Investment

The key difference between spending and investing is the purpose. When you spend money, you use it for something now. When you invest money, you give up using it today in the hope of having more later.

Common investments include shares in companies, bonds, funds, property, savings products and businesses. Each offers a different mix of potential return and risk. A savings account offers low but steady returns. Shares can grow much more over long periods but can also fall sharply in the short term. Property can provide rent and price growth but is expensive to buy and slow to sell.

The word is also used in a business sense. When a company spends money on new equipment, research or a new factory, it is making an investment, expecting the spending to produce future profits.

All investments carry some risk, and returns are never guaranteed, especially in the short term. Good investing usually involves understanding what you are buying, spreading money across different assets and matching the investment to how long you can leave the money untouched.