What is the difference between a loan and an investment, and how do they vary in terms of financial implications and risks?

Answer 1

A loan is money borrowed from a lender that needs to be repaid with interest, while an investment involves putting money into an asset with the expectation of generating a return. Loans typically have fixed repayment schedules and interest rates, while investments can be more variable in terms of returns. Loans carry the risk of default if the borrower is unable to repay, while investments are subject to market fluctuations and the potential loss of principal. Overall, loans are more secure but offer lower potential returns, while investments have higher potential returns but come with greater risk.