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Investment

By Edited Nov 13, 2013 1 0

Investment is the purchasing of shares, controlling interests, financial instruments or other assets for the purpose of receiving an increased return over time. Investment occurs on every level of the economy, from private micro-investments in a friend's new company, all the way up to massive purchases of shares by governments and large corporations. While investment is favored amongst financial gurus as a powerful means of increasing one's net worth over time, it does necessarily entail a degree of risk commensurate to the type of company, asset or instrument being purchased. For many, the allure of investment is the possibility for the degree of return to scale along with this risk. Considered in this way, it is easy to see why many have noted that investing money is, in certain specific aspects, similar to gambling.

When an investor purchases a certain number of shares in a company, he or she is considered to correlatively own a portion of that company. Shareholders, as such an investor is then called, have controlling interests in the day-to-day management of their company as well as its quarterly earnings and financial performance. Because their money is backing the operations of the company, shareholders exercise considerable influence over executives tasked with daily management.

A person may also invest their money more directly into precious commodities such as silver, gold and gemstones which they physically retain until their purchases' value increases. Gold and silver have served as mainstays of the economy since the time the federal reserve backed every issued bank note with a commensurate amount of silver. During times of economic uncertainty and stress, it is common for investors to pull money out of less certain ventures such as companies and redirect their wealth into precious metals, considered to be safer and more stable.

An icon of investment and American financial strength, Wall Street is home to the New York Stock Exchange, the often televised frenzied scene full of jacketed traders screaming "Buy" and "Sell" during trading hours, littering the floor and air with tickets.

Finding Safe Investments


In recent years, with the advent of internet commerce, even investment has gone online. Many different trading websites allow users to create legal trading accounts and to purchase, manage and sell stock holdings over the internet.

Investment's marriage with the internet has allowed more people access to the world of financial instrument trading, but has also opened the industry to new and dubious practices such as algorithmic trading, in which carefully calibrated computer networks use split-second calculations and complex decision making software to profit off of miniscule windows of time in which to buy and sell massive amounts of stocks for small gains which, performed in the massive quantities achievable by computers, result in gigantic profits. This practice has come under fire for introducing as yet poorly understood new elements and tendencies into the market, yet legislative responses to the new phenomena have been slow to materialize.

In an effort to givemore of the workforce the opportunity to develop diversified financial holdings via stocks, strong employee benefits packages offer workers the choice to have some of their paycheck each month invested in portfolios either of their choosing or of the company's arrangement. These 401-K plans encourage workers to continually divert part of their earnings into stocks so that, over time, they not only save liquid cash but also amass other valuable assets.



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