Know What Does an Investment Really Means
Investment is an expansive word that encompasses a wide variety of things, but on tracing the word back to its roots, it is funny that this word finds its origins in the Latin word ‘vestis’, meaning garment. Digging in a little deeper, we find that the word was used in reference to putting things (money or other claims to resources) into others' pockets, which though simple, is the most effective way of defining this word. By investing our money, or resources, or time for that matter, we are making a definitive contribution to an activity or the acquisition of an asset that is capable of producing a recurring profit. But the flip side to this two sided coin is the use of the misnomer profit, which is not necessarily what the investor ends up with. Investment in financial circles, is of two types –
The first being a Real investment, which deals the acquisition of tangible property, such as an automobile or a house. The other type of investment is the acquisition of Financial assets, such as money in a bank, or stock market shares, that one can trade or sell at will.
But from an investor’s standpoint, one worries only about the ‘recovery’ of one’s investment, and hence the classification would be on the basis of whether his or her investment earns him money, or ends up with him going ‘belly-up’ if you could use the expression.
So how does one toe the fine line and find the right balance which would be the difference between hero and zero. The trick lies in one’s ability to filter and select only those assets that have a relatively high probability of success, and I use the word relatively here because some of the most brilliant ideas do not make it big because of circumstance, which unfortunately is out of human control. It is a person’s cognitive ability to analyse the situation at hand and take calculated risks that separates the successful from the not-so successful.
One often hears or reads about investment guaranteeing immediate results. I would add that to redundancy in wording. A key in investing is patience and persistence. One cannot expect his input to immediately produce returns. A parallel can be drawn between the lives of an investor and a mosquito. One cannot expect returns too soon; even a mosquito doesn’t get a pat on the back until he’s nearly completed his task.
During the course of writing this article, some research on the internet led me to many sites that gave tips on successful investing. Kind of surprising is it not that with such potent advice available you don’t find as many Ambanis or Donald Trumps walking down the road. The real reason is that you do not become a successful investor by reading about how to become one, but by going out there and developing this intuitive feel to the ground reality. Technology is growing by leaps and bounds and this will only enhance your ability to keep in touch with your investments. But it is the discretion of the investor whether he adapts to this technology and raises the bar just that little bit more for his competition.
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