Economics

What Is An Investment?

Jesse
2 mn

Investing refers to the buying of an asset at a relatively low price and hoping it appreciates in value so you can sell it at a higher price. This asset could be physical commodities like gold, shares in a company, or through markets such as cryptocurrency. Earning returns by selling assets for a profit is how you make money by investing. 

The goal of investing is to grow the value of your original investment over either short, medium, or long term. Short-term investments include Money markets, Savings accounts, and Treasury bills. Medium-term investment examples are home bonds and income funds. If you are looking for longer-term investments, consider real estate, stocks, and retirement plans.

Investments generate income in two main ways. The first would be salable assets, allowing you to earn your income through profit. The second would be through return generation, meaning you earn an income through the growth of gains. 

Cryptocurrency for example can be either a short, medium, or long-term investment, depending on the trader or investor. Although it is mostly considered a salable asset, in some ways it is a return generating investment.