Investment Definition

An investment is an asset or item that is purchased with the intent of generating income or appreciation. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the goal of earning a return on investment (ROI), such as interest, dividends, or capital gains.

There are two types of investments: primary and secondary. Primary investments are made when you buy something with the express purpose of making money from it, such as buying a stock or a bond. Secondary investments are made when you buy something that you expect to use or consume yourself, but that could also be sold for a profit if you chose to do so, such as a piece of art or a house.

The most common types of investments include stocks, bonds, mutual funds, real estate, and cash equivalents like savings accounts and certificates of deposit (CDs).