The word Investment refers to either the application of money to make more money, the purchase of goods that are not consumed now but are used in the future to make money (create wealth), or a monetary asset that will rise in value and be sold at a higher price or provide income in the future.
There are two main types:
- Direct Investment: putting your money into specific fixed assets such as buildings, factories, property, etc.
- Indirect Investment: purchasing securities or other assets that are bought and sold on financial markets.
In economics, investment refers to the usage of resources in order to raise income or output in the future. If you deposit money in an interest-bearing account in a bank, or purchase machinery in anticipation of earning income from its production, you are investing.
Difference between asset and investment
If you buy a house and live in it, it is an asset. Assets can go up and down in value. Even if you do not live in it, and leave it empty, it is an asset.
However, if you decide to rent out your house, i.e. use it to generate income, that asset becomes an investment. An investment is something that generates further income.
Investment may also involve giving up time for future benefit. For example, somebody who goes to university is investing his or her time in order to gain a qualification and have a career in the future.
Many individuals get together and create investment clubs, which pool their resources and knowledge together with the aim of achieving more successful investment outcomes.
In military terminology, investment can mean the process of surrounding a town or fort with armed forces to prevent anything or anybody from entering or escaping (a military blockade). The aim is to cut communications with the outside world, and prevent reinforcements and supplies from entering.
Etymology
Etymology studies the origin of words and how their meanings evolved over time.
According to etymonline.com, the term ‘investment’ emerged in English around the 1590s, initially meaning ‘act of putting on vestments’ and ‘surrounding and besieging’ a military target.
By around 1610, it began to be used in the financial sense of ‘investing money or capital,’ reflecting its current usage.
Translation
The English word ‘investment’ is ‘investissement’ in French, Spanish – inversión, Portuguese – investimento, Italian – investimento, German – Investition, Russian – инвестиции, Japanese – 投資, and Chinese – 投资.