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Answer Posted / abhishek kr. sinha
Most of the answers above says investment is investing in
equities. Remember this is a trap and a wrong notion. And
the second answer says that investment is a postponement of
consumption. However, Savings is primarily postponement of
consumption. Idle cash is totally risk free and hence
returns are also zero.
Investment is a function of savings. It has the capability
of generating series of future cash-flows and gererating
employment. Buying shares and all is not an investment
activity - It is just an example of re-allocation of money.
Example of investment - investing in real estate which
generates employment and cash flows. Investment is an
extremely important variable as far as G in Keynesian
C+I+G+NX is concerned.It stimulates the multiplier.
Thanks,
Er. Abhishek Kr. Sinha.
IBS - Hyderabad.
2009-2011 batch
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