An investment is an asset that is purchased with expectation that it will generate income or appreciate in the long run. In an economic aspect, an investment is buying of goods that are not consumed today but are used in the future to make wealth. In finance, an investment is a monetary asset bought with the idea that the asset will provide income in the future or valued to be sold at a greater price. There are various kinds of investment of which five (5) will be discussed:
The Capital Investment
It is defined as the expenditure that may be acquired by a business organization in order to buy machineries and other fixed assets. This expenditure is beneficial as it lays the foundation for future investments that are alike. Capital investment also implies the amount of money, which is required to purchase long-term assets besides the amount that is required for running of the business.
The Equity Investment
This refers to the trading of stocks and bonds in the share market. It is also the acquiring of equity or ownership participation in the company. An equity investment is an ownership investment, where the investor owns an asset of the company.
In this kind of investment there is always the risk of the investor not earning a definite amount of money. Equity investment can be seen as payment to a firm in return for partially owning the firm. An equity investor may assume some management control of the firm and also share in future profits of the company.
The Land Investment
This is a long-term investment and just as the cost of land around the world has drastically increased. Large development companies and wealthy individuals have involved themselves in land investment. Moreover, an functioning system for efficient development of land must be in place.
With the increase in the cost of land, investment in land can be very profitable as capital gains are easily realized. Moreover, land is a very substantial asset and the investors can use it in their best interests. Land investment forms a major part of real estate investment.
The Stock Investment
In stock investment it helps the stock traders or investors to deal in securities. Investors can operate individually or under the guidance of investment management companies. The system of stock investment is not unaware of prices and it involves a certain amount of risk and uncertainty.
The ones who are mostly affected by the harsh nature of the stock investment are the new investors and those who are not intelligible enough in their decision making process. In desiring to make quick money the stock market investment is not actually the right option for an investor
The Retirement Investment
The core step to success in retirement investing is developing the habit early saving lifestyle. Adequate planning ensures financial security in the post retirement period. A considerable amount of money should be invested in retirement investment plans. Money must not be withdrawn anyhow from retirement accounts.
An individual’s various retirement investments must be check mated regularly. Both the social security and investment in stocks may add to an individual’s retirement.
The Need for Investment
This refers to why investment or the need for investment. The investment policy is a plan, which is created to guide an investor to select the most appropriate investment collection that will help him achieve his financial goals within a specific period of time.
An investment strategy usually involves a set of methods, rules, and regulations, and is designed according to the exchange of the investor’s risks and returns. A number of investors like to increase their earnings through high-risk investments, while others prefer investing in assets with minimum risk involved. Then ultimately before investing take a minute to think about why you may want to invest.
- Inflation is constantly raising the price of goods and services and affect the value of your income and wealth. You need to save money and invest it well so that the value of every rupee is augmented.
- High life-expectancy means people live longer and they need more money to maintain their standards of living
- Investing allows you to enjoy tax benefits.
- Through the means of investing you can improve your standard of living and generate wealth for the future.