What is investment?

Investment is the allocation of resources (such as capital) with the expectation of generating a profit. This can include using money to finance and establish a business, or purchasing land with the aim of reselling it later at a higher price. In financial markets, this typically involves investing in financial instruments with the hope of selling them later at a higher price.

The expectation of returns is the basis of the investment concept (this is also referred to as return on investment). Unlike trading, investment usually takes a long-term approach to wealth accumulation. The investor's goal is to build wealth over a long period of time (years, or even decades). There are many ways to do this, but investors typically use fundamental factors to find good potential investment opportunities.

Given the nature of their long-term approach, investors typically do not concern themselves with short-term price fluctuations. Thus, they tend to be relatively passive, not worrying much about short-term losses.