Investment or investing means that an asset is bought, or that money is put into a bank to get a future interest from it. Investment is total amount of money spent by a shareholder in buying shares of a company. In economic management sciences, investments means longer-term savings.
It is a term used in business management, finance and economics, related to saving or deferring consumption. Literally, the word means the “action of putting something in to somewhere else” (perhaps originally related to a person’s garment or ‘vestment’).
Types of investment
The major difference in the use of the term investment between the economics field and the finance field is that economists refer to a real investment (such as a machine or a house), while financial economists refer to a financial asset, such as money that is put into a bank or the market, which may then be used to buy a real asset. Advisors, who tell people how to manage their investments, might say that even when an investment is losing money because of bad times, not to give up and withdraw it. Instead, wait for the situation to improve. This is a risk for each person to decide.
The term ‘asset management’ is often used to refer to the investment management of collective investments, while the more generic term ‘fund management’ may refer to all forms of institutional investment as well as investment management for private investors. Investment managers who specialize in advisory or discretionary management on behalf of (normally wealthy) private investors may often refer to their services as money management or portfolio management often within the context of “private banking“.
The provision of investment management services includes elements of financial statement analysis, asset selection, stock selection, plan implementation and ongoing monitoring of investments. Coming under the remit of financial services many of the world’s largest companies are at least in part investment managers and employ millions of staff. It remains unclear if professional investment managers can reliably enhance risk adjusted returns by an amount that exceeds fees and expenses of investment management.
The term fund manager (or investment advisor in the United States) refers to both a firm that provides investment management services and an individual who directs fund management decisions.