The topic of investing is very broad and cuts across other disciplines. Investing is the decision by an individual or an entity to risk existing wealth in order to create and gain more wealth. Wealth as we all know is referred to as items of economic value. This can be in the form of money or produced goods and services.
Investing is then said to have taken place when an individual or a firm gives away accumulated savings to another individual or firm and expects returns in the form of interest or shared profits. Let it be clear that investments are totally different from loans. With loans, the lender is not liable to any losses. On the other hand, investors are considered part owners in the new venture and liable to any failures or losses.
To drive the point home, any kept asset that has a fluctuating value and has some risk factor to it can be called an investment. The changes in value of the asset may be positive or negative. That is why there is an element of risk to investing. No wonder some have labeled investing as a calculated risk taking using controlled assets.
Types of Investments
There are different forms of investing that are worth mentioning. Also, the term investment has different meanings in economics and finance. To an economist, investing refers to tangible products in the form of factories, buildings and machines. Whereas a financial analyst sees investing in the form of paper money as in stocks, bonds, shares and equities.
Regardless of which side of the isle you belong, you are on the winning side. It all comes down to the operative word “economic-value”. That is to say; as long as you can prove and calculate the economic value of the invested asset, it is qualified as an investment. So keep in mind that business intangibles such as patent rights, goodwill, copy rights, software, and many others do have some economic values too.
Some of the most popular investment sectors are in the areas of: investing in real estate, investing in starting a business, investing in the stock market, investing in bonds and investing in mutual funds.
I will be discussing some of these investment types in details on my site in the near future.