Page 9 - Introduction To Investment Management

In addition, financial assets will also allow the distribution of wealth and profits in
the economy became more extensive and not confined to certain groups. As for example,

most of us may not be able to have their own car factory; hence, we can still enjoy the
benefits and take part in business activities if we own the shares in that car company. This

example shows that the existence of financial assets not only helps the existence of
physical assets, also giving space and opportunity to individuals in the economy to enjoy

the benefits from whichever industry they are invested in.

1.2 DEFINITION OF INVESTMENT

Investment is the commitment of financial resources that we have today hoping

to gain profit/benefit in the near future. Investment can occur by managing systematically
and making decision based on specific analysis on the financial assets or physical assets.

In an economic sense, an investment is the purchase of goods that are not consumed
today but are used in the future to create wealth. In finance, an investment is a monetary

asset purchased with the idea that the asset will provide income in the future or will be
sold at a higher price for a profit.

Investors are advised to make a wise decision in making an assessment of risks

and returns on investment that may be encountered by them. Return or profit on the
investment may consist of dividends, capital gains or interest (financial assets) and cost of

an asset. In other words, investment is an activity for earning the future profits or
increased in future value of money based on the current monetary value.

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