Join Rudolph Rosenberg for an in-depth discussion in this video What is an investment?, part of Making Investment Decisions.
- View Offline
…The first thing we need to do is to make sure…we have a good understanding of what we are talking about.…So what is an investment?…The most common definition of an investment, is that someone is…spending money or putting aside money for a certain period of time.…In order to get back more money, than he or she originally invested.…If we analyze the definition in detail, we can identify three…key elements and three keywords. The first one is that there is an…original sum of money that will be spent, or put aside which is called the capital.…
The keyword here is capital.…The second is that time will play a part in it.…No matter how long or short the time is, the keyword here is time.…The last element is that at the end of the…investment period, you will be getting something back from your investment.…It is called a return.…And the keyword here is return.…It is by the analysis of those three elements capital, time,…and return, that you can differentiate good investments from bad ones.…
This definition is, as I said, the most commonly used.…
This course teaches the net present value (NPV) methodology, an investment evaluation formula used by countless publicly traded companies and financial analysts, in a way that makes it accessible and applicable to you—no finance background required. Rudolph Rosenberg explains what investments are, how they are measured, and what makes a good investment. Then he explores the NPV formula in depth, showing you how to evaluate your cash flows, choose a rate of return, and assess the risk of a particular investment. This all culminates in a look at how the principles of investment apply to three real-life scenarios that any individual or company might encounter.
- What is an investment?
- Understanding ROI
- What makes a good investment?
- Using the NPV formula
- Assessing risk
- Applying NPV to real-life situations