Meaning of Investment

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MEANING

An investment is a sacrifice of current money or other resources for future benefits. It usually involves putting money into an asset which is not necessarily marketable in the short run in order to enjoy a series of returns the investment is expected to yield. An investment is a commitment of funds made in the expectation of some positive rate of return. If investment is properly undertaken, the return will be reciprocated with the risk the investor assumes.

Definition

  • According to economists, investment refers to any physical or tangible asset, for example, a building or machinery and equipment. On the other hand, finance professionals define an investment as money utilized for buying financial assets, for example stocks, bonds, bullion, real properties, and precious items.
  • According to business theories, investment is that activity in which a manufacturer buys a physical asset, for example, stock or production equipment, in expectation that this will help the business to prosper in the long run.
  • Investment may be defined as an activity that commits fund in any financial/physical form in the present with an expectation of receiving additional return in future. The expectation brings with it a probability that the quantum of return may vary from minimum to a maximum. This possibility of variation in the actual return is known as investment risk. Thus, every investment involves a return and risk.

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