An investment is something you get with the goal of having it grow in value over time.

This simple definition contains some basic but important financial literacy concepts.

  • something you get: When you invest, you get something by giving up something you have. Usually you give up money, but you might give up your time.
  • goal: When you invest, it is not a “sure thing.” Like any goal, the goal of growth might or might not be reached.
  • grow in value: You invest so that you will have something worth more than what you have now.
  • over time: Your investment needs time to grow. The length of time you are willing to wait could be several months or many years.

We will be talking about financial investments in this guide. But financial investments are not the only way to have something that is worth more later than it is worth now. Your house, your jewelry or even a special trading card collection can grow in value over time. Getting an education or bettering yourself in some other way are also investments. We won’t be talking about those here, but these examples can help you understand the idea of investing.

When you are thinking about investing, it is important to do what is right for you. The goal of any investment is growth in value, but only you know what you want to do with that extra money. You might want to buy a house, help your children go to university, or create a nest egg for retirement. How long you are willing to wait for an investment to grow and how much risk you are willing to take will depend on the goal. So, the way that you invest and what you invest in will also depend upon this.