The term "investment" is used differently in economics and in finance. Economists refer to a real investment (such as a machine or a house), while financial economists refer to a financial asset, such as money that is put into a bank or the market, which may then be used to buy a real asset.
Business Management
The investment decision (also known as capital budgeting) is one of the fundamental decisions of business management: managers determine the assets that the business enterprise obtains. These assets may be physical (such as buildings or machinery), intangible (such as patents, software, goodwill), or financial (see below). The manager must assess whether the net present value of the investment to the enterprise is positive; the net present value is calculated using the enterprise's marginal cost of capital.
Economics
In economics, investment is the production per unit time of goods which are not consumed but are to be used for future production. Examples include tangibles (such as building a railroad or factory) and intangibles (such as a year of schooling or on-the-job training). In measures of national income and output, gross investment I is also a component of Gross domestic product (GDP), given in the formula GDP = C + I + G + NX. I is divided into non-residential investment (such as factories) and residential investment (new houses). "Net" investment deducts depreciation from gross investment. It is the value of the net increase in the capital stock per year.
Investment, as production over a period of time ("per year"), is not capital. The time dimension of investment makes it a flow. By contrast, capital is a stock, that is, an accumulation measurable at a point in time (say December 31st).
Investment is often modelled as a function of income and interest rates, given by the relation I = f(Y, r). An increase in income encourages higher investment, whereas a higher interest rate may discourage investment as it becomes more costly to borrow money. Even if a firm chooses to use its own funds in an investment, the interest rate represents an opportunity cost of investing those funds rather than loaning them out for interest.
Finance
In finance, investment is buying securities or other monetary or paper (financial) assets in the money markets or capital markets, or in fairly liquid real assets, such as gold, real estate, or collectibles. Valuation is the method for assessing whether a potential investment is worth its price.
Types of financial investments include shares, other equity investment, and bonds (including bonds denominated in foreign currencies). These financial assets are then expected to provide income positive future cash flows, and may increase or decrease in value giving the investor capital gains or losses.
Trades in contingent claims or derivative securities do not necessarily have future positive expected cash flows, and so are not considered assets, or strictly speaking, securities or investments. Nevertheless, since their cash flows are closely related to (or derived from) those of specific securities, they are often studied as or treated as investments.
Investments are often made indirectly through intermediaries, such as banks, mutual funds, pension funds, insurance companies, collective investment schemes, and investment clubs. Though their legal and procedural details differ, an intermediary generally makes an investment using money from many individuals, each of whom receives a claim on the intermediary.
Personal finance
Within personal finance, money used to purchase shares, put in a collective investment scheme or used to buy any asset where there is an element of capital risk is deemed an investment. Saving within personal finance refers to money put aside, normally on a regular basis. This distinction is important, as investment risk can cause a capital loss when an investment is realized, unlike saving(s) where the more limited risk is cash devaluing due to inflation.
In many instances the terms saving and investment are used interchangeably, which confuses this distinction. For example many deposit accounts are labeled as investment accounts by banks for marketing purposes. Whether an asset is a saving(s) or an investment depends on where the money is invested: if it is cash then it is savings, if its value can fluctuate then it is investment.
Saturday, April 21, 2007
Business Management
The investment decision (also known as capital budgeting) is one of the fundamental decisions of business management: managers determine the assets that the business enterprise obtains. These assets may be physical (such as buildings or machinery), intangible (such as patents, software, goodwill), or financial (see below). The manager must assess whether the net present value of the investment to the enterprise is positive; the net present value is calculated using the enterprise's marginal cost of capital.
Economics
In economics, investment is the production per unit time of goods which are not consumed but are to be used for future production. Examples include tangibles (such as building a railroad or factory) and intangibles (such as a year of schooling or on-the-job training). In measures of national income and output, gross investment I is also a component of Gross domestic product (GDP), given in the formula GDP = C + I + G + NX. I is divided into non-residential investment (such as factories) and residential investment (new houses). "Net" investment deducts depreciation from gross investment. It is the value of the net increase in the capital stock per year.
