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What Is An Investment?

Views 58k2022.03.02
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  • An investment is an asset bought in the hope of generating income or profits over time.

  • Investments are made upon the desire for a  greater payoff, but sometimes an investment may carry risks of missing expectations.

  • Learning is a kind of investment, which could be the most common and must thing for individuals new to investing.

Understanding an investment

An investment is like planting a seed. You cultivate with your time, patience and expect it to grow into a tree with fruit. When you make an investment, you exchange certain resources (like money, time and land) for assets (like stocks, opportunities, real estate) with the aim of generating returns or increasing value in the future. For example, if you decide to buy shares of Apple, you are expecting that the asset value will grow over time.

In most cases, an investment involves the outlay of money, especially in the investments such as stocks, options, funds and bonds, among others. However, learning that mainly takes up time and attention is also a kind of investment for most people (in hopes of bringing more incomes), which could be the most common and must thing for individuals new to investing.

Investments are made upon the desire for a greater payoff, but sometimes an investment may carry risks of missing your expectation, taking up your resources or shrinking your assets. Therefore, doing due diligence before making investment decisions is necessary to mitigate risks as much as you can.

Example

Back to $Apple(AAPL.US)$'s investment story. Apple has been the long-term leader in smartphone markets in terms of market shares. With the launch of service offerings, analysts rated that Apple's closed-loop ecology is to be further consolidated, which reminds you of Warren Buffet's moat principle.

Assuming several years ago, you have bought 10 shares of Apple at $50 per share. In2021, Apple' stock price has risen to $140 per share. Your 10 shares of Apple now worth $1,400, which means the investmentappreciates$900 in value regardless of taxes, trading fees, and other costs. It's worth mentioning positive returns cannot be guaranteed in all investments, which is the main feature considered while differentiating investments from savings. If you had bought AMC stocks on Jun. 2, 2021, at $78, each share would have been worth only $35.69 as of Aug. 16, 2021. 

The content in this article is intended for general circulation and informational purposes only. It does not take into account the investment objectives, financial situation or needs of any particular person and should not be relied on as advice or recommendation. Information provided in this article are not specifically intended for or specially targeted at the public in any specific jurisdiction. Neither Moomoo Inc. nor its affiliates are licensed Financial Advisers and do not provide financial advice. You are advised to consult your financial adviser before making any commitment to invest in any capital markets product. The information published is not and does not constitute or form part of any offer, invitation or solicitation to subscribe or to enter into any transaction in capital markets products. Moomoo is a professional trading app offered by Moomoo Inc. In the U.S., investment products and services on Moomoo are offered by Futu Inc., Member FINRA/SIPC. In Singapore investment products and services are offered through Futu Singapore Pte. Ltd., regulated by the Monetary Authority of Singapore (MAS). This advertisement has not been reviewed by the MAS. Moomoo Inc., Futu Inc. and Futu Singapore Pte. Ltd are affiliated companies. Any illustrations, scenarios, or specific securities referenced herein are strictly for illustrative purposes. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal.

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