INVESTMENT A BEGINNERS DEFINITION

Updated: 10/04/2008 20:49
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Investment is any activity which can help to increase the future value of an asset which could be either liquid or fixed asset

Investment is any activity which can help to increase the future value of an asset which could be either liquid or fixed asset. Investment is anything 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 investment decision is a fundamental decision. The investor must determine the investment value of the assets that he has within his control or possession. These assets may be physical (such as buildings or machinery), intangible (such as patents, software, goodwill), or financial marketable securities such as company stocks (an equity investment) or bonds (a debt investment) or other short term instruments. Most times the goal of the investment is for producing future value. Assets are used to produce streams of revenue that often are associated with particular costs or outflows.

Investments are often made indirectly through intermediaries, such as banks, mutual funds, pension funds, insurance companies, collective investment schemes and investment clubs.

Though their legal and procedural details differ, an intermediary generally makes an investment using money from many individuals, each of whom receives a claim on the intermediary.

Types of Investment: Investment can be categorised into two major types. Short term investments which as the name implies are for short periods of time. Usually periods ranging from 1 month to 3 years.

Long term investments on the other hand includes investments which cover longer period. Can be between 5 years to 25 years or more. Your choice of the type of investment depends on your risk outlook.


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