Category: Investment Benefits

In finance, the benefit from investment is called a return. The return may consist of a profit from the sale of property or an investment, or investment income including dividends, interest, rental income etc., or a combination of the two. The projected economic return is the appropriately discounted value of the future returns.

Investors generally expect higher returns from riskier investments. When we make a low risk investment, the return is also generally low.

Investors, particularly novices, are often advised to adopt a particular investment strategy and diversify their portfolio. Diversification has the statistical effect of reducing overall risk.

When you invest money, either by purchasing stocks or shares of a company or by buying mutual funds, your money ends up earning its own income. If the value of the stock or mutual fund increases, you can earn money if you sell the stock for the higher price. Plus, many stocks or mutual funds pay dividends (a percentage of the company’s earnings) each quarter. The dividends you earn on your investments often get re-invested in the company, so the amount of stock you own— and the value of that stock—increases.