Investment

 Introduction to Investment

Investment is spending your savings in such a way that it increases over time. The present trend in Countries is to invest money in such a way that it provides maximum return over time.

                                               

Risk

Risk is defined as the chances actual return deviates from the expected return. Thus higher deviation from expected return means higher risk and lower deviation means lower risk.

For Example::::::::::For example if an organization is expecting to earn $10,000, $20,000 and $30,000 per quarter but can earn only $5000, $6000 and $ 7000 in these three quarters. In this case the deviation from expected return is very high, and thus the company seems to have higher risk.

Additional an organisation is expecting to earn $10,000, $20,000 and $30,000 per quarter and earns an equivalent of $9000, $20,000 and $29,000 in three quarters. Then in this case, the deviation from expected return is very low. Thus the company has lower risk.

Microsoft company is a leading oganization in the world. Its net income for the year 2017 was 20,539 Million, for 2018 was 16, 571 Million. This shows there could have been a sharp decline from the expected profit and thus there can be higher risk. Thus the Concept of Investment is Highly Important.

 

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