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Investment

From Academic Kids

Investment is a term with several closely-related meanings in finance and economics. It refers to the accumulation of some kind of asset in hopes of getting a future return from it.

  • In theoretical economics, investment means the purchase (and thus the production) of capital goods - goods which are not consumed but instead used in future production. Examples include building a railroad, or a factory, clearing land, or putting oneself through college. In a stricter sense, investment is also a component of GDP given in the formula GDP = C + I + G + NX. The investment function in that aspect is divided into Non-residential investment (such as factories, machinery etc) and residental (new houses.) Investment is the function of income and interest rates, given by the relation I = (Y, i). An increase in income will encourage higher investment, whereas a higher interest rate will discourage investment as it becomes costlier to borrow money. Even if a firm chooses to use its own funds, the interest rate represents the opportuntity cost of loaning out the money.
  • Investment clubs are groups of individuals who meet on a regular basis for the purpose of investing money. Various online communities devoted to this type of investing have recently emerged and have contributed to the personal investing boom in the United States. Two of the largest provide best practices for investment clubs (http://www.better-investing.org/) and extensive accounting resources (http://www.bivio.com/index.html) for these groups of investors. The latter site also has an extensive listing (http://www.bivio.com/pub/clubs) of U.S.-based investment clubs. A smaller international community (http://www.bivio.com/xcic/files/index.html) founded in 1997 openly allows individual investors to observe observe and learn (http://s6.invisionfree.com/crosscountry/index.php?act=site) from its activities.

See also

List of Marketing TopicsList of Management Topics
List of Economics TopicsList of Accounting Topics
List of Finance TopicsList of Economists

External links

de:Investition es:inversin nl:Investering ja:投資 pl:Inwestycja fi:Sijoittaminen

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