What is "investment"

I was thinking about the meaning of "investment" and being an "investor". The term "investment" seems to be used very frequently but what is it? What is the act of investment and thus being a investor.

Hypothetical Examples
  • I purchase some shares in a Zinc mine that I hear will report good news next week and thus I guess will increase in price next week, is that investing?
  • I just sit on a couple of IP's and do nothing, is that investing? Am I a property investor by doing nothing?
  • I go to work for a month and my company credits my account with my monthly salary, is that investing? If I use the salary to cover negative gearing holding costs is that investing?
  • I buy a old house and I renovate it, is that "investing"?
  • I buy Peter Spann book and "invest" the time to read it, is that "investing".
  • I buy a 500SL Merc on credit, investing in my prestige?


To spend or devote for future advantage or benefit.
 
I guess it means different things to different people. Some consider buying and selling shares on the stock market as investing, others say its trading, some even call it gambling. Some think investing is buying for income return while trading is buying for captial growth. Some say, if you sell your trading if you never sell your investing. Some others think that if you buy to get a larger return of money then thats investing, but buying for return of other purposes isnt.
 
Definition from the www (http://www.cogsci.princeton.edu/cgi-bin/webwn?stage=1&word=investing):

the act of investing; laying out money or capital in an enterprise with the expectation of profit

Key takeaway points:
1. 'laying out money or capital'
2. 'expectation of profit'

Those of us who put detailed investment plans together will put more criteria into their investments such as 'timeframe', 'risk', 'ongoing costs/expenses', 'amount of profit/capital gain'.
 
qaz said:
I guess it means different things to different people. Some consider buying and selling shares on the stock market as investing, others say its trading, some even call it gambling. Some think investing is buying for income return while trading is buying for captial growth. Some say, if you sell your trading if you never sell your investing. Some others think that if you buy to get a larger return of money then thats investing, but buying for return of other purposes isnt.
Thanks Gaz, I'm glad you cleared that up. :D

T
 
OK,
If "investment" is taking an action now with the expectation of future benefit, this is how I see the examples:

always_learning said:
  • I purchase some shares in a Zinc mine that I hear will report good news next week and thus I guess will increase in price next week, is that investing


  • As you've taken an action with the expectation of future benefit, you would probably call that "investment." I may call that "speculation," but I think it's what you (the hypothetical investor) would call it that's important.
    [*] I just sit on a couple of IP's and do nothing, is that investing? Am I a property investor by doing nothing?
    I would say you are WAITING, rather than doing nothing. You are, in fact, consciously waiting in expectation of future benefit - investment again.

    [*]I go to work for a month and my company credits my account with my monthly salary, is that investing? If I use the salary to cover negative gearing holding costs is that investing?
    In the first question the Company is paying you in exchange for services rendered - not in order to achieve a future gain; so it doesn't appear to be "investing." The second question is an interesting one.... I would say it's an action taken as a result of, or in support of investment, but the action itself would not be considered "investment."

    [*]I buy a old house and I renovate it, is that "investing"?
    I guess it depends. In taking this action, is it your intention that this will provide a future gain? I think it may be the purpose of your action that determines whether something is an "investment" or not. In hindsight, some actions may prove themselves to be either "good" or "bad" investments. Perhaps the only true test is whether the person considers what they are doing to be an investment(?)

    [*] I buy Peter Spann book and "invest" the time to read it, is that "investing".
    Any time you spend with the expectation of gaining from it in future would be "investment," including books, courses, etc. Of course, whether they end up being valuable is another question.

    [*] I buy a 500SL Merc on credit, investing in my prestige?
I don't see why not! Of course, you have chosen my favourite car so I am a little biased. Aren't you buying the Mercedes with the intention of gaining benefit (social stature, adoration from the opposite sex, etc) in the future? Invest away, I say! :D
 
1. Investment (n)

Anything I want to sell you today.


2. Investment in your future

As above but with no immediate benefits

(Note that anything anyone else is trying to flog is either a liability or a waste of money and certainly does not count as an investment ;)
 
Investing involves some level of research & understanding of the asset you are buying into.

Otherwise it's gambling.

Hence if you go to uni to invest in your education but don't have a clear idea of what the outcomes could be, the jobs you might be doing or how the degree with help your future success - you are gambling :)

Cheers,

Aceyducey

PS: What are you selling Spiderman :D
 
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