What is Investment

The word investment refers to investing, that is, to the action and effect of changing or using something in a different way. It is a word that originates from the Latin investment.

The term inversion is used in different ways, for example, in some cases to indicate that a person is homosexual, as well as to refer to the changes that musicians make in the order of certain musical notes in a piece, in order to vary its original composition.

However, the most frequent use of investment takes place in the field of economics and finance.

investment in economy

In the field of economics and finance, it is understood that an investment is the provision of capital in an operation or economic activity that generates long-term returns and profits.

Investment is an economic activity that carries risks and involves time and whose purpose is to generate a profit or benefit in the short, medium or long term.

An investment can be carried out either in a private or public company or by a person for a particular purpose.

Private investments contemplate three variables that are: the expected return that responds to the profits and profitability that is expected to be achieved in the activity.

The accepted risk, which is the uncertainty and probability of reaching or obtaining the desired profit and; the temporal horizonwhich indicates the time it will take for the investment to obtain the expected results.

Investment project

The investment project is an action plan in which set goals and use resources human, material and technical in order to generate economic returns in a certain period.

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During the preparation of these projects, the different factors that intervene in an economic or financial activity are evaluated, in order to determine what are the steps to follow to achieve the objectives and achieve greater profitability.

The factors are: market study (supply and demand of a product or service), technical study (resources to be used), economic and financial study (budget to use) and, organization study (internal order that will be established in the company or institution for when it starts its activity).

Foreign investment

Foreign investment refers to action of putting a capital in a foreign country and is divided into two branches, direct foreign investment and indirect foreign investment.

The foreign direct investment seeks long-term relationships with important economic goals in order to internationalize a company and generate, in the receiving country, benefits such as jobs, competition, exchange of technical and human resources and even foreign exchange.

The indirect foreign investmentalso known as portfolio investment, refers to the loans that one country makes to another, which consist of transferring money or resources in public companies or placing official securities of the recipient country in the stock market of the country that provides the investment.

Investment Types

There are different types of investment depending on the resources available to individuals or companies and according to the objectives they wish to achieve.

The ideal is to make a brief analysis of the types of investment that can be executed and consider which of all is the most convenient according to your needs and future goals.

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Investments according to time: investments are characterized by the time they require to achieve their goals. There are short, medium and long term investments.

Investment fund: It is the base where a group of people place their capital resources destined to make a particular investment.

No investment fund is safe, but when they obtain the expected results, the profits are usually beneficial for all those who participated.

Bonuses: People who have considerable capital lend their money to those who issue the bond, therefore they access them and, in exchange, receive interest payments until they recover the money invested in its entirety.

Actions: Through the acquisition of shares, people can invest in various companies, of which they will later be part. The benefits of stocks are long term.

Low risk investments: These investments allow interest to be generated on the money held and even have a certain degree of liquidity. In these cases, the return is lower compared to larger investments.

See also Profitability.

investment company

Investment companies are corporations whose purpose is to capture, invest and manage resources and then invest them in financial instrumentswhose returns are collective, that is, of all those who are part of the company.

Investment company is also understood as investment funds.

See also the meaning of Limited Company.

thermal inversion

The thermal inversion is a phenomenon that occurs when a layer of warm air is sandwiched between two layers of cold air.

This happens when the temperature of the ground decreases and cools the nearby air layers, happening in the same way with the higher air layers.

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Consequently, the warm air layer is trapped between the cold air layers. This usually occurs at night.

In the process, the contamination particles are trapped in the air layers and cannot be dispersed. However, it generates negative consequences such as layers of smog that are trapped near the earth and affect all living things.