Cutting Edge Insights
with Dr. Lee

What is an Investment?

Investment is a word that gets used very frequently, often without consideration of its true underlying meaning.  It traditionally is used pertaining to an infusion of capital into a project to accomplish a certain goal.

For example, Merriam-Webster.com defines investment as “The outlay of money usually for income or profit: capital outlay.”

Dictionary.com adds that an investment is “a devoting, using, or giving of time, talent, emotional energy, etc., as for a purpose or to achieve something.”

This definition affirms that we can invest non-financial assets into something for an anticipated outcome.

Investopedia.com says that an investment is “An asset or item acquired with the goal of generating income or appreciation.”  Here, we return to the idea that investment typically requires a cash infusion.

I’m not ecstatic about any of the above-referenced definitions of investment and I’m even less enthused about the common usage and reference of the term in our everyday lives.

With respect to the definitions, I’m dismayed that the idea of investing with respect to devoting time and energy receives little attention.

With respect to its use in mainstream media, I dislike that the term investment is used in the sense of anticipated capital appreciation rather than projected cash flow or income stream.

Therefore, I’m going to propose my own definition of investment:

“Resources, financial or otherwise, allocated to an asset or an objective, in anticipation that the resources will produce a return consisting of an increase in value, stream of income, or both.”

-OR-

“An asset or objective into which resources have been placed or allocated.”

According to my definition, I can invest in real estate as well as personal development.  I can invest with the anticipation of increasing value as well as hope for future flow of value, or income stream.

As you think about this, always consider how you are allocating your time, abilities, and financial resources.

Disclaimer – I give ideas – not advice.

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References:
Merriam-webster.com, investopedia.com, dictionary.com

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