Definition: Investment, Investor and Savings

In economics, the definition of investment is quite strict.

• Investment means an increase in the capital stock – Gross fixed capital formation.

When we buy shares or put money in the bank. This is not seen as investment, it is seen as a mere transfer of ownership – there is no increase in the productive capacity of the economy. Therefore ‘investing’ money in the bank is properly known as saving.

Financial Investment

• In common terminology we refer to ‘investing money’ in a bank. It is better to refer to this as ‘financial investment’ to avoid confusion.

Investor

• An investor is someone who increases the capital stock, or engages in ‘financial investment’

• Guide To Investment
• How does Japanese Investment affect the UK economy
• Impact of Foreign Direct Investment