In financial terms, individuals and corporations make investments when they use capital to purchase securities, assets or property with the intention of profiting from them in future. Economists refer to all capital in an economy that stimulates new or increased production as investment.
Historically, investment was solely the result of forgone consumption and that is still the case today in societies with closed economies, which rely for investment purely on the savings of individuals, private companies and governments. Societies with more open economies, however, can attract foreign investment and broaden their development opportunities.
What's it worth?
Investors measure the productivity of their investment in several ways but probably the most popular is return on investment (ROI). It is calculated by dividing the investment's return by its cost and is experessed as either a ratio or a percentage, the higher the better. However, ROI can also be misleading depending on how the terms 'return' and 'cost' are defined.
- ↑ Investment. EconLib.org.
- ↑ Return On Investment - ROI. Investopedia - Forbes Digital.