What Is an Investment? An investment is an asset or item acquired with the goal of generating income or appreciation.
Appreciation refers to an increase in the value of an asset over time. When an individual purchase a good as an investment, the intent is not to consume the good but rather to use it in the future to create wealth.
What Is an Investment?
An investment always concerns the outlay of some resource today—time, effort, money, or an asset—in hopes of a greater payoff in the future than what was originally put in.
For example, an investor may purchase a monetary asset now with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit.
KEY TAKEAWAYS
An investment involves putting capital to use today in order to increase its value over time.
An investment requires putting capital to work, in the form of time, money, effort, etc., in hopes of a greater payoff in the future than what was originally put in.
investment
An investment can refer to any medium or mechanism used for generating future income, including bonds, stocks, real estate property, or alternative investments.
Investments usually do not come with guarantees of appreciation; it is possible to end up with less money than with what you started.
Investments can be diversified to reduce risk, though this may reduce the amount of earning potential.
2 replies on “What Is an Investment?”
[…] Buy and Hold […]
[…] invest […]