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3 Factors: Why is Investment Important for Economic Growth?

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Investment is a major force behind economic expansion, propelling progress and development in both established and developing nations. It is the commitment of resources, monetary or otherwise, to projects that promote productivity growth, infrastructure development, and innovation stimulation. Let us understand the important 3 factors: why is investment important for economic growth in this topic.

Fundamentally, investment stimulates demand, fosters employment creation, and advances technology to increase economic growth. This essay explores the various ways that investment contributes to economic growth, looking at both the macro and microeconomic levels of its effects. Global economies are influenced by investment in a big way, from fostering capital accumulation to promoting entrepreneurship.

During Olden Days, Around Half a Century Back

We have seen our parents working whole life. People use to stick to one job for very long time maybe it is government job or private job where job security was guaranteed. In those times, whether they were aware of investment or not it hardly matter since they had a regular income coming along to take care of their children and educate them, purchase a house, medical necessities. When they get retired, they get handsome of benefits as a cash to look after their expenses after retirement.

Why is Investment Important for Economic Growth?

  • To beat growing inflation rate.
  • To achieve financial goals quickly.
  • Building capital for next generation.

Importance of Investment

Now a day’s, investing is necessity of life. Things are not same as it was previous days, now a day’s most people work for a private corporation where there is no guarantee of job security. In current times and in current private job, you have to take care of your family, old parents, children, children education, medical expenses and many more. In this internet world you need to work extremely hard to fulfil future needs.

Costs of medical treatments have risen so high that it is beyond the budget of middle class salaried person income. This modern world which you pass-on to next generation would be even faster and competitive then it is today. Looking at the world which next generation is going to inherit, you should less expect children to take care of you in your old age. Investment important for economic growth due to all this causes and effects. It is always recommended to start early investing.

So in conclusion, It is very much clear that when you work for the money at the same time your money also should work for you to fulfil the future necessity of this era. You will need to create a good wealth by investing so that in near future during jobless period or retirement age your money will work to generate regular income for you.

Investment definition never says that you must require enormous amount for investing. You can start systematic investing with your budgeted saving. It is pretty sure that this era is not for people who are merely hard working but this win-win generation is about people made up of recipe with smart work and smart investing. Thus investing is necessity to secure your present and future needs.

Build a Road Map for Investing

Financial planning is a very broad concept whereas investing money is merely a piece of a pie chart diagram. When you decide to invest wealth your half of the road map is completed with your regular savings. The next step is to set your short-term and long-term financial milestones. You should draw a roadmap of your targets. Proper financial planning requires clear milestones. You can only set them with proper knowledge of investment options that suit you best. You need to consider risks, as well as risk-to-reward returns.

Going forward we will keep on explaining different various pieces of financial planning pie chart diagram. For now you can read our next tutorial session to get knowledge of various investment options and different ways to invest and make money.

Conclusion

Ultimately, investment shows up as a crucial indicator of economic expansion that promotes both national wealth and the welfare of its citizens. Infrastructure development, increased productivity, and innovation are all made possible by investing in successful businesses. It has a broad effect, promoting technological advancements, boosting job growth, and raising competitiveness internationally. Moreover, sustained investment promotes long-term, sustainable growth pathways in addition to short-term economic growth.

Governments, corporations, and individuals must recognize the crucial role that investment plays in determining economic fortunes. They should promote laws and efforts fostering a favorable investment climate. Fostering an investment culture can help countries reach their full economic potential. It also creates conditions for a more affluent future.

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