Investment:

Investment is the activity, which is made with the objective of earning some sort of positive returns in the future. It is the commitment of the funds to earn future returns and it involves sacrificing the present investment for the future return. Every person makes the investment so that the funds he has increases as keeping cash with himself is not going to help as it will not generate any returns and also with the passage of time the time value of the money will come down. As the inflation will rise the purchasing power of the money will come down and this will result that the investor who does not invest will become more poor as he will not have any funds whose value have been increased. Thus every person whether he is a businessman or a common man will make the investment with the objective of getting future returns.

Introduction:
In Keyness General Theory, investment played a key role in that it was presented as the most important factor governing the level of spending in an economy, despite the fact that it typically was only one-fifth to one-sixth of total spending. This paradox can be understood in terms of a concept also developed in the 1930s, the multiplier. The multiplier was the amount by which a change in investment would be multiplied in achieving its final effect on incomes or expenditures. If, for example, investment increases by $10, the extra $10 of expenditures will generate, assuming unemployed resources, an extra $10 of production and subsequently incomes in the form of wages and profit. This increase, however, is hardly the end of the matter since most of the additional incomes earned will be respent on consumer goods. If nine-tenths of any change in income is spent on consumer goods and one-tenth is saved, consumption will increase by $9. But again, one persons expenditures are another persons income, so that incomes now rise by $9 of which $8.1 is respent on consumer goods. The process continues until expenditures, incomes, and production have increased by $100, of which $90 is consumption and $10 the original change in investment. In this case the multiplier is 10. But investment may be a source of instability if it is not maintained at a rate sufficient to stimulate demand for the production it is creating. Is there any guarantee that supply or productive capacity will grow at the same rate as demand so that neither excess capacity nor excess demand results? The British economist R.F. Harrod and the American economist E.D. Domar put this question in a very simple mathematical form. In their equations, the rate of growth of supply (i.e., the production function as defined above) is equal to the rate of growth of capital stock. Through investment this capital stock is augmented. The rate of growth of demand depends upon the rate of growth of investment or, more correctly, upon the rate of growth of nonconsumption expenditures. Thus investment affects both demand and supply. But the HarrodDomar analysis still did not answer the question of what kept the system from becoming increasingly unstable.

Types of investments: There are basically three types of investments from which the investors can choose. The three kinds of investment have their own risk and return profile and investor will decide to invest taking into account his own risk appetite. The main types of investments are: Economic investments:- These investments refer to the net addition to the capital stock of the society. The capital stock of the society refers to the investments made in plant, building, land and machinery which are used for the further production of the goods. This type of investments are very important for the development of the economy because if the investment are not made in the plant and machinery the industrial production will come down and which will bring down the overall growth of the economy. Financial Investments:- This type of investments refers to the investments made in the marketable securities which are of tradable nature. It includes the shares, debentures, bonds and units of the mutual funds and any other securities which is covered under the ambit of the Securities Contract Regulations Act definition of the word security. The investments made in the capital market instruments are of vital important for the country economic growth as the stock market index is called as the barometer of the economy. General Investments:- These investments refer to the investments made by the common investor in his own small assets like the television, car, house, motor cycle. These types of investments are termed as the household investments. Such types of investment are important for the domestic economy of the country. When the demand in the domestic economy boost the over all productions and the manufacturing in the industrial sectors also goes up and this causes rise in the employment activity and thus boost up the GDP growth rate of the country. The organizations like the Central Statistical Organization (CSO) regularly takes the study of the investments made in the household sector which shows that the level of consumptions in the domestic markets.