What is investment?

Man, it is said lives on hopes. Hope, though necessary, is not sufficient in life. There are many other materialistic things that he needs like food, clothing, shelter etc. These needs keep changing as well throughout his life. To make things more uncertain, his ability to fulfill the needs too changes significantly. When his current ability ( current income) to fulfill his needs exceeds his expenditure, he saves the excess. The savings may be buried in the backyard or hidden under a mattress. On the other side of the coin, when the amount available for current consumption is less than the current needs, he is undergoing through a negative saving. This trade-off between the amount available for present consumption and future consumption is the core of investment. 


From the financial and business point of view, investment is an asset which is purchased for profits through interest, income (dividends), or appreciation (capital gains)over a period of time. The entity who has made the investment is called investor. It is not always necessary that investment would lead to capital appreciation. If the investment has not been thoroughly analyzed can be highly risky and you could potentially loose a part or whole of your principal amount. So it becomes extremely important for us to understand what investment is all about. We should also understand what are the different investment instruments available where we can bet our money.

How attractive the investment is, would actually depend on the return of the  investment whether anticipated or realized. 

Watch this space for more on different investment strategies..... stay tuned !!