Investment Definition and Meaning Simplified with Example

Posted by Grace under Investing on July 27, 2016

Investment Definition: Any purchased items or assets that helps the investors make other money are investments. Know the definition of investment by understanding this investment example. Example of investments that generates income or profits for the investors are real estate properties, stock shares, mutual funds shares, bonds, and even cash or certificate of deposits. In business, a money used when buying business equipment to set up a business are investment capital – in business they are also known as the “business start-up capital”.

Any objects, materials or any that can be profitable in the future are called “investment”. If an individual will buy a painting that cost $5,000 and expect it to sell $10,000 after 20 years, the painting is now called an investment.

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Also, if an individual will buy gold that cost $10,000 and expect the gold to increase its market price after 5 years, the process of buying called in this example is called “investing in gold”. Painting and gold are examples of investments used in this post, as a guide, get more information about the different types of investments and find out how to invest on those investment options.

For you to understand the meaning and definition of investment, here are some of the similar words you can use when defining the word investment. The words are asset, contribution, money, property, purchase, stake, venture, expenditure. expense, financing, transaction, principal, nest egg, funds, estate, wealth, substance, treasure, resources and savings. Other people consider IRA individual retirement accounts as investments. Some people consider that their bank CDs (certificate of deposits) are also investments.

Another word for invest are put money to make money or buy something to make money. There are several related words for investment that we can use to understand its meaning and definition.

Digging Investment Definition Deeply

You will only know if a person has sense of investment if he is buying for something that provides more value to him for future. Example, if you think a car is investment, you’re wrong. A car will only become an investment if he it generates money for you. A car will never become an investment if it pulls money from your pocket. (Original Idea of Robert T. Kiyosaki)

If you have just read the similar word of investment, you will find out that there is a word “nest egg”. A nest egg is a investment basket preserves for the retirement years. Usually, the nest egg (investment for retirement) are started during the first day of a person’s job or during the day when he received his first pay check.

Opposite of investment is divestment. When you divest, you are pulling all your funds in a particular investment vehicle. Divestment simply means to stop “investing”. Most of the time, an investor will only divest if he meets or realized his investment goal or achieved already his financial goal.

Since an individual is expecting future returns for his investment, he will only realize or earn the return on investment if he will sell the items he purchased. In this example, if the gold will sell $10,000, the investor will get a profit of $5,000 because he bought the gold for only about $5,000. That means, the investors doubled his investment when the items sold.

For more investment definition and meaning, kindly subscribe to Investment Total to receive more common investment terms via email for free. What about you? How do you define investment in your own words? Share your own definition and understanding about investment in the comment box.

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