Define meaning of investment, Finance Basics

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Define Meaning of Investment

Meaning of Investment: Investment involves making of a sacrifice in the present with hope of deriving future advantages. Investment has many meanings and facets. The two most significant features of an investment are current sacrifice and future benefit. We can now give a simple yet a broad definition of investment. We can state investment as "postponed consumption".

When you postpone consumption, sacrifice occurs on the present and is certain while the benefits occur on future and are uncertain. Hence, risk and expected return from the investment are two key determinants of investment process.

 


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