People are now more confused with the word ‘Investment’ as the present financial markets become more complicated to them. We make it simple for you to understand. But before this, you should check these statements by some scholars regarding investment.
Some Important Definition of Investment:
Sacrificing of certain present value for some uncertain future value. -Sharpe/Alexander
Purchase of a financial asset that produces a yield that is proportional to the risk assumed over some future investment period. – F. Amling
An investment operation is one which, upon thorough analysis promises the safety of principal and an adequate return. Operation not meeting these requirements are speculative. – Graham
What is Investment:
Investment is the process of generating income in the future by sacrificing something now. In the financial sense, Investment activity involves the use of funds or savings for the acquisition of assets. These acquisitions include the purchase of bonds, stocks or real estate property.
But the art of investment especially for the famous Investors is to maximize returns with the minimum of risk. Some uncertainty involves in the future flow of funds. Investment is a fiscal asset bought with the idea that the asset will give income in the future or will later be exchanged at a higher price for a profit.
Class of Investment:
There are two main classes of Investment. They are:
- Fixed Income Investment
- Variable Income Investment