Definition of Investment

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Investment is to allocate resources such that we might get benefits in future which are greater than if we use that same resources now.
Investment is term not only referred in financial terms. Everyone are investing either knowingly or unknowingly. You are here, reading this blog, investing your time here, so that you can manage your money and put your money to work. You eat salads and stay fit. Here you are investing on your health. You are investing time with family to have Life's biggest unmaterialistic thing called "Memories".

Deep diving now into financial investment. Definition remains the same, only Change is that you have to replace generic "resources" to specific "financial resources" word. In finance, investments are quantifiable. The future value that we get is known as return. Generally returns are expressed in percentage terms.


In olden days, investments were simple. For example, imagine that you are in the days where a shepherd is a great old time investor. He knows overtime his cattle/sheep will reproduce and multiply in number. Each and every single day as his cattle/sheep gain weight his asset value increases. There will also be dividend of milking them and getting cash without damaging or selling his asset. Being a shepherd is not everyone's cup of tea. So let's learn about modern assets and how we can attain FIRE with help of them.

We will be dealing with simple math going forward. I know math is boring when it's alone. You combine that with money, I promise you won't feel the same way.
Return itself may sometimes doesn't tell us much about if that investment was fruitful or not.

Assume you have made a return of 10,000 rupees on an investment. Is there anything missing here?? Yes absolutely. We are missing how long did we wait and more importantly we are missing how much we have invested in. In simple terms, percentage returns will tell how hard our each rupee has worked to give us that return. 
So here is the formula for return percentage
((Current value - invested value)/invested value) X 100
Click to know about more accurate calculated return term call CAGR


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