of risk and provides the [[possibility]] of generating returns over a period of [[time]].[2]
Investment comes with the [[risk]] of the loss of the principal sum. The investment that has not been thoroughly analyzed can be highly risky with respect to the investment owner because the possibility of losing [[money]] is not within the owner's control. The [[difference]] between speculation and investment can be subtle. It depends on the investment owner's [[mind]] whether the [[purpose]] is for lending the resource to someone else for economic purpose or not.[3]
In the case of investment, rather than store the [[Things|good]] produced or its [[money]] equivalent, the investor chooses to use that good either to create a durable consumer or producer good, or to lend the [[original]] saved good to another in exchange for either interest or a share of the profits. In the first case, the individual [[creates]] durable consumer goods, hoping the [[services]] from the good will make his life better. In the second, the [[individual]] becomes an entrepreneur using the resource to produce goods and services for others in the [[hope]] of a profitable sale. The third case describes a lender, and the fourth describes an investor in a share of the [[business]]. In each case, the consumer obtains a durable asset or investment, and accounts for that asset by recording an equivalent liability. As time passes, and both prices and interest rates [[change]], the value of the asset and liability also change.
An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a future return or interest from it. The [[word]] [[origin]]ates in the [[Latin]] "vestis", [[meaning]] garment, and refers to the [[act]] of putting [[things]] ([[money]] or other claims to [[resources]]) into others' pockets. The basic [[meaning]] of the term being an asset held to have some recurring or capital gains. It is an asset that is expected to give returns without any [[work]] on the asset per se. The term "investment" is used differently in [[economics]] and in [[finance]]. Economists refer to a real investment (such as a [[machine]] or a house), while financial economists refer to a financial asset, such as [[money]] that is put into a bank or the market, which may then be used to buy a real asset.
==Notes==
# Arthur O' Sullivan, Steven M. Sheffrin, [http://www.pearsonschool.com/index.cfm?locator=PSZ3R9&PMDbSiteId=2781&PMDbSolutionId=6724&PMDbCategoryId=&PMDbProgramId=12881&level=4 Economics: Principles in Action] ISBN 0-13-063085-3
# Graham, Benjamin, and David Dodd (1951). Security Analysis. McGraw-Hill Book Company. ISBN 0071448209
# Graham and Dodd (1951). Security Analysis. McGraw-Hill Book Company. ISBN 0071448209
[[Category: Economics]]
