digplanet beta 1: Athena
Share digplanet:


Applied sciences






















For other uses, see Investment (disambiguation).
"Invest" redirects here. For the term in meteorology, see Invest (meteorology).

Investment is time, energy, or matter spent in the hope of future benefits actualized within a specified date or time frame. Investment has different meanings in economics and finance.

In economics, investment is the accumulation of newly produced physical entities, such as factories, machinery, houses, and goods inventories.

In finance, investment is putting money into an asset with the expectation of capital appreciation, dividends, and/or interest earnings. This may or may not be backed by research and analysis. Most or all forms of investment involve some form of risk, such as investment in equities, property, and even fixed interest securities which are subject, among other things, to inflation risk. It is indispensable for project investors to identify and manage the risks related to the investment.

In macroeconomics[edit]

In macroeconomics, non-residential fixed investment is the amount purchased per unit time of goods which are not consumed but are to be used for future production (i.e. capital). Examples include railroad or factory construction. Investment in human capital includes costs of additional schooling or on-the-job training. Inventory investment is the accumulation of goods inventories; it can be positive or negative, and it can be intended or unintended. In measures of national income and output, "gross investment" (represented by the variable I) is a component of gross domestic product (GDP), given in the formula GDP = C + I + G + NX, where C is consumption, G is government spending, and NX is net exports, given by the difference between the exports and imports, XM. Thus investment is everything that remains of total expenditure after consumption, government spending, and net exports are subtracted (i.e. I = GDP − CGNX).

Non-residential fixed investment (such as new factories) and residential investment (new houses) combine with inventory investment to make up I. "Net investment" deducts depreciation from gross investment. Net fixed investment is the value of the net increase in the capital stock per year.

Fixed investment, as expenditure over a period of time (e.g., "per year"), is not capital but rather leads to changes in the amount of capital. The time dimension of investment makes it a flow. By contrast, capital is a stock—that is, accumulated net investment to a point in time (such as December 31).

Investment is often modeled as a function of income and interest rates, given by the relation I =  f (Y, r). An increase in income encourages higher investment, whereas a higher interest rate may discourage investment as it becomes more costly to borrow money. Even if a firm chooses to use its own funds in an investment, the interest rate represents an opportunity cost of investing those funds rather than lending out that amount of money for interest.[1]

In finance[edit]

In finance, investment is the purchase of an asset or item with the hope that it will generate income or appreciate in the future and be sold at the higher price.[2] It generally does not include deposits with a bank or similar institution. The term investment is usually used when referring to a long-term outlook. This is the opposite of trading or speculation, which are short-term practices involving a much higher degree of risk. Financial assets take many forms and can range from the ultra safe low return government bonds to much higher risk higher reward international stocks. A good investment strategy will diversify the portfolio according to the specified needs. The most famous and successful investor of all time is Warren Buffett. In March 2013 Forbes magazine had Warren Buffett ranked as number 2 in their Forbes 400 list.[3] Buffett has advised in numerous articles and interviews that a good investment strategy is long term and choosing the right assets to invest in requires due diligence. Edward O. Thorp was a very successful hedge fund manager in the 1970s and 1980s that spoke of a similar approach.[4] Another thing they both have in common is a similar approach to managing investment money. No matter how successful the fundamental pick is, without a proper money management strategy, full potential of the asset cannot be reached. Both investors have been shown to use principles from the Kelly criterion for money management.[5] Numerous interactive calculators which use the kelly criterion can be found online.[6]

In contrast, dollar (or pound etc.) cost averaging and market timing are phrases often used in marketing of collective investments and can be said to be associated with speculation.

Investments are often made indirectly through intermediaries, such as pension funds, banks, brokers, and insurance companies. These institutions may pool money received from a large number of individuals into funds such as investment trusts, unit trusts, SICAVs etc. to make large scale investments. Each individual investor then has an indirect or direct claim on the assets purchased, subject to charges levied by the intermediary, which may be large and varied. It generally, does not include deposits with a bank or similar institution. Investment usually involves diversification of assets in order to avoid unnecessary and unproductive risk.


The Code of Hammurabi (around 1700 BC) provided a legal framework for investment, establishing a means for the pledge of collateral by codifying debtor and creditor rights in regard to pledged land. Punishments for breaking financial obligations were not as severe as those for crimes involving injury or death.

In the early 1900s purchasers of stocks, bonds, and other securities were described in media, academia, and commerce as speculators. By the 1950s, the term investment had come to denote the more conversative end of the securities spectrum, while speculation was applied by financial brokers and their advertising agencies to higher risk securities much in vogue at that time. Since the last half of the 20th century, the terms speculation and speculator have specifically referred to higher risk ventures.

Types of investment[edit]

Types of investments include:

See also[edit]


  1. ^ Hassett, Kevin A. (2008). "Investment". In David R. Henderson (ed.). Concise Encyclopedia of Economics (2nd ed.). Indianapolis: Library of Economics and Liberty. ISBN 978-0865976658. OCLC 237794267. 
  2. ^ Editor. "Investment Definition". Investopedia. Retrieved 31 March 2013. 
  3. ^ Editor. "Forbes 400: Warren Buffett". Forbes Magazine. Retrieved 1 March 2013. 
  4. ^ Thorp, Edward (2010). Kelly Capital Growth Investment Criterion. World Scientific. ISBN 9789814293495. Retrieved 2010. 
  5. ^ "The Kelly Formula: Growth Optimized Money Management". Seeking Alpha. Healthy Wealthy Wise Project. 
  6. ^ Jacques, Ryan. "Kelly Calculator Investment Tool". Retrieved 7 October 2008. 

