What is Investment?

'Investment'--In Finance

Introduction:

Now a day’s people are being more aware about their future. They want to make their future secure by depositing their present income in bank account or purchasing the various insurance plans. If you have a saving account in bank then you are also an investor. Some people are also investing their present income to purchase gold, land etc. for the expectation that its value will be appreciated in the future. Thus, all individuals, groups, or organizations who sacrifices their present income for the objective that it will produce higher return in the future period of time are known as investor.

Meaning:

Dictionary meaning of investment is to devote, give or use of time, talent, knowledge, income, etc. for the purpose of receiving something big in the future. It means that investment refers to the scarification of present income so as to achieve higher income in the future. It is the purchase of real assets (Gold, land, etc.) or financial assets (stocks, bods, debentures, etc.) for the expectation that it will provide higher return in the future period of time either through the current income (interest, dividend, profits, etc.) or through the capital appreciation.

Definition:

According to Amit Chaudhary, “Investment can be defined as the commitment of fund at the present for the objective that it will yield higher return in the future.”

Objectives/Motives of Investment:

As we already discussed that investment is the commitment of present income for future income. So, the main objective of the investment is to increase the return. But increasing the return is not only the objective of investment. Some of the objective of investment are presented in the diagram below.