Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Investment

What it is:

An investment is an asset intended to produce income or capital gains.

How it works (Example):

Investments can be stocks, bonds, mutual funds, interest-bearing accounts, land, derivatives, real estate, artwork, old comic books, jewelry -- anything an investor believes will produce income (usually in the form of interest or rents) or become worth more.

Why it Matters:

The safety of the principal is of concern in any investment, although some investors are more risk tolerant than others and are thus more willing to lose some of their principal in return for the chance of generating a higher profit. The investor's ability to tolerate risk and the incremental return associated with increasing amounts of risk are two primary factors that distinguish types of investments from one another and help determine appropriate investments for a given investor.

Related Terms View All
  • Early Exercise
    The option holder may decide to exercise the option before it reaches maturity by buying...
  • Managed Futures Account
    When you buy a managed futures account, in essence you're hiring an expert to buy, sell...
  • Interchange
    Banks are common users of interchange data because they issue credit cards and debit...
  • XPO
    An option gives the holder the right, but not the obligation, to purchase (or sell) 100...
  • Unsecured Debt
    If you borrow money from XYZ Bank, XYZ Bank becomes your creditor. Utility companies,...