External links[edit]

Original courtesy of Wikipedia: http://en.wikipedia.org/wiki/Investment — Please support Wikipedia.
This page uses Creative Commons Licensed content from Wikipedia. A portion of the proceeds from advertising on Digplanet goes to supporting Wikipedia.
1000000 videos foundNext > 

William Ackman: Everything You Need to Know About Finance and Investing in Under an Hour

William Ackman: Everything You Need to Know About Finance and Investing in Under an Hour. WILLIAM ACKMAN, Activist Investor and Hedge-Fund Manager We all wan...

Investment Punk - Gerald Hörhan - "Warum ihr schuftet und wir reich werden"

https://www.facebook.com/Fachschaft.Wirtschaft.Hochschule.Fulda?ref=ts&fref=ts Hochschule Fulda - Fachschaftsrat Wirtschaft Wir freuen uns Gerald Hörhan für ...

INVESTMENT BANKS DESTROYED in this AWESOME Presentation - Part 1 of 5

Institute of Trading and Portfolio Management - University Tour 2013 Filmed at University College London (UCL) November 2013 University Tour 2013 -- Full Pre...

Best Real Estate Investor - Robert Kiyosaki - Rich Dad Poor Dad Author - Investment Strategies

http://www.coachingbysubjectexperts.com/marketing-coach/ (We are looking for product) See our call to action for coaches.

Warren Buffett This is Always a Bad Investment

economy 2013,2014 economy,financial,gold, gold price, 2014 gold, 2014 gold price, gold 2014, gold price 2014, silver price 2014, 2014 silver price, silver, s...

The Best of Value Investing - Part 1

The World's Best Investment Advices from valueinvestor- Warren Buffett, Peter Lynch, John Templeton, Seth Klarman, Charlie Munger, Walter Schloss, Bill Ackma...

Six numbers every investor should know - MoneyWeek Investment Tutorials

Like this MoneyWeek Video? Want to find out more about investment banks? Go to http://www.moneyweekvideos.com/six-numbers-every-investor-should-know/ now and...

How to Make Money Like Warren Buffett: Stock Market Investment Advice - Quotes, Portfolio

In 2008, Warren Buffett was ranked by Forbes as the richest person in the world with an estimated net worth of approximately US$62 billion. In 2009, after do...

Stock Investment Guide - How to Invest in Stocks Safely

Stock Market Investment Guide - Learn how to invest in stocks safely and wisely to get maximum returns.

What is an Investment? Lessons in Money for Kids!

Schiel Wealth Management Kids! In this lesson, Chad explains what an investment is. Often times investments are confused with assets. Here Chad explains the ...

1000000 videos foundNext > 

18819684 news items

CMC Markets Site

Mon, 28 Jul 2014 16:23:19 -0700

“It will be all about investment-banking revenue” and cost cutting, said Chirantan Barua, a London-based analyst at Sanford C. Bernstein Ltd. who rates the shares market perform. “A mix of well-known structural headwinds added to a deleveraging ...
Tue, 29 Jul 2014 04:00:04 -0700

Interpublic last week released this statement: "We have strong, positive relations with the investment community. As such, we meet with shareholders regularly and are open to engaging in dialogue with Elliott Management to assess their perspectives.
Pittsburgh Business Times (blog)
Tue, 29 Jul 2014 10:15:00 -0700

A corporate organization promoting foreign investment has recognized Pennsylvania as an up-and-coming place for energy-intensive industries. The recognition is from the Foreign Direct Investment Association, which named the state as its top Destination ...
Tue, 29 Jul 2014 06:52:30 -0700

JPMorgan Chase & Co., the biggest U.S. lender, is cutting hundreds of technology support employees in its corporate and investment bank amid a revenue decline, people with knowledge of the move said. Workers in locations including New York, Tampa, ...
Las Vegas Review-Journal
Mon, 28 Jul 2014 17:00:00 -0700

Unfortunately, people do not always do what they should to protect themselves, and despite tougher laws and better oversight, investors are continuing to get hurt by bad investment deals. In a survey conducted by the Federal Trade Commission, an ...

Economic Times

Tue, 29 Jul 2014 01:03:45 -0700

FRANKFURT, July 29 (Reuters) - Deutsche Bank's plan to become "the last man standing" in investment banking in Europe is working, the bank said on Tuesday, reporting a 16 percent year-on-year increase in quarterly pretax income. But the spectre of ...


Tue, 29 Jul 2014 07:48:45 -0700

If there is turnover, those people who have left the company might be good to talk to as they could know about something happening at the firm, such as major changes which could impact your investment, notes Shane. “Those individuals are the most ...

New York Times

New York Times
Mon, 28 Jul 2014 09:15:44 -0700

Mr. Icahn, who disclosed his Family Dollar stake on June 6, and later urged the company to put itself up for sale, is poised to walk away with a return of roughly 28 percent on his investment. In a statement on Monday, Mr. Icahn raised the possibility ...

Oops, we seem to be having trouble contacting Twitter

Talk About Investment

You can talk about Investment with people all over the world in our discussions.

Support Wikipedia

A portion of the proceeds from advertising on Digplanet goes to supporting Wikipedia. Please add your support for Wikipedia!