Investment
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Strictly defined, investment is expenditure on real capital goods. However, in everday language, it is also taken to mean purchase of any asset, or indeed the undertaking of any committment, which involves an initial sacrifice folowed by subsequent benefits. For example, one may speak of the purchase of an ordinary share or the decision to go to university as an investment. However, in the therory of income determination, investment means strictly expenditure on capital goods. In this sense, investment is the amount by which the stock of capital of a firm or economy changes, once we have allowed for replacement of capital which is scrapped.
Reference: The Penguin Dictionary of Economics, 3rd edt.
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Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >