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What is an 'Investment' An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price. BREAKING DOWN 'Investment' The building of a factory used to produce goods and the investment one makes by going to college or university are both examples of investments in the economic sense. In the financial sense investments include the purchase of bonds, stocks or real estate property. Be sure not to get 'making an investment' and 'speculating' confused. investing usually involves the creation of wealth whereas speculating is often a zero-sum game; wealth is not created. Although speculators are often making informed decisions, speculation cannot usually be categorized as traditional investing. Invest Like an Expert Learn The Basic Financial Analysts Report and other must-know tools with Investopedia’s FREE Investing to get started, and learn what’s making other investors so successful. To invest is to allocate money (or sometimes another resource, such as time) in the expectation of some benefit in the future. In finance, the expected future benefit from investment is a return. The return may consist of capital and/or investment income, including dividends,interest, rental income etc. Investment generally results in acquiring an assets, also called an investment. If the asset is available at a price worth investing, it is normally expected either to generate income, or to appreciate in value, so that it can be sold at a higher price (or both). Investors generally expect higher returns from riskier investments. Financial assets range from low-risk, low-return investments, such as high-grade government bonds, to those with higher risk and higher expected commensurate reward, such as emerging market rock investments. Investors, particularly novices, are often advised to adopt an investment strategy and diversify their portfolio.Diversification has the statistical effect of reducing overall risk.

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