What is Investing?

What is Investing?

• Investing is the expectation of a return over time in the form of income (dividends) or price appreciation. These assets tend to valued based on future discounted cashflows.
• Risk goes hand in hand with expected returns. The less risk taken results in lower expected returns while high risk investments is vice versa. Time horizon tends to be long term.

Example of Investing:

• You are looking to invest in Apple. After your fundamental analysis, you believe that over the long term the business will grow, and the stock price will appreciate in value. You buy the company expecting future cashflows/profitability to grow. You plan on holding at least for 5-10 years.