Investment

An Investment is a commitment of resources with the expectation of achieving future benefits (positive return on investment).

• Context:
  • It can (typically) involve Resource Allocation, such as of:Financial Resources, Time, Energy, or Matter.
  • It can (typically) involve a trade-off between Risk and Potential Return, with higher-risk investments generally offering higher potential returns.
  • It can (typically) be acquired through an Investment Act with an associated Investment Cost.
  • ...
  • It can range from being a Short-Term Investment to being a Long-Term Investment, depending on the investment time horizon.
  • It can range from being a Personal Investment to being an Organizational Investment (e.g. corporate investment, government investment).
  • It can range from being a Tangible Asset (e.g., ...) to an Intangible Asset (e.g., ...).
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  • It can benefit from Due Diligence and ongoing Investment Management.
  • It can impact economic inequalities depending on its nature and accessibility.
  • It can take different forms across cultures and economic systems, from formal financial markets to informal community-based systems.
  • It can consider Environmental, Social, and Governance (ESG) factors, reflecting broader impacts beyond financial returns.
  • It can be subject to behavioral biases and psychological factors influencing decision-making.
  • It can be crucial in personal planning, corporate strategy, and national policy.
  • ...
• Example(s):
  • Personal Development and Well-being Investments (for personal growth and health benefits), such as:
    • Human Capital Investments: Education investment (for educational outcome benefits), skill development (for career advancement benefits), relationship building (for social capital benefits)
    • Health and Wellness Investments: Physical exercise (for physical health benefits), creative projects (for mental well-being benefits), community service (for social well-being benefits)
    • Personal Development Investments: Training (for skill enhancement benefits), health improvement (for long-term health benefits)
    • Personal Well-being Investments: Fitness programs (for physical fitness benefits), therapy (for mental health benefits), wellness retreats (for stress reduction benefits)
    • ...
  • Economic Investments (for financial return and economic growth benefits), such as:
    • Financial Asset Investments: financial assets like stocks, bonds, or mutual funds, where money is invested in financial markets with the expectation of monetary returns.
      • Stock Investments: Purchasing shares of a company (for dividend and capital appreciation benefits)
      • Bond Investments: Lending money to governments or corporations (for interest income benefits)
      • Mutual Fund Investments: Pooling resources with other investors in a managed fund (for diversification benefits)
      • Exchange-Traded Fund (ETF) Investments: Investing in ETFs that track an index, sector, commodity, or other asset
      • Cryptocurrency Investments: Investing in digital currency like Bitcoin or Ethereum
    • Real Estate Investments: Residential property investment (for rental income and property value appreciation benefits), commercial real estate investment (for business rental income benefits)
    • Retirement Investments: 401(k) contributions (for tax-deferred growth benefits), IRA investments (for long-term retirement security benefits)
    • Venture Capital Investments: Providing funding to startups or small businesses
    • Private Equity Investments: Investing directly in private companies or buyouts
    • ...
  • Tangible Asset Investments, such as:
    • Precious Metal Bullion Investments: A precious metal bullion such as gold bullion or silver bullion
    • Capital Investments: Investments in tangible assets such as machinery, buildings, or technology
    • Art Investments: Acquiring artworks with the expectation of value appreciation
    • Commodities Investments: Investing in raw materials like oil, grain, or precious metals
    • ...
  • Intangible Investment Assets:
    • Intellectual Property: Patents, trademarks, copyrights
    • Human Capital: Education, skills, expertise
    • Brand Value: Company or product reputation and recognition
    • ...
  • Technology and Infrastructure Investments (for technological advancement and economic development benefits), such as:
    • Technology Investments: Startup funding (for innovation and high-growth potential benefits), emerging tech investment (for future market leadership benefits)
    • Infrastructure Investments: Road development (for transportation improvement benefits), bridge construction (for connectivity benefits), utility system upgrades (for service reliability benefits)
    • Renewable Energy Investments: Solar farm development (for clean energy and long-term financial return benefits), wind energy project funding (for sustainable power generation benefits).
    • ...
  • Social and Community Investments (for societal improvement and community development benefits), such as:
    • Social Investments: Community project funding (for local development benefits), social enterprise support (for sustainable social impact benefits)
    • Cultural Investments: Museum funding (for cultural preservation benefits), theater support (for arts development benefits), local art initiative investment (for community engagement benefits)
    • Social Impact Investments: Affordable housing investment (for housing accessibility benefits), sustainable agriculture funding (for food security and environmental benefits)
    • ...
  • Long-term Societal Impact Investments (for sustainable development and societal progress benefits), such as:
    • Environmental, Social, and Governance (ESG) Investments: Sustainable business practices (for environmental preservation and social responsibility benefits)
    • Education System Investments: Public education funding (for societal knowledge and skill development benefits), research grants (for scientific advancement benefits)
    • Green Technology Investments: Clean energy research funding (for sustainable future and environmental protection benefits)
  • ...
• Counter-Example(s):
  • Speculative Gambling, which involves high risk without a strategic plan for long-term profit.
  • Consumable Goods, such as food or fuel, which provide direct gratification and do not generate future returns.
  • Debts incurred for immediate expenses, like credit card balances, which may carry interest but do not generate future benefits.
  • Expenses related to entertainment, vacations or luxury items, which provide direct and immediate gratification.
  • Liability: An obligation or debt owed by an entity, which represents a future resource outflow.
• See: Capital Investment, Risk Management, Asset Allocation, Portfolio Diversification, Investment Strategy, Financial Planning, Economic Resource, Time Investment, Energy Investment.

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References

2024

• (Wikipedia, 2024) ⇒ https://en.wikipedia.org/wiki/Investment Retrieved:2024-8-17.
  • Investment is traditionally defined as the "commitment of resources to achieve later benefits". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broader viewpoint, an investment can be defined as "to tailor the pattern of expenditure and receipt of resources to optimise the desirable patterns of these flows". When expenditures and receipts are defined in terms of money, then the net monetary receipt in a time period is termed cash flow, while money received in a series of several time periods is termed cash flow stream.

    In finance, the purpose of investing is to generate a return on the invested asset. The return may consist of a capital gain (profit) or loss, realised if the investment is sold, unrealised capital appreciation (or depreciation) if yet unsold. It may also consist of periodic income such as dividends, interest, or rental income. The return may also include currency gains or losses due to changes in foreign currency exchange rates.

    Investors generally expect higher returns from riskier investments. When a low-risk investment is made, the return is also generally low. Similarly, high risk comes with a chance of high losses. Investors, particularly novices, are often advised to diversify their portfolio. Diversification has the statistical effect of reducing overall risk.

2020

• https://en.wiktionary.org/wiki/investment#Noun
  • The act of investing, or state of being invested.

    Giving your children a good education is a wise long-term investment.

  • (finance) A placement of capital in expectation of deriving income or profit from its use or appreciation.

    Antonym: divestment

2014

• (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/investment Retrieved:2014-6-22.
  • 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.

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