Investment and its types


The commitment of funds/finance to one or more assets which will be held over some time period for the purpose of earning returns.


The field of study which involves the study of investment environment, investment process and investment securities and markets.

The definition of Investments includes:

1. Investment Environment:

  • Types of Securities
  • Types of Financial Markets
  • Types of Investment Companies

2. Investment Process:
Steps of making investment is Investment process.

3. Investment Securities:
Types, Evaluation and Analysis of Securities.

4. Investment Markets
Markets, types and decisions of the appropriate market for investment.

Types of Investment

1. Direct Investment:
The Investor himself makes the investment with his knowledge and decision.

2. Indirect Investment:
When there is an intermediary between the Investor and Investment that is indirect investment. The investor hand over his finances to the investment company that will invest the amount further and give him returns. (Usually an investment company does not invest in a single investment, rather divide that investment into smaller units and divide among investors that helps to reduce the risk.) It is on the discretion of the investment company where to invest the finances, the investor will get his agreed rate of return.

2. Equity Investment:
The investment in the equity shares of a company is called equity investment. That can be in common stock or preferred stock.

2. Debt Investment:
The investment in bonds, loans, deposits and debentures is debt investment.

3. Derivative Securities Investment:
Investment in paper assets such as options, futures, and contracts is known as derivative securities investment.

  • There is a physical asset involved behind these investments.
  • The value of investment is measured on the basis of underlying assets.

4. High Risk Investment:
The investment in securities like Futures, Junk Bonds or Speculative Bonds are considered high risk investments. The major risk is the Interest Rate Risk that cause variability in their value. Thus they provide high yield in compare to other securities.

5. Low Risk Investment:
The investment in securities like Treasury Bills, Bonds and stocks are low risk investments thus yield low return as well.

6. Short Term Investment:
The investment in securities which are matured within a year is short term investment.

7. Long Term Investment:
The investment in securities which have maturation life of over a year or have no limited maturity life like stocks is long term investment.

8. Domestic Investment:
Investing within the premises of the country is called domestic investment.

9. Foreign Investment:
Whereas investment in foreign countries or either in foreign currency securities within own country is foreign investment.

One thought on “Investment and its types

  1. Apart from those types of investment mentioned above, Investment in Human Capital and Investment in acquiring Property under which types of investment one could classify them.

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