Short and Long Term Investments

To invest is to allocate money in the expectation of some benefit in the future.

A young plant growing from money.Heap of money with seedling.

In finance, the benefit of an investment is called a return. The return may consist of a gain (or loss) realized from the sale of a property or an investment, unrealized capital appreciation (or depreciation), or investment income such as dividends, interest, rental income, etc., or a combination of capital gain and income. The return may also include currency gains or losses due to changes in the foreign currency exchange rates.

Investors generally expect higher returns from riskier investments. When a low-risk investment is made, the return is also generally low. Similarly, high risk comes with high returns

Investors are often advised to adopt a particular investment strategy and diversify their portfolio. Diversification has the statistical effect of reducing overall risk.

Investments are often made indirectly through intermediary financial institutions. These intermediaries include funds and insurance companies in local and International Markets. They may pool money received from a number of individual end investors into funds such as investment trust etc. to make large-scale investments. Each individual investor holds an indirect or direct claim on the assets purchased, subject to charges levied by the intermediary, which may be large and varied.