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What is an Investment?
In financial words, an investment is an asset purchased to generate income in the future, or we can say, investments are considered avenues to grow ones’ wealth. For example, if you buy an apartment, it can generate income for you in two ways:
- If you sell it at a higher price, you will earn a profit due to capital appreciation or capital gain.
- If you rent it out, you will have an additional income (passive income)
A point to consider
The safety of the principal amount is a significant point of concern while investing, as risk and reward move proportionately with it. Hence, if you go for low-risk investments, the returns will be less. However, if you are prepared to take higher risks, you can aspire for higher returns.
What are the three types of investments?This content is locked
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Power Words
- Maturity date
- Capital appreciation
- Principal amount
- Asset
- Capital gain
- Profit
- Defensive
- Avenues
- Depreciate
- Substantially
- Risk
- Income
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