Investment involves employment of funds with the aim of achieving additional income or growth in values.
- Lending money to another [interest]
- Purchasing of gold[value appreciation]
- Purchase of insurance plan[promised future benefits]
Different Definitions for Investment
Investment may be defined as:
“a commitment of funds made in the expectation of some positive rate of return” OR
“a sacrifice of current money or other resources for future benefits”.
- Return is expected to be realized in future
- Future is uncertain
- Expected return > realized return - variation
- Variation in income is risk
- Non marketable financial assets
- Bonds
- Mutual fund schemes
- Real assets
- Equity shares
- Life insurance policies
- Financial derivatives and
- Precious objects