What is investment?

Since ancient times, investments have always been made whether in time, skills, or assets to fulfill our needs or to gain something from it. While working for a company, we invest our time and skills to generate income for ourselves i.e. salary. Similarly, while doing business, we invest our money or assets to generate more money.

The income we earn may be kept at home or we may utilize it to earn more and grow, by financing the needs of someone else. This could be an individual, a government, or a business house. All these people or entities need finance to execute their goals, development work, or business activities. From such activities, they are able to achieve their objectives and generate more money or profit, the portion of which they again distribute back to the people who financed them earlier. Thus, your idle money generates more money for you. This additional money generated is known as interest or returns.

To simplify this, we have now have instruments such as government bonds floated by the Government of India or corporate bonds and company shares floated by business houses. These entities collect public money and utilize it to generate more money to finally distribute it to public, which assisted in financing them earlier. Thus, to get additional returns, you can put your money into such instruments. We call this investment or investing your money to earn more money.

 

 

Written By: Manish Tawde

 

Product Research & Financial Planning

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

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