Module 1INVESTMENTSINVESTMENT IS A SACRIFISE OF CERTAIN PRESENT VALUE FOR FUTUREREWARD
Investment is employment of funds with aim of achieving additional income or growth invalue.It’s a long term commitment , where essential quality is waiting for a reward.It’s acommitment of resources which have been saved or put away from current consumptionin the hope that some benefit will occur in future.
Investment in economic sense
:Investment is a Net addition to the economy’s capital stock, which consists of goodsand services that are used in the production of other goods and services. It’s a formationof productive capital. Net additions to the capital stock of the society ( those goodswhich are used in the production of other goods)
Investment in financial sense
Investment is a Monetary assets purchased with the idea that the asset will provide anincome and capital appreciation. Its an exchange of financial claims like stock, bonds,real estate etc. Investment is parting with one’s fund to be used by another party for productive activity. Investment is a conversion of money or cash into a monetary asseton a claim on future money for a return.
Investment and speculation are somewhat different and yet similar because speculationrequires an investment and investments are at least somewhat speculative. Both areleading to claim on money, aims at maximizing return. Investment is putting money inan asset not necessarily in marketable in short run, where as speculation is selecting aninvestment with higher risk in order to profit from an anticipated price movement.If investment is done with long term objective, speculation is of short term objective.Investment is distinguished from speculation in 3 ways.•Risk •Capital gain•Time.
investment, a well grounded and cerefully planned speculationGAMBLING
Gambling is a High risk venture, where the investor plays for high stakes. Recklessventure to look for very quick profits in the short term. Gambling is based upon tips,rumors , its un planned, unscientific, and without the knowledge of the exact nature of risk.