It is an action that consists of using capital in an entrepreneurial activity with the objective (expectation) of obtaining a benefit, additional profit or income. Any expense can be considered an investment if it is intended to achieve a return on investment. In other words, investing is spending wisely.
This economic term has several definitions linked to saving, capital and deferred consumption. Unquestionably in the field of the company, it refers to the action in which certain assets are used with the sole purpose of entering some income and benefits over time.
How do investments work?
It is important to know that investment is a flow of products at a specific time that is used to maintain or increase the capital of an economy. As a consequence, spending inherently brings an increase in the future productive capacity of the economy.
Therefore, investing involves two phases:
▪ Capital injection,
▪ Benefit reception.
In the first, the decision and choice factor plays a major role. However, in the second phase, the strategy to achieve the profit is the determining factor.
Investing implies a sacrifice in the present moment and converges for a situation in the future where the objective is to obtain benefits. This means that both the strategy and the decision are determining factors for a successful investment. The expected results will depend on the optimal combination of these factors. However, not all investments have the same degree of risk.
For example, invest in bag Buying shares in a company is not a safe investment due to the fluctuations market that can produce rises (gains) or falls (losses) quickly and unexpectedly. Investing requires an analysis of the risk of the product and deciding what risk to assume.
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