The meaning of investment
Investment in the basic terms can be defined as the allocation of anything that has a productive capacity to produce more valuable goods or services . In investment therefore you allocate a certain proportion or certain goods or services and make profits. In the case where money is used, investment can be defined as the allocation of a certain amount of money to purchase financial commodities or asset in order to gain returns in terms of profits. Everyone in this modern world has at one time or the other had to prefer investing. This is because of the dynamic word that turns every opportunity in making valuable returns. In the capitalist world, investment is just necessary for anyone who wants to add value to his or her statue. In investment, there has to be saving or deferring of consumption in order to increase appreciation of value of these goods. In other words, in order to gain interest, value appreciation or income, you have commit some resources like money and time.
In the use of finances or any other form of capital, you purchase an item that has the potential to add value in the future. In this case. You use or allocate capital in some goods today in order to use them in the future to produce more valuable assets when they are sold at a higher price. There are many investment options in the world today. All the basis is determined by the potential of any particular investment strategy that you involve yourself in, in order to make more value in the future. Investment therefore involves employment of choice by an individual. You have to forego some resource today in order to make or add value to that resource be it time, money, land or any other property. There are assets that are bought that all have potential risk over time. These include machinery such as vehicles and others. These provide investment to the owners as well as insurance companies that manage or cover the risks of such assets.
Effects of investment
Investment is one of the most important economic variable in the world. With investment, you are able to develop other more resourceful products from others. In this case. You can use some natural resources that are available to create more useful or more valuable products from them.
A good example is the use of the highly valuable land to grow crops that will in turn have more value and still have that land as a constant asset. Hare you invest time and some other resources such as the use of seeds and the use of other factors of production such as machinery in order to produce other more valuable products. After the employment or these factors or production in such a case, you get products that can be consumed or used directly. On the other hand, you can produce goods that need to go to factories before they can be used. In this case, this becomes another level of investment
An investor will buy some goods, spend other resources to improve those goods and later sell them at higher prices.This is how investments eventually leads to development.