UNIT 66 INVESTMENT

Investment has different meanings in finance and economics.

Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time.

In contrast putting money into something with an expectation of gain without thorough analysis, without security of principal, and without security of return is speculation or gambling.

Investment is related to saving or deferring consumption. Investment is involved in many areas of the economy, such as business management and finance whether for households, firms, or governments.

To avoid speculation an investment must be either directly backed by the pledge of sufficient collateral or insured by sufficient assets pledged by a third party

In economic theory investment is the amount purchased per unit time of goods which are not consumed but are to be used for future production.

Investment in human capital includes costs of additional schooling or on-the-job training.

Inventory investment refers to the accumulation of goods inventories; it can be positive or negative, and it can be intended or unintended.

In measures of national income and output, "gross investment" (represented by the variable I) is also a component of Gross domestic product

In finance, investment is the commitment of funds through collateralized lending, or making a deposit into a secured institution.

In contrast to investment; dollar cost averaging, market timing, and diversification are phrases associated with speculation.

Investments are often made indirectly through intermediaries, such as banks, credit unions, brokers, lenders, and insurance companies. Though their legal and procedural details differ, an intermediary generally makes an investment using money from many individuals, each of whom receives a claim on the intermediary.