Investment is an activity that is engaged in by people who have savings. Investment is one or more two assets that are held over some future time period. The investment will be selected on the basis of the portfolio. Here portfolio means different sectors of investment and whenever you will invest that time you have to carefully select the acceptable sectors in the portfolio.
Investment involves the choice by an individual or an organization such as a pension fund, after some analysis or thought, to place or lend money in a vehicle, instrument or asset, such as property, commodity, stock, bond, financial derivatives (e.g. futures or options), or the foreign asset denominated in foreign currency, that has a certain level of risk and provides the possibility of generating returns over a period of time.
When an asset is bought or a given amount of money is invested in the bank, there is anticipation that some return will be received from the investment in the future. Investment is an important part of the business and any other sector of your money. So we can say the investment is a process of re-use of your idle money. If you carefully select a potential sector for your investment you can double your money from that opportunity.
Types of Investment:
1. Autonomous Investment:
Investment which does not change with the changes in income level is called Autonomous or Government Investment.
2. Induced Investment:
Investment which changes with the changes in the income level is called Induced Investment.
3. Financial Investment:
The investment made in buying financial instruments such as new shares, bonds, securities, etc. is considered as a Financial Investment.
4. Real Investment:
The investment made in new plants and equipment, construction of public utilities like schools, roads, and railways, etc., are considered as Real Investment.
5. Planned Investment:
The investment made with a plan in several sectors of the economy with specific objectives is called Planned or Intended Investment.
6. Unplanned Investment:
Investment done without any planning is called an Unplanned or Unintended Investment.
7. Gross Investment:
Gross Investment means the total amount of money spent for the creation of new capital assets like Plant and Machinery, Factory Building, etc.
8. Net Investment:
Net Investment is Gross Investment less (minus) Capital Consumption (Depreciation) during a period of time, usually a year.
9. Entrepreneurial Investment:
The interested investment parties who are interested to invest in entrepreneurial activities.
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