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What is Investment
Investment means the use of funds in order to make a profit or earn an interest.

Investment is the use of funds to generate income, interest or achieve some other appreciation, positive effects or utility in the future (e.g. improved quality, safety improvement). For evaluating the effects of non-financial investment (or rather indirect financial effects) is successfully used for example BSC method.

What is the investment in practice?

The term investments or investing encountered in many situations. In financial markets, and is a term investments perceived and used as a direct investment of funds in any entity - to a company, the financial fund or other financial instrument. So investors to deposit their funds somewhere. Then they hold some securities or the become a holder of a capital share in the company.

In the managerial practice the investment has slightly different meaning - it is meant as an activity of development organizations or companies, that use the funds to create or improve something - for example, investment in new technologies, investing in the education of people, investments to improve the working environment. An investment is thus viewed as a long-term finance - capital costs (CAPEX.

Starting or growing businesses (startups) are often looking for an investment in the business which would help them at the beginning to bridge the period when their costs are greater than revenues.

Related terms and methods:

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Last update: 05.03.2016


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