According to Wikipedia, an Investment is the dedication of an asset to attain an increase in value over a period of time which requires a sacrifice of some present asset, such as time, money, or effort. There is also another definition of investment in economics.
From time to time, many financial markets declare their gains in order to compel investors to put in their resources with a great picture in mind. However, in finance, an investment brings both gains and losses.
Naturally, there are higher returns on high-risk investments and there are lower returns on low-risk investments. With this, many investors hire researchers to investigate a particular stock before they start investing.
What Is The Definition of Investment in Economics?
By definition, economics is the branch of knowledge concerned with the production, consumption, and transfer of wealth.
If economics is much concerned with production and consumption as well as wealth, the definition of investment in economics will actually put the term investment in the right spot.
According to economics, an investment is an asset or item acquired with the goal of generating income or appreciation.
For the definition of investment in economics, an investment’s meaning is primarily to obtain an additional source of income or gain profit over a specific period of time.
What Are The Main Types of Investment?
For investors, the kind of resources drawn into a particular additional wealth accumulation avenue defines the types of investment they are into.
Here I will share with you the different types of investment as defined by economics.
- Share investment – this type of investment enables an investor to use the money to own a part of an institution or company and periodically receive gains in terms of dividends.
- Property investment – here, an investor uses his resources to acquire properties, for example, houses (real estate) and waits patiently for the prices to go higher and then resells or leases.
- Cash investment – cash investment, comes in the form of everyday banking. Here, an investor opens high interest generating accounts like fixed deposit accounts. It also includes buying stocks like treasury bills.
- Fixed interest investment – this type of investment comes with particular conditions and time periods. The best example in this instance bonds, where governments borrow money from investors to build their economies and pay interest in return after some time.
- Growth investment – this investment can come in the form of any of the above-listed types. However, growth investment is measured with time as it is a long-term investment. This is also one type under the definition of investment in economics.
Summary
In simple terms, the definition of investment in economics is an asset acquired with the aim of generating income in the future. The types of this investment include; property investment, cash investment, share investment, and fixed interest investment.
As an investor, you are encouraged to go in for an industry expert who will research and educate you on which stocks and types of investment to throw your resources behind.
The same expert informs you when to pull out of an investment and when to add more resources to your already existing investment.
