Economic Investment

An Economic Investment is an investment that represents an economic asset (economic resource that is an asset).

• Context:
  • It can (typically) be acquired through an Investment Act with an associated Investment Cost.
  • It can (typically) generate returns through Capital Appreciation, Income Generation, or both.
  • It can (typically) require ongoing evaluation and management to maximize potential benefits and mitigate risks.
  • ...
  • It can range from being a Tangible Asset (e.g., Real Estate, Commodities) to an Intangible Asset (e.g., Financial Assets, Intellectual Property).
  • It can range from being a Traditional Investment Asset (e.g., Stocks, Bonds) to an Alternative Investment Asset (e.g., Cryptocurrency, Non-Fungible Tokens (NFTs)).
  • ...
  • It can be influenced by factors like Economic Conditions, Market Trends, Regulations, and Tax policies.
  • It can be a key component in an Investment Strategy.
  • It can be categorized into various Asset Classes, each with distinct characteristics, risk profiles, and potential returns.
  • It can fluctuate in value based on market conditions, economic factors, and asset-specific characteristics.
  • It can serve multiple investment objectives, such as growth, income generation, or capital preservation.
  • It can be subject to specific Regulations and Tax implications, which vary across jurisdictions and asset types.
  • It can be traded in various markets, from traditional Financial Markets to emerging platforms for alternative assets.
  • It can have broader societal impacts, both positive (e.g., funding innovation) and negative (e.g., exacerbating wealth concentration).
  • It can vary significantly in accessibility and performance across different global economic contexts.
  • It can be influenced in its valuation and management by both quantitative methods and qualitative factors, including market sentiment and global events.
  • ...
• Example(s):
  • Financial and Market-Based Investments, such as:
    • Financial Asset Investments on financial assets, such as: financial stocks, financial bonds, or mutual funds, where money is invested in financial markets with the expectation of monetary returns.
    • Bond Investments: Lending money to governments or corporations through the purchase of bonds, expecting regular interest payments and the return of principal at maturity.
    • Mutual Fund Investments: Pooling resources with other investors in a managed fund that diversifies across various asset classes, aiming for consistent returns over time.
    • Exchange-Traded Fund (ETF) Investments: Investing in ETFs that track an index, sector, commodity, or other asset, offering diversification and liquidity with potentially lower costs than mutual funds.
    • Stock Security Investments: Purchasing shares of a company, representing partial ownership and a claim on part of the company's assets and earnings.
    • Cryptocurrency Investments: Investing in digital currency like Bitcoin or Ethereum, anticipating future price appreciation or utility in decentralized finance.
    • Venture Capital Investments: Providing funding to startups or small businesses, with the hope of high returns if the companies succeed.
    • Private Equity Investments: Investing directly in private companies or buyouts, with the goal of improving business performance and eventually selling at a profit.
  • Tangible Asset Investments, such as:
    • Precious Metal Bullion Investments: A physical asset such as gold or silver, valued for its intrinsic metal content and used as a hedge against inflation.
    • Real Estate Investments: Purchasing property, including land and buildings, with the expectation of generating income through rent or appreciation in value.
    • Capital Investments: Investments in tangible assets such as machinery, buildings, or technology, intended to enhance productivity and generate profit over time.
    • Art Investments: Acquiring artworks with the expectation that their value will increase over time, offering both financial returns and cultural enrichment.
    • Real Asset Investments: Tangible assets like real estate, infrastructure, or natural resources, invested in for their ability to generate income and appreciate over time.
    • Commodities Investments: Investing in raw materials like oil, grain, or precious metals, with the expectation that their value will rise due to supply and demand factors.
  • Intangible Investment Assets:
    • Intellectual Property: Patents, trademarks, copyrights
    • Human Capital: Education, skills, expertise
    • Brand Value: Company or product reputation and recognition
  • ...
  • Long-Term Investments, such as:
    • Pension Fund Investments: Long-term investments made by pension funds on behalf of retirees, aimed at ensuring steady income in retirement years.
    • Annuities: A financial product that provides a stream of payments over time, often used as a retirement income strategy, where the investment is expected to generate stable returns.
  • ...
• Counter-Example(s):
  • Time Investments: Allocating time to activities like education or skill development, which are investments but not tangible assets.
  • Energy Investments: Committing personal energy to tasks like physical exercise or creative projects, which can yield future benefits but are not tradable assets.
  • Relationship Investments: Building and maintaining personal or professional relationships, which can provide future advantages but are not financial assets.
  • Social Investments: Efforts to improve communities or society, which may not involve acquiring specific assets but still aim for future benefits.
  • Emotional Investments: Committing emotionally to a cause, project, or relationship, which can yield personal returns but does not involve tangible assets.

See: Investment, Asset, Economic Resource, Financial Asset, Real Asset, Portfolio Management, Risk Management, Return on Investment, Asset Allocation, Investment Strategy.

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References

2024

• (Wikipedia, 2024) ⇒ http://en.wikipedia.org/wiki/investment Retrieved:2024-8-22.
  • NOTES:
    • Economic Investments involve the commitment of resources, often money, with the intention of generating future benefits, including monetary returns.
    • An Economic Investment in finance has the primary goal of achieving a return, which can take the form of capital gains, income from dividends, interest, or rental income.
    • Economic Investments can be categorized into traditional investments such as stocks, bonds, cash, and real estate, each offering different risk and return profiles.
    • Economic Investments may include alternative investments like private equity, commodities, collectibles, digital assets like cryptocurrencies, and sophisticated financial instruments like derivatives.
    • Economic Investments often involve portfolio diversification to mitigate risk, spreading investments across different asset classes and geographical locations to reduce exposure to any single economic factor.
    • Economic Investments are influenced by various risks, including financial risk, currency risk, and market volatility, which must be managed carefully.
    • An Economic Investment is subject to valuation based on metrics such as free cash flow and debt-to-equity ratios, helping investors assess potential risks and returns.
    • Economic Investment strategies like value investing, growth investing, and momentum investing guide how these investments are selected and managed, each with distinct principles and goals.
    • Economic Investments can range from short-term strategies, like momentum investing, to long-term commitments, such as pension funds and real estate, which aim for sustained growth over time.
    • Economic Investments can have broader societal impacts, such as fostering innovation, contributing to economic development, and sometimes exacerbating wealth inequality.

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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