Investment is the process of allocating money to assets in order to obtain financial gains through value appreciation or income generation. It allows people to achieve their dreams and financial goals much more quickly than saving alone, but investing can be risky. People can invest in stocks, bonds, property, gold and more. To start investing, they must open an account and choose funds that align with their financial goals and risk tolerance. They can also seek the advice of a financial professional to get access to investment instruments, accounts and online platforms.
Investment comes in many forms and is an essential component of economic growth. It can be in the form of physical capital, such as a factory or a road, or non-physical capital, such as human capital, pharmaceutical products that establish higher productivity or real estate. Non-physical capital can even be in the form of government investments, such as bridges or roads. The study of investment is a significant branch of microeconomics. Nobel laureate Trygve Haavelmo contributed a fundamental contribution to the development of investment literature after World War II, and Dale Jorgenson developed a highly influential neoclassical theory of investment that has withstood the test of time.
Investors can gain returns on their investments through the sale of them or through periodic payments, such as interest or dividends. The return on an investment can depend on the amount of risk associated with it, with higher-risk investments usually yielding higher returns and lower-risk investments yielding lower returns.
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