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Word of the Day: Investment: Envisioning the Future and Taking a Risk

Definition

An Investment can be the use of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.

An investment can refer to a particular instance or mode of investing.

An investment can be a thing invested in, as a business, a quantity of shares of stock, etc.

An investment can refer to something that is spent such as money, or tax refunds.

An Investment can be devoting, using, or giving of time, talent, emotional energy, etc., as for a purpose or to achieve something

To make a good investment requires two things, looking forward into the future and taking a risk.

01

In 2018 we saw the ways in which businesses invested funds when the Trump Tax cuts became law. 

Foreseeing a need to keep their workforce steady, employers invested in pay raises.

Foreseeing a need for increased production they invested in their facilities which needed repairs, replacements, or additions, or hired new employees.

Foreseeing a need for future capital, they bought back outstanding stock to maintain their dividend rate, but pay out less dividends.

We make these types of decisions in our personal lives, whether it is obtaining further education, or purchasing a house or car or starting a new business we all look into the future to envision our lives there.

Legislators consistently use this term when they come to us with their visions of the future and ask us to spend (invest) our tax dollars for public projects and social prorams.

02

All investments require some amount of risk taking. Did we see correctly into the future? If we have, the investment will increase our income, ease our lives, or solve a problem. If we did not foresee accurately we may lose income, create hardships or leave a problem unsolved. That is the risk we take.

Whether you are a investor, an entrepreneur, or a taxpayer, you are constantly evaluating investment opportunities presented to you by others. To make an investment you will need to be able to make reasonable assumptions about the future and then take a risk.

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