Investment is defined as a purchase or expenditure that could be expected to provide a financial return in the future. Investments are made for capital gains, income, or commodities. Capital gains are seen as an increase in the value of an asset, usually due to an intrinsic value addition. Income investments are seen as an investment that will provide a steady stream of income, such as bonds or dividends.
Investment can also be considered as a risk you take to make money. This can be in the form of stocks, bonds, real estate, or a savings account. For some investments, you will have to put a little bit of your own money in and you will reap the benefits if it does well. For others, such as retirement accounts or stock options, there is no cost for making the investment because the company pays for them with their own funds.
Compound interest is a valuable concept for any investor to know. It is a method of calculating the rate by which money accumulates over time with the interest being calculated on the initial investment as well as all accumulated interest. With compound interest, your investment can grow exponentially by generating more and more earnings from itself. In other words, if your initial investment is $1,000 and you earn 10% per year in compounded interest, then you will have made $2593.74 in 10 years.