What is Investment in Economics?
Investment means buying the financial assets that will give returns on their money. The investment made with the goal of that the goods or services that is not consuming today it will be consumed in the future. The main goal of the investment is to generate more income or appreciation in the future.
Types Of Investment In Economy
There are many types of Investment in the Economy. That helps the government to grow the economy. Some are the following :
Business Fixed Investment
Business Fixed Investment means When the Businesspeople of the country start to invest in machines, tools, and equipment to increase productivity and further production of the products or goods. This kind of investment increase the value of the company.
Residential Investment means the investment which people spend on constructing or buying new houses or for the purpose of staying or renting out to others. Residential Investments helps the economy to grow from three to five percent of GDP (it also depends on the economic conditions of the country.) The residential investment has good value at both the market Primary and Secondary market.
Autonomous Investment is also known as government investment. it refers to the investment in houses, roads, public buildings, and other parts of public infrastructure that will be utilized by the public. It does not depend on income because the government has to invest in infrastructure, roads, etc.
Financial Investment means buying new shares, bonds, or debentures that will be considered as a financial investment. the buying of old bonds, shares or debentures will not be considered the financial investment. the financial investment directly impacts on the growth of the economy.
Planned Investment means when the investor invests money to calculate every aspect of the investment, which is called planned investment. Most of the time, the planned investment gives positive results to the investors and it also helps the investors to make faith in the company.
Induced Investment means the investment which depends on the income level of the people when the income increases then Entrepreneurs starts to invest more. When the income level starts to decreasing then Entrepreneurs start investing less.