What is an Investment?

One of the reasons why many people fail, even very sadly, in investment games is that they play it without understanding the rules that govern it. It is an obvious truth that you cannot win a game if you violate its rules. However, you must know the rules before you can avoid violating them. Another reason why people do not invest is because they play the game without understanding what it is about. Therefore, it is important to reveal the meaning of the term 'investment'. What is an Investment? An investment is an income-generating value. It is very important that you take note of every word in the definition because they are important for understanding the true meaning of investment.

From the definition above, there are two key features of an investment. Any possession, property or property (of yours) must meet both conditions before it can qualify to be (or be called) an investment. Otherwise, it will be nothing but an investment. The first characteristic of an investment is that it is valuable - something that is very useful or important. Therefore, property, property or property (of yours) that has no value is not and cannot be an investment. Under this definition, a worthless, useless or insignificant possession, property or property is not an investment. Each investment has a value that can be quantified monetarily. In other words, every investment has a monetary value.

The second feature of an investment is that in addition to being a valuable one, it must be income generating. This means it must be able to make money for the owner, or at least assist the owner in the money-making process. Each investment has wealth-generating capacity, commitment, responsibility and function. This is an inalienable feature of an investment. Any possession, property, or property that cannot generate income for the owner, or at least help the owner generate income, is not and cannot be an investment, no matter how valuable or precious it may be. Additionally, any property that cannot play any of these economic roles is not an investment, no matter how expensive or expensive it may be.

There is another feature of an investment that is very closely linked to the other feature described above that you need to pay close attention to. This will also help you realize whether a valuable one is an investment or not. An investment options in bahrain that does not generate money in the strict sense or helps generate income will save you money. Such an investment saves the owner some expenses he would have made in his absence, although it may lack the capacity to attract some money into the investor's pocket. Thus, the investment generates money for the owner, but not in the strict sense. In other words, the investment still performs a wealth-creating function for the owner / investor.

As a rule, anyone valuable, in addition to being something that is very useful and important, must have the capacity to generate income for the owner or save money for it before it can qualify to be called an investment. It is very important to emphasize the second feature of an investment (ie, an investment as income-generating). The reason for this claim is that most people consider only the first feature of their assessment of what constitutes an investment. They understand an investment simply as a valuable one, even if the valuable one is revenue-consuming. Such a misunderstanding usually has serious financial consequences in the long run. Such people often make costly financial mistakes that cost them fortunes in life.

Perhaps one of the reasons for this misunderstanding is that it is acceptable in academia. In economic studies in conventional educational institutions and academic publications, investment - otherwise called assets - refers to valuables or properties. This is why business organizations consider all of their valuables and properties as their assets, even if they do not generate any income for them. This view of investment is unacceptable among people with economic literature because it is not only wrong, but also misleading and misleading. This is why some organizations unknowingly view their obligations as their assets. This is also why some people also consider their liabilities as their assets / investments.