Investments FAQs What is an Investment? An investment is an asset that will eventually provide value that exceeds the initial cost. What is an Investment in finance? Investments in finances are instruments that investors purchase in order to realize a greater return later. Most often, these instruments are stocks. Are there different types of Investments? There are many types of investments available on the market, from stocks and bonds to mutual funds, ETFs, etc. How do Investments grow? Investments grow due to an appreciation of the asset’s value. This could be because of a change in market conditions (such as with stocks), a change in the overall supply (such as the works of a particular artist growing more expensive as collectors accumulate more of the overall supply), or because of a direct improvement being made (such as with buying real estate and renovating to increase the value). What is Return on Investment (ROI)? ROI is a metric that evaluates how much value has been gained from an investment relative to the cost. For example, if you had purchased an asset for $100 and the value appreciates to $120, then you have gained $20 worth of value for an ROI of 20%. About the Author True Tamplin, BSc, CEPF® Facebook Linkedin Instagram Twitter Youtube True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists. True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics. To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.