How an Investment Works: An investment can refer to any mechanism used for generating future income.
The act of investing has the goal of generating income and increasing value over time.
This includes the purchase of bonds, stocks, or real estate property, among other examples. Additionally, purchasing a property that can be used to produce goods can be considered an investment.
In general, any action that is taken 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.
The upfront investment of time attending class and money to pay for tuition will hopefully result in increased earnings over the student’s career.
How an Investment Works
Because investing is oriented toward the potential for future growth or income, there is always a certain level of risk associated with an investment. An investment may not generate any income, or may actually lose value over time.
For example, a company you invest in may go bankrupt. Alternatively, the degree you investing time and money to obtain may not result in a strong job market in that field.
An investment bank provides a variety of services to individuals and businesses, including many services that are designed to assist individuals and businesses in the process of increasing their wealth.
Investment banking may also refer to a specific division of banking related to the creation of capital for other companies, governments, and other entities.
Investment banks underwrite new debt and equity securities for all types of corporations, aid in the sale of securities, and help to facilitate mergers and acquisitions.