Investment, as production over a period of time ("per year"), is not capital. The time dimension of investment makes it a flow. By contrast, capital is a stock, that is, an accumulation measurable at a point in time (say December 31st).
Investment is often modelled as a function of income and interest rates, given by the relation I = f(Y, r). An increase in income encourages higher investment, whereas a higher interest rate may discourage investment as it becomes more costly to borrow money. Even if a firm chooses to use its own funds in an investment, the interest rate represents an opportunity cost of investing those funds rather than loaning them out for interest.
Investment, as production over a period of time ("per year"), is not capital. The time dimension of investment makes it a flow. By contrast, capital is a stock, that is, an accumulation measurable at a point in time (say December 31st).
Investment is often modelled as a function of income and interest rates, given by the relation I = f(Y, r). An increase in income encourages higher investment, whereas a higher interest rate may discourage investment as it becomes more costly to borrow money. Even if a firm chooses to use its own funds in an investment, the interest rate represents an opportunity cost of investing those funds rather than loaning them out for interest.
Wednesday, April 18, 2007
Types Of Investments
Bonds
Grouped under the general category called fixed-income securities, the term bond is commonly used to refer to any securities that are founded on debt. When you purchase a bond, you are lending out your money to a company or government. In return, they agree to give you interest on your money and eventually pay you back the amount you lent out.
The main attraction of bonds is their relative safety. If you are buying bonds from a stable government, your investment is virtually guaranteed, or risk-free. The safety and stability, however, come at a cost. Because there is little risk, there is little potential return. As a result, the rate of return on bonds is generally lower than other securities. (The Bond Basics tutorial will give you more insight into these securities.)
Stocks
When you purchase stocks, or equities, as your advisor might put it, you become a part owner of the business. This entitles you to vote at the shareholders' meeting and allows you to receive any profits that the company allocates to its owners. These profits are referred to as dividends.
While bonds provide a steady stream of income, stocks are volatile. That is, they fluctuate in value on a daily basis. When you buy a stock, you aren't guaranteed anything. Many stocks don't even pay dividends, in which case, the only way that you can make money is if the stock increases in value - which might not happen.
Compared to bonds, stocks provide relatively high potential returns. Of course, there is a price for this potential: you must assume the risk of losing some or all of your investment. (For additional reading, see Stock Basics tutorial and Guide to Stock Picking Strategies.)
Mutual Funds
A mutual fund is a collection of stocks and bonds. When you buy a mutual fund, you are pooling your money with a number of other investors, which enables you (as part of a group) to pay a professional manager to select specific securities for you. Mutual funds are all set up with a specific strategy in mind, and their distinct focus can be nearly anything: large stocks, small stocks, bonds from governments, bonds from companies, stocks and bonds, stocks in certain industries, stocks in certain countries, etc.
The primary advantage of a mutual fund is that you can invest your money without the time or the experience that are often needed to choose a sound investment. Theoretically, you should get a better return by giving your money to a professional than you would if you were to choose investments yourself. In reality, there are some aspects about mutual funds that you should be aware of before choosing them, but we won't discuss them here. (You can, check out the details in the Mutual Fund Basics tutorial.)
Alternative Investments: Options, Futures, FOREX, Gold, Real Estate, Etc.
So, you now know about the two basic securities: equity and debt, better known as stocks and bonds. While many (if not most) investments fall into one of these two categories, there are numerous alternative vehicles, which represent the most complicated types of securities and investing strategies.
The good news is that you probably don't need to worry about alternative investments at the start of your investing career. They are generally high-risk/high-reward securities that are much more speculative than plain old stocks and bonds. Yes, there is the opportunity for big profits, but they require some specialized knowledge. So if you don't know what you are doing, you could get yourself into a lot of trouble. Experts and professionals generally agree that new investors should focus on building a financial foundation before speculating. (For more on how levels of risk correspond to certain investments, check out: Determining Risk And The Risk Pyramid.)
Grouped under the general category called fixed-income securities, the term bond is commonly used to refer to any securities that are founded on debt. When you purchase a bond, you are lending out your money to a company or government. In return, they agree to give you interest on your money and eventually pay you back the amount you lent out.
