The Definition of Investment: Piggy Banks, Coffee Cans, Stocks and Bonds
Investments can take two basic forms. First, an investment can be the purchase of goods, supplies, tools, or equipment to use in the production of increasing profits. For example, a businessperson who produces shoes may purchase a machine that automatically stitches leather in the hopes that the time saved will allow for the production of more shoes and increased sales.
The second basic form an investment can take is what most of us think of when we say we are investing our money. That is, we use the money we have for the specific purpose of making more money from it.
There are several different ways of investing money in the hopes of gaining a profit. Stocks and bonds, exchanging currencies in the Forex market, annuities, certificates of deposit, mutual funds, buying real estate to sell at a profit later (Flip That House!), IRAs, even simple savings accounts, are all methods of investing. Even loaning your brother-in-law a few bucks (at a reasonable interest rate) to start a business is an investment.
Generally speaking, the riskier the venture is, the more opportunity there...
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