Investment and Types of Investment

by on May 16, 2010

What Is Investment?

In Economics Investment is defined as The per unit Production of goods, which have not been utilized, but will be used in future for the purpose of further production of that same Product. In Business Management investment Refers to the assets like machinery or equipments or assets like Copyrights and Patents. In terms of finance investment is referred as the purchase of future security or financial assets in terms of property bonds or expensive goods like gold, silver.

If you think investment is just about investing in shares or equities or stocks then I should warn you, it is a very false notion as the above statements have very well explained what investment is. To further explain in detail the term investment is a procedure of saving your earnings. This in future acts as your support. So buying shares and all is not an investment it is just putting of your money on papers than your bank or pocket. The experts have also derived, an investment as using your money to purchase assets or financial instruments so that you can gain there profit in terms of interest or regular income when you need it the most that is your retirement or professional exile. If not done wisely Investment can cause the risk of loss of the Money you saved. So one should study the trends and procedures of investment like in what you should invest? how much you can invest? or what is the best investment trend for you? these questions should be self analyzed by you first and then you should move ahead and save your money in that practical trend. Well this was the practical term of investment on the other hand investment is also referred as the saving caused by delay in consumption. When a particular amount of money in saved in the bank then a specific return is accepted in the future in terms of interest. So save wisely and invest wisely to have that perfect retired life .

Types of investment

I’ve heard a lot of time s that there are 3 different kinds of investment, Stock, Bond and cash but indeed it is so untrue there are basically 5 different kinds of Investment. Which are segregated in the following way:

  1. Stock
  2. Bond
  3. Real Estate
  4. Cash
  5. Gold & Silver
  1. Stock – stocks are the best and the unbeatable investment commodity. In long term they give you the best returns than any investment. they give you up to 5-7 % of return and are easily taxable no messy procedures. Most of the times they have been proved as the best asset but yes they do have there drawbacks too. The Stock market is a very wild place and is quite unpredictable if not studied properly you can loose all your investment in a blow. Investing in stocks is always beneficial when it’s a long term investment, whereas short term investments are much of a risky game.
  2. Bond – bonds are basically known as the Debt Instruments. When you buy a bond of a company it is that you give that company some money in return of which they promise you to return some amount of money as interest and later your actual principal amount after the maturity. These are a very old investing instrument which is kind of average paying.
  3. Real Estate – Investing in real estate can be highly beneficial if done wisely. Real estate investors own multiple pieces of land or property across there area which are used to generate rental income or price appreciation. If money is wisely invested in real estate then it can give you double or triple returns after few years.
  4. Cash – well this is a very common and most important investment. We invest cash in banks in the form of funds or fixed deposits which in return give us interest. If we deposit some cash in the bank then the bank promises us to give in return the interest and the principal amount after some time or the decided tenure.
  5. Gold & Silver – they come under the precious commodity list in which the investor invests directly in the costly items like gold or silver which with the time always appreciate ands is the investment.

These are the most important 5 investing instruments which help us to invest wisely for our future.

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