The main attraction of bonds is their relative safety. If you are buying bonds from a stable government, your investment is virtually guaranteed, or risk-free. The safety and stability, however, come at a cost. Because there is little risk, there is little potential return. As a result, the rate of return on bonds is generally lower than other securities. (The Bond Basics tutorial will give you more insight into these securities.)
Stocks
When you purchase stocks, or equities, as your advisor might put it, you become a part owner of the business. This entitles you to vote at the shareholders' meeting and allows you to receive any profits that the company allocates to its owners. These profits are referred to as dividends.
While bonds provide a steady stream of income, stocks are volatile. That is, they fluctuate in value on a daily basis. When you buy a stock, you aren't guaranteed anything. Many stocks don't even pay dividends, in which case, the only way that you can make money is if the stock increases in value - which might not happen.
Compared to bonds, stocks provide relatively high potential returns. Of course, there is a price for this potential: you must assume the risk of losing some or all of your investment. (For additional reading, see Stock Basics tutorial and Guide to Stock Picking Strategies.)
Mutual Funds
A mutual fund is a collection of stocks and bonds. When you buy a mutual fund, you are pooling your money with a number of other investors, which enables you (as part of a group) to pay a professional manager to select specific securities for you. Mutual funds are all set up with a specific strategy in mind, and their distinct focus can be nearly anything: large stocks, small stocks, bonds from governments, bonds from companies, stocks and bonds, stocks in certain industries, stocks in certain countries, etc.
The primary advantage of a mutual fund is that you can invest your money without the time or the experience that are often needed to choose a sound investment. Theoretically, you should get a better return by giving your money to a professional than you would if you were to choose investments yourself. In reality, there are some aspects about mutual funds that you should be aware of before choosing them, but we won't discuss them here. (You can, check out the details in the Mutual Fund Basics tutorial.)
Alternative Investments: Options, Futures, FOREX, Gold, Real Estate, Etc.
So, you now know about the two basic securities: equity and debt, better known as stocks and bonds. While many (if not most) investments fall into one of these two categories, there are numerous alternative vehicles, which represent the most complicated types of securities and investing strategies.
The good news is that you probably don't need to worry about alternative investments at the start of your investing career. They are generally high-risk/high-reward securities that are much more speculative than plain old stocks and bonds. Yes, there is the opportunity for big profits, but they require some specialized knowledge. So if you don't know what you are doing, you could get yourself into a lot of trouble. Experts and professionals generally agree that new investors should focus on building a financial foundation before speculating. (For more on how levels of risk correspond to certain investments, check out: Determining Risk And The Risk Pyramid.)
Only 244 copies of Genuine Windows Vista sold in China
Microsoft spent millions of dollars advertising its next generation OS 'Windows Vista' in China, in fact the IT juggernaut threw up the biggest Vista Ad on the 421 meter high Jin Mao tower in Shanghai China. However after 2 weeks (Jan 19 to Feb 2) from launch Microsoft managed to sell a mere 244 copies of Windows Vista. Software piracy is rampant in the middle kingdom and a pirated version of Vista sells for a mere $1 on the streets. The following numbers are quoted by Windows Vista chief distributor in Bejing.
Tuesday, April 17, 2007
Earning more with CPC (Cost Per Click) programs
You might think that your earnings depends only on visitors, right? It’s one of the factors, for sure, but if you would just place ads wherever you want you might earn less than other webmaster with even less visitors but some techniques. I’ll give you some tips for Google Adsense, but basically it will work with any CPC program.
I’ve seen so many webmasters who are trying to discern their ads from site, for example: If site got white background and dark grey font color, they are making something like: blue ad background with white font and light green borders or something like that. This is not good idea in the most cases. Of course, visitor will notice your ad, but are you sure that visitor will read/view it for more than a second? You can always disagree with me, that’s only mine opinion, but I suggest you to make your ad look the same as your site content, make borders and background color same as your site background color, make your ad url/title same color as all your site links. This will definitely attract more attention; most will think that it’s a part of site so they will read that ad. So if ad will be interesting there’s big chance that it will be clicked, more clicks – less views = higher CTR.
