10.7 Investment

. Investment Investment implies using the money for further production. If savings are put under the folds of a saree or kept hidden in a pitcher, it is not going to result in investment. Savings have to be put to productive use in the economic sense to result in investment.

Investments may be in two types of assets – physical assets and financial assets. Savings, if put into bank accounts, post offices, or financial credit societies institution, in shares and securities, insurance policies, etc., lead to formation of financial assets. They provide financial security to the family and are productive in economic terms. Savings in physical assets means using your savings to buy land, property, house, gold, household durables, etc.

This kind of investment is not productive in the economic sense of the term and does not result in capital formation. However, it usually has long term positive returns.