Investments.
Investing is the concept of purchasing an asset. An asset is defined as something which generates value, which can be either a cash income or some kind of increase in the value of the asset itself. Investing is different from work where the worker gets paid for their effort or time. Investment is something which happens at all scales from individuals up to whole countries, as well as families and corporations between the two in size.
A business is fundamentally involved in investment. A business owns assets (as well as liabilities, things which cost money to own) which can be physical or not, and those assets are used to generate cash flow, other assets, or both.
Assets all have a degree of risk, as well as a likelihood of generating value. Assets might include such things as property, land, commodities, stocks, bonds, financial derivatives such as futures or options, or a business. Different assets have different amounts of risk as well as generating differing amounts of value. A major part of the decisions made in investing involve the estimation of both the risks and possible returns relating to a particular asset.
Investment risk not only includes the risk that no increase in value will be generated by the asset, but additionally the risk that the asset itself will decrease in value to some extent (or even become totally worthless). Risk and return will also vary over time.
Real estate is a common type of investment asset although there are considerable misunderstandings about the concept or real estate investment, and many actions that someone might consider to be real estate investment are really real estate speculation. Residential real estate is the most common area of real estate investment and is generally considered to have less risk than commercial real estate.
Other types of assets which can be invested in include such things as metals (such as gold or silver), jewelry, bonds, art, stocks, shares, commodities, and other things. Each asset category will have different risks and returns associated with it.
Article Source: FxTradingStock.com
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by: Thomas Goldman
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Date: Sun, 30 May 2010
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