Investment

AAA

DEFINITION of 'Investment'

An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.

INVESTOPEDIA EXPLAINS 'Investment'

The building of a factory used to produce goods and the investment one makes by going to college or university are both examples of investments in the economic sense.

In the financial sense investments include the purchase of bonds, stocks or real estate property.

Be sure not to get 'making an investment' and 'speculating' confused. Investing usually involves the creation of wealth whereas speculating is often a zero-sum game; wealth is not created. Although speculators are often making informed decisions, speculation cannot usually be categorized as traditional investing.

RELATED TERMS
  1. Sacred Cow

    A firmly held mainstream belief that is considered to be true ...
  2. Investment Product

    A product purchased with the expectation of earning a favorable ...
  3. Bond

    A debt investment in which an investor loans money to an entity ...
  4. Real Estate

    Land plus anything permanently fixed to it, including buildings, ...
  5. Speculation

    The act of trading in an asset, or conducting a financial transaction, ...
  6. Asset

    1. A resource with economic value that an individual, corporation ...
Related Articles
  1. The Seasons Of An Investor's Life
    Investing Basics

    The Seasons Of An Investor's Life

  2. The Five Biggest Stock Market Myths
    Investing Basics

    The Five Biggest Stock Market Myths

  3. Defining The 3 Types Of Investments
    Investing Basics

    Defining The 3 Types Of Investments

  4. 8 Steps To An Organized Financial Life
    Budgeting

    8 Steps To An Organized Financial Life

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center