Investment

Working is to earn enough money for shelter, food, clothing and necessities. If there is any money leftover, you can stuff it in a pillowcase or invest it.

In general, to invest is to distribute money in the expectation of some benefit in the future – for example, investment in durable goods, in real estate by the service industry, in factories for manufacturing, in jumpstart products, or in research and development.

In finance, the benefit from investment is called a ‘return’. The return may consist of a profit from the sale of property or an investment, or investment income including dividends, interests, rental income etc., or a combination of the two. The projected economic return is the appropriately discounted value of the future returns.

Investors, particularly novices, are often advised to adopt a particular investment strategy and diversify their portfolio. Diversification has the statistical effect of reducing overall risk.

Investment differs from arbitrage, in which profit is generated without investing capital or bearing risk.

An investor may bear a risk of loss of some or all of their capital invested, whereas in saving the risk of loss in the value that is stated on a coin or note is normally remote.

Investment in stocks, property, etc. in the hope of significant gain but with the risk of significant loss, i.e. speculation, involves a level of risk which is greater than most investors would generally consider justified by the expected return. An alternative characterization of speculation is its short-term, opportunistic nature.

In the early 1900s purchasers of stocks, bonds, and other securities were described in media, academia, and commerce as speculators. By the 1950s, the term investment had come to denote the more conservative end of the securities spectrum, while speculation was applied by financial brokers and their advertising agencies to higher risk securities much in vogue at that time. Since the last half of the 20th century, the terms speculation and speculator have specifically referred to higher risk ventures.

So what do you invest in?

You invest in your relationships’? If speculative for a long-term reward, an emotional investment is worth the effort. The holiday purchases show a material affection. Investing in time doesn’t cost anything but…. Time.

You invest in your health? Join a gym club or jog and eat right. Get plenty of sleep and regular check-ups. Buy a health insurance policy to cover the cost.

You invest in your work? Like relationships, the effort put in may achieve dividends.  

You invest in your community? Keep the grass mowed, coach a little league team, attend teacher conferences, donate to the symphony and public radio. Help in charitable events and vote.

You invest in your eternal life? This is a tough one. No matter how much tithe in the passing plate there are no guarantees.

All investments require faith.