This article what is investment to gdp ratio about investment in finance. This article needs additional citations for verification.
In finance, the benefit from investment is called a return. The return may consist of capital gains or investment income, including dividends, interest, rental income etc. Investors generally expect higher returns from riskier investments. Investors, particularly novices, are often advised to adopt a particular investment strategy and diversify their portfolio. Diversification has the statistical effect of reducing overall risk.
Investment differs from arbitrage, in which profit is generated without investing capital or bearing risk. Speculation involves a level of risk which is greater than most investors would generally consider justified by the expected return. An alternative characterization of speculation is its short-term, opportunistic nature. Investors famous for their success include Warren Buffett. In the March 2013 edition of Forbes magazine, Warren Buffett ranked number 2 in their Forbes 400 list. Thorp was a highly successful hedge fund manager in the 1970s and 1980s who spoke of a similar approach. The investment principles of both of these investors have points in common with the Kelly criterion for money management.