What does it mean to invest?

Investing refers to the practice of allocating money toward an asset, project, or venture with the expectation of generating an income or profit over time. This concept encompasses various asset classes such as stocks, bonds, real estate, and mutual funds, among others. The underlying principle of investing is that the capital used is expected to grow or appreciate, leading to returns that exceed the original amount invested.

When someone invests, they are not merely setting aside money or saving; rather, they are actively putting their money to work in hopes that it will yield financial gains in the future. This distinguishes investing from simply saving, which often involves lower returns and is primarily focused on preserving capital without the intention of generating high returns. Furthermore, spending money on consumer goods or borrowing for immediate needs do not involve the same forward-looking strategy associated with investing, which aims for future appreciation and returns.