Tuesday, August 28, 2007

What Is An Investment?

Today I wanted to discuss the meaning of investment. While I know this may seem trivial a lot of people simply just do not understand what an investment really is. According to the Wikipedia, an investment (or investing) is a term that has several closely-related meanings in business management, finance and economics, related to saving or deferring consumption. An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a future return or interest from it. Literally, the word means the "action of putting something in to somewhere else" (perhaps originally related to a person's garment or 'vestment').

So what does this mean? In simple terms an investment means that you buy something now with the anticipation that the value of that item will increase in value at at a later period of time.

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