An investment is an asset that is acquired for the purpose of generating a return or raising the price. The word "investment" has a Latin root and means "invest".
In economic terms, an investment is the purchase of goods that are not consumed today, but are used in the future to create wealth.
An investment in finance is a financial asset that is purchased with the idea that it will provide a return in the future or may be sold at a higher price later in order to make a profit.
It is important to remember that the investment always refers to the cost (time, money, effort) of an asset today, in the hope of a higher payback than the initial one in the future.
Why do we need investment?
The topic of investment for beginners usually begins with this question. But let's go further. In practice, in the modern world, there are two legal ways to make money. And these are like:
1. You work for yourself or someone else
2. Increase your wealth by investing in various assets
Most often, the first way you get funds, and the second way you increase them. In some cases, the second method may play the role of the first.
But back to the reasons to start investing. People are turning to investment for a variety of reasons, such as building a long-term fortune, paying for a child's education, planning for retirement, achieving financial goals, or simply increasing disposable income.
Some investments offer tax relief, which leads to a double benefit - tax savings and capital gains.
At the same time, due to inflation, the value of currencies is declining. This means that the basket of products and services that you can buy with BGN 100, for example, decreases. And as inflation rises, the basket will continue to shrink, thus reducing purchasing power .
12. Use pending orders whenever possible
In this situation, you would like to have a potentially high return on investment to increase your capital over time. If you look at it differently when you are not investing your money, you are not only neglecting your ability to potentially increase your financial stability, but you may be effectively reducing the funds you have.