Generally, investment is defined by dictionaries as, transacting to produce income or profit.
There are only three investment groups; ownership, lending and cash equivalents.
Ownership Investment
This class of investment is the most volatile but also the most profitable. Examples are:
Lending Investments
A little lower risk but then lower returns. You become the bank with associated risks. Examples:
Cash Equivalents
Any cash investment that can be converted to cash immediately.
Almost an Investment
Here we could think of our education, a cup of coffee to wake us up for longer working hours or a lawnmower to be more time efficient. Consumer purchases depreciating over time are not investments.
Bottom Line
There are three types of investments: ownership, lending and cash equivalents. There is no fourth category of consumer purchases. Admittedly, it’s a clever piece of advertising that removes some of the guilt from impulse purchasing. The decisive test is whether there is a potential to turn a profit. The operative word here is; “potential” because not every legitimate investment makes money. Making money through investing requires research and evaluating different investments, not simply knowing what is and is not an investment. That said, being able to see the difference between an investment and a purchase is an essential first step.