Investment is time, energy, or matter spent in the hope of future benefits actualized within a

specified date or time frame. Investment has a different meaning in finance from that
in economics.
In finance, investment is buying or creating an asset with the expectation of capital
appreciation, dividends (profit), interest earnings, rents, or some combination of these returns.
This may or may not be backed by research and analysis. Most or all forms of investment involve
some form of risk, such as investment in equities, property, and even fixed interest securities
which are subject, among other things, to inflation risk. It is indispensable for project investors to
identify and manage the risks related to the investment.

The price to earnings ratio (P/E), or earnings multiple, is a particularly significant and
recognized fundamental ratio, with a function of dividing the share price of stock, by its earnings
per share. This will provide the value representing the sum investors are prepared to expend for
each dollar of company earnings. This ratio is an important aspect, due to its capacity as
measurement for the comparison of valuations of various companies. A stock with a lower P/E
ratio will cost less per share, than one with a higher P/E, taking into account the same level
of financial performance; therefore, it essentially means a low P/E is the preferred option.
An alternative investment is an investment in asset classes other than stocks, bonds,
and cash. The term is a relatively loose one and includestangible assets such as precious metals,
[1]
art, wine, antiques, coins, or stamps [2] and some financial assets such as a Fund,
commodities, private equity, distressed securities, hedge funds, carbon credits,[3] venture capital,
film production[4] and financial derivatives. Investments in real estate and forestry are also often
termed alternative despite the ancient use of such real assets to enhance and preserve wealth.
Alternative investments are to be contrasted with traditional investments.
In finance, the notion of traditional investments refers to putting money into well-known
assets (such as bonds, cash, real estate, and equity shares) with the expectation of capital
appreciation, dividends, and interest earnings. Traditional investments are to be contrasted
with alternative investments.

A capital gains tax (CGT) is a tax on capital gains, the profit realized on the sale of a noninventory asset that was purchased at a cost amount that was lower than the amount realized on
the sale. The most common capital gains are realized from the sale of stocks, bonds, precious
metals and property. Not all countries implement a capital gains tax and most have different
rates of taxation for individuals and corporations.

Risk is the potential of losing something of value. Values (such as physical health, social status,
emotional well-being or financial wealth) can be gained or lost when taking risk resulting from a
given action, activity and/or inaction, foreseen or unforeseen. Risk can also be defined as the
intentional interaction with uncertainty. Uncertainty is a potential, unpredictable, unmeasurable
and uncontrollable outcome, risk is a consequence of action taken in spite of uncertainty.

Rate of return is a profit on an investment over a period of time, expressed as a proportion of

the original investment. The time period is typically a year, in which case the rate of return is
referred to as annual return.
National income accounting provides economists and statisticians with detailed information
that can be used to track the health of an economy and to forecast future growth and
development. Although national income accounting is not an exact science, it provides useful
insight into how well an economy is functioning, and where monies are being generated and
spent.
Collective Investment Fund: Investments created by a bank or trust company for employee
benefit plans, such as 401(k) plans, that pool the assets of retirement plans for investment
purposes. They are governed by rules and regulations that apply to banks and trust companies
instead of being registered with the SEC. These funds are also referred to as collective or
commingled trusts.

Capital accumulation refers to the investment of money or a financial asset for the purpose of
making more money (whether in the form of profit, rent, interest, royalties, capital gain or some
other kind of return). Accumulation of capital is the basis of capitalism.
In a more broad sense, capital accumulation may refer to the gathering or amassing of any
objects of value as judged by one's perceived reproductive interest group.

A specialized investment fund or SIF is a type of investment fund governed by

the Luxembourg law of 13 February 2007 replacing the law of 1991 defining the legal framework
for institutional funds and enlarging the distribution scope to "informed investors". The SIF law
significantly simplified the rules for setting up investment fund structures ranging from
straightforward investment strategies investing in listed securities to hedge funds, real
estate and private equity funds.
Liquidity: The ease with which an investment can be converted into cash. If a security is very
liquid, it can be bought or sold easily. If a security is not liquid, it may take additional time and/or
a lower price to sell it.
Volatility: The amount and frequency of fluctuations in the price of a security, commodity, or a
market within a specified time period. Generally, an investment with high volatility is said to
have higher risk since there is an increased chance that the price of the security will have fallen
when an investor wants to sell.

Socially responsible investing (SRI), also known as sustainable, socially conscious, "green" or
ethical investing, is any investment strategy which seeks to consider both financial
return and social good. In general, socially responsible investors encourage corporate practices
that promote environmental stewardship, consumer protection, human rights, and diversity.
Some
avoid
businesses
involved
in alcohol, tobacco, gambling, pornography, weapons,contraception/abortifacients/abortion, fossil
fuel production, and/or the military.[1] The areas of concern recognized by the SRI industry are
sometimes summarized as ESG issues: environment, social justice, and corporate governance.

Compounding: The cumulative effect that reinvesting an investments earnings can have by
generating additional earnings of their own.