Investment involves placing a portion of money for the purpose of gaining profit from returns. Examples of investments include lending businesses, insurance plans, bonds, and stocks. Investments are characterized by their level of risk, return, safety, liquidity, and potential for tax shelters. While investments can help save money for the future and see returns grow above inflation, not all guarantee profits and some carry greater risks like losing money or being akin to gambling. Investments are distinguished from speculation and gambling by being based on rational behavior and analysis of past performance rather than hopes or random bets without research.

1. PB601
Investment
management
INTRODUCTION TO INVESTMENT

2. Definition of investment
Place a portion of money for the purpose of
gain profit from the return

3. Example 0f investment
Lending business (borrow money to others)
Purchase of insurance plan
Purchase of bond
Purchase of common stock and preferred stock

4. Characteristic of investment
Risk
Return
Safety
Liquidity
Tax shelter

5. Advantages of investment and
disadvantages
advantages Disadvantages
Save money for future Not all investment guaranteed in profit return
The return can be used for re-invest or keep the
profit
Lose money of your investment
Money grow at good compared to inflation rate Sometimes investment becomes like gambling

6. Differentiate between investment,
speculation and gambling
investment speculation gambling
Rational investment behavior
based in knowledge of past stock
price
Based on hope Make A bet on an uncertain
income
Based on analysis of stock Stock price volatility estimates of
future
Greater risk and disproportionate
to the expected of return
Requires research and research
based on the fact
Price speculation on rumors No analysis before buying shares
Long-term investment are usually
more than two years
Based on an event It it’s a game of chance