I can give you mine own example, I own a free forum skins site (www.GPF-Design.com), when I had an exclusive ad with different colors than mine whole site theme it had near 1% CTR so I was earning just a few cents, but once I made it look like my site theme, CTR increased five times next day. It’s just example how important text ad color is.
So where should you place your ads? Good question. Most would place it at the top of the site, 468*60 for example. This is not good idea if you are being paid for clicks, but not views, how many of you are looking there when you are surfing site? I suggest you to place ads in the corners or somewhere in the content. OK, I will give you one more example: let’s say that you want to buy laptop, you are looking for reviews first, right? You were searching via search engine for something like laptop reviews, found site. You didn’t place much attention to that site top, where most place ads, right? Good. So you are reading… Found that this one is the best in its class, so you think, ah, I will buy this one, and then you notice! Notice Google ad in the middle of the text where it says “Buy Cheap Laptops”, what a cool ad! You just wanted to buy this one, so what you do? You click ad and see what that e-shop/seller can offer, webmaster was smart and knew that it was good idea to place ad somewhere where it will be profitable. I suggest you to be smart too.
Of course, if you are getting paid for views or got some very exclusive ads which are being noticed you could get some clicks too, but most just will scroll site or surf around and won’t take many attention to the top again, but it’s your decision. It’s not always bad to place you ad there or make it look different than your site theme, just take a shot and try both.
Just don’t forget main rule: Ad shouldn’t make your site look ugly, it should decorate your site and make it look even better.
That’s it. Enjoy your growing earnings.
I’ve seen so many webmasters who are trying to discern their ads from site, for example: If site got white background and dark grey font color, they are making something like: blue ad background with white font and light green borders or something like that. This is not good idea in the most cases. Of course, visitor will notice your ad, but are you sure that visitor will read/view it for more than a second? You can always disagree with me, that’s only mine opinion, but I suggest you to make your ad look the same as your site content, make borders and background color same as your site background color, make your ad url/title same color as all your site links. This will definitely attract more attention; most will think that it’s a part of site so they will read that ad. So if ad will be interesting there’s big chance that it will be clicked, more clicks – less views = higher CTR.
I can give you mine own example, I own a free forum skins site (www.GPF-Design.com), when I had an exclusive ad with different colors than mine whole site theme it had near 1% CTR so I was earning just a few cents, but once I made it look like my site theme, CTR increased five times next day. It’s just example how important text ad color is.
So where should you place your ads? Good question. Most would place it at the top of the site, 468*60 for example. This is not good idea if you are being paid for clicks, but not views, how many of you are looking there when you are surfing site? I suggest you to place ads in the corners or somewhere in the content. OK, I will give you one more example: let’s say that you want to buy laptop, you are looking for reviews first, right? You were searching via search engine for something like laptop reviews, found site. You didn’t place much attention to that site top, where most place ads, right? Good. So you are reading… Found that this one is the best in its class, so you think, ah, I will buy this one, and then you notice! Notice Google ad in the middle of the text where it says “Buy Cheap Laptops”, what a cool ad! You just wanted to buy this one, so what you do? You click ad and see what that e-shop/seller can offer, webmaster was smart and knew that it was good idea to place ad somewhere where it will be profitable. I suggest you to be smart too.
Of course, if you are getting paid for views or got some very exclusive ads which are being noticed you could get some clicks too, but most just will scroll site or surf around and won’t take many attention to the top again, but it’s your decision. It’s not always bad to place you ad there or make it look different than your site theme, just take a shot and try both.
Just don’t forget main rule: Ad shouldn’t make your site look ugly, it should decorate your site and make it look even better.
That’s it. Enjoy your growing earnings.
Samsung’s quarterly profit falls
SEOUL, South Korea (Reuters) -- Samsung Electronics, the world's top memory chip maker, reported a 15 percent fall in first-quarter earnings on Friday, hurt by a steep drop in margins, and predicted further price pressure in the near term.
Source.
Source.
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