Meaning: - Investment refers to the use of saving for purpose of production
made by an individual or a business firm. The aim of investment is to acquire
capital goods or assets e.g. Machinery, plant, factory building, raw materials
etc.
1.
Gross investment: -It is the total investment in fixed
assets like buildings, machines and in inventories (stock) during a year
without deducting capital depreciation or capital consumption.
2.
Net investment: -Net investment is the gross
investment minus capital consumption during a year. Capital consumption
include:
(a)
Depreciation of capital assets.
(b)
Losses to capital assets due to
fire, earthquakes, etc.
3.
Autonomous
investments: - These
are investments made by the government for the welfare and benefit of the
people. These investments are made without any profit motives. This type
includes investments made by the government in roads, railways, bridges, dams,
communication facilities health and education facilities, exploration of oil
and natural gases, etc.
4.
Induced investment: - These are investments made by the
private sector or private entrepreneurs mainly for profit motive; it is
prominent in capitalistic and free market economics. Private sector
investment is mostly induced investment.
5.
Financial Investment: - It is the investment expenditure
made for the purchase of shares, bonds, securities, stock, etc. in the country
during the year. This investment is expressed in money term.
6.
Real Investment: -It is the investment made for
creating new stock of real/physical capital assets such as machines, factory,
buildings, tools and equipment, etc. in the country during a year. This
investment is expressed in real/physical terms.
The real investment increases the productive capacity of a nation.
