investment

/in vest"meuhnt/, n.

1. the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.

2. a particular instance or mode of investing.

3. a thing invested in, as a business, a quantity of shares of stock, etc.

4. something that is invested; sum invested.

5. the act or fact of investing or state of being invested, as with a garment.

6. a devoting, using, or giving of time, talent, emotional energy, etc., as for a purpose or to achieve something: His investment in the project included more time than he cared to remember.

7. Biol. any covering, coating, outer layer, or integument, as of an animal or vegetable.

8. the act of investing with a quality, attribute, etc.

9. investiture with an office, dignity, or right.

10. a siege or blockade; the surrounding of a place with military forces or works, as in besieging.

11. Also called investment compound. Metall. a refractory material applied in a plastic state to a pattern to make a mold.

12. Archaic. a garment or vestment.

[1590-1600 for def. 12; 1605-15 for def. 1; INVEST + -MENT]

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I

Process of exchanging income for an asset that is expected to produce earnings at a later time.

An investor refrains from consumption in the present in hopes of a greater return in the future. Investment may be influenced by rates of interest, with the rate of investment rising as interest rates fall, but other factors more difficult to measure may also be important

for example, the business community's expectations about future demand and profit, technical changes in production methods, and expected relative costs of labour and capital. Investment cannot occur without saving, which provides funding. Because investment increases an economy's capacity to produce, it is a factor contributing to economic growth.

II

(as used in expressions)

investment bank

investment casting

investment credit

investment tax credit

investment trust

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▪ finance

      process of exchanging income during one period of time for an asset that is expected to produce earnings in future periods. Thus, consumption in the current period is foregone in order to obtain a greater return in the future.

      For an economy as a whole to invest, total production must exceed total consumption. Throughout the history of capitalism, investment has been primarily the function of private business; during the 20th century, however, governments in planned economies and developing countries have become important investors.

      From the standpoint of an individual, two types of investment may be distinguished: investment in the means of production and purely financial investment. Although at the individual level both types may provide a monetary return to the investor, from the standpoint of the entire economy, purely financial investments appear only as title transfers and do not constitute an addition to productive capacity.

      Before the 1930s, investment was thought to be strongly affected by the going rate of interest, with the rate of investment likely to rise as the rate of interest fell. Since then, empirical investigation has shown business investment to be less responsive to interest rates and more dependent on businessmen's expectations about future demand and profit, technical changes in production methods, and the expected relative costs of labour and capital.

      Because investment increases an economy's capacity to produce, it is the factor responsible for economic growth. For growth to occur smoothly, it is necessary that savers intend to save the same amount that investors wish to invest during a time period. If intended saving exceeds intended investment, unemployment may result; and if investment exceeds saving, inflation may occur. See also saving; marginal efficiency of investment. (marginal efficiency of investment)

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