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Investment in single company shares and gilts
Finance & Accounting
Pages 12 (3012 words)
The dictionary defines the term Investment as ‘the commitment of money or capital to purchase financial instruments or other assets, in order to gain profitable returns in the form of interest, income, or appreciation of the value of the instrument’ …
From the point of view of economics, the act of investment is related to saving or deferring consumption today for the purpose of a better or higher return tomorrow. Interest is the price paid to the investor for waiting or deferring consumption. As consumers, we may invest for a number of reasons. We may invest in a house because we want the comfort of a shelter and a place to hold our belongings, a car to drive us to work, or a beach house to spend the holidays. Investments are also made in financial instruments that have value such as shares, bonds and pension plans. The idea is that the investment should bring us a better level of return in the future. Investments may also be made by corporations of monies kept for the purpose of buying future assets or replacement of machinery etc. The investment made in different types of financial instruments will yield a rate of interest and may increase or decrease in value due to demand and supply or various other factors. Thus investment will give one more than one types of return- interest earned and capital gains. The Investment Climate in the UK The UK has a very active financial environment, as London has been one of the most important financial centers of the world for some time now. The main reasons for this are the availability of infrastructure in the shape of the equity and bond markets and money market for local and foreign currencies. ...
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