Investments Help Fuel Economic Growth

Investments Help Fuel Economic Growth

An investment is money placed into an investment product with the hope of future gains or profits. Bonds, stocks and shares are examples of investment products that investors expect to benefit from. The money that you invest today is expected to be given back in the future but with a higher value.

Making an investment could also mean dedicating money to capital spending, building the capability of an entity to generate goods and/or services that it markets. In terms of national economy, these investments are resources that are returned to the economy to fuel economic growth as well as productivity. Hence, making investments does not only benefit the investor but the economy as well.

If you plan to make an investment, there are a lot of markets to participate in. To gain access to these markets, such as the stock market, forex market, and cryptocurrency market, you will have to choose a reliable broker to partner with. For instance, ROinvesting is a brokerage firm that offers its clients, whether professionals or beginners, CFD trading on an array of assets, like forex, commodities, and stocks. Is roinvesting legit? Yes, it is. Although they are new in the industry where they only started operating in 2017, the online broker was honored in the Awards 2018 by the Global Brands Magazine as the Best Customer Service Broker in Europe and in 2019 the Best Trading Experience by FXDailyInfo.com.

Economic Growth – What Is It?

On an individual level, making an investment could mean expending money on one’s own business or investing money into investment products, like stocks and bonds as well as other products and resources that are intended to generate and provide profits, either short term, long term or both.

As mentioned, investments drive economic growth. Economic growth happens when it sees a rise in the amount exchanged goods and services over a particular span of time, which is frequently measured making use of Gross Domestic Product (GDP). In terms of national accounting, growth is every so often adjusted for inflation values over time to present a measure of the growth of the economy in a more realistic manner. This could be measured utilizing the following factors:

  • Labor Intensity (the hours worked by the working population)
  • Labor Productivity (the output of goods/service produced at a period of time)
  • Participation Rate (the percentage of labor population who are working)
  • Demographics that compare the working-age of the labor population against the whole population

Investments and the Economy

Basically, investment directs towards the improvement of productivity, and when there is improvement in productivity, this would lead to growth. With this growth, more investments are put in and profits improve. In an idyllic and perfect economy, this kind of cycle is endless. This then would portray how investments play a major and crucial role in the growth of an economy.