Why do people invest money?

Answer 1

People invest because they believe that they can expect a positive return on their money. Investment is often necessary in order to reach financial goals for college, retirement or to protect against a possible loss of income in the future.

Answer 2

For a return on investment. The choice as to if they will invest is simple present value= future value/(1+expected interest)^ number of years. This seems complex, but it is truly quite simple. If people, rather than invest only save in the banks, they would end up being poorer over the long run because the rate that savings accounts grow by don't even keep pace with inflation. A good investment allows your money to grow faster than it loses value, and generates a steady stream of income that is greater than its present value.

The present value formula simply states that future income or value divided by its interest rate should be its value in terms of today's money.

Answer 3

Most often money is put into businesses (invested) in order for that money to grow and return more money later (ROI -Return on Investment).

Sometimes an investor might want to hide profits from another venture and so invest because of that reason.

Answer 4

Investment is any asset that is purchased today with the intention that its value will increase in the future or it will generate income for the investor in the future. Alternatively, it is also used to refer to any means that is aimed towards creating wealth for the long term. Investments, in general include buying stocks, bonds, securities, mutual funds, any residential or commercial property (either for future resale or rental income) among other things.

Any individual should invest his/her money in safe investment objects and steer clear of speculative investments which are high risk and are suitable only for short term financial goals.

Here is a list of reasons why an individual should invest:

1. Investments allow for growth of wealth by using the existing financial resources
2. Income can be increased through the right investment vehicles
3. After retirement, in addition to savings, returns from an investment made in the past can help manage the daily expenses. For e.g- term deposits like fixed deposits provide steady earnings at minimal (or no) risk. Nowadays Bajaj Finance is best investment company which provide high rate of interest on their Fixed Deposit investment plans.
4. Investments provide returns and these returns can help fill in the gaps where savings are not enough.

Answer 5

1. To achieve capital appreciation on its stock

2. To get dividend income

These are the 2 main reasons why people invest in companies.

Answer 6

Over time money loses its value because of inflation. Investing in stocks or bonds ensures investors that they at least maintain their purchasing power over time.