terminology

investment


purchasing/owning an asset with a view to making a financial return

i.e. increasing the amount of cash that the investor has. [/ asset value]




example



1/1/2010	$12,000		purchase of shares		investor to the company



1/7/2010	$230		dividend			company to the investor

1/1/2011	$230		dividend			company to the investor

1/7/2011	$230		dividend			company to the investor

1/1/2012	$230		dividend			company to the investor

1/7/2012	$230		dividend			company to the investor


as long as the investor still owns the shares




dividends are only paid if the company makes a profit

the dividend rate can change depending of the profit for the year

dividend rates generally 2% to 5% p.a.




asset values


in the case of real estate and shares listed on stock exchanges, the asset can also be sold. 

assets that are not easily saleable are: a share of a business



example


1/1/2010 	issue price	$1.00

				$0.90
trading prices
over time			$1.05

				$1.23

				$1.25



total value at $1.25 per share,

12,000 x 1.25 = $15,000


in this example the shares purchased for $12,000 could be sold for $15,000.

changes in values are generally 20% to 30% per year (prices rise and also fall depending on good or bad economic conditions).







				

