Wealth, Welfare, and Investment Concepts Explained

The social science of economics is possibly as old as humanity itself. In ancient and mediaeval India, people would transact using various objects such as grains, gold, silver, etc. The Arthashastra which is one of the greatest treatises on politics also details out the steps to run an economically prosperous kingdom. Even Shri Rama can be seen teaching Bharata the same in the Ramayana. Indians were the original traders, trading through some of the greatest sea routes in the world. Marine trade flourished during the times of Raja Raja Chola of the Chola dynasty. The Indian or Hindu scriptures tell us that “Artha” or “rightful garnering of wealth” is one of the four goals of human living. 

Hence, we can see that economics has always existed even if the current form of money did not, as it is essential for the survival of society. What then is this art and science all about?

Economics, Wealth and Welfare

Firstly, we must understand that economics is not about money alone. It is a lot more than that. It is a well-developed and dynamic science that focuses on various aspects such as production, sustenance, delivery and use of goods and services, lending and taking, fluidity of funds and so on. Economists are those who study how governments, countries, organisations and people take decisions pertaining to resource consumption. 

As human beings, we behave in ways that will allow us to reap the maximum benefits out of any undertaking. Economics also studies this behaviour and its impact on the individual’s life and larger economic well-being. Wealth can be defined in general terms as an abundance of availability of material assets or resources. Wealth can be categorised as : 

Personal Wealth - It includes personal assets that an individual earns over his lifetime such as gold, houses, property, lands, stocks and shares, cash in hand or in the bank, etc.

National Wealth - It is defined as the wealth of an entire nation or country including government bonds, public properties, national reserves, etc.

The Concepts of Wealth and Welfare

While welfare is defined as the overall well-being of a society, it exists only when the nation has wealth which is an abundance of monetary assets in various forms. Even though wealth and welfare are different concepts, they go hand in hand as one cannot exist or have meaning without the other. When an individual owns wealth, it brings welfare not only to them but also to the community around them. Similarly, in the absence of wealth, society suffers and welfare decreases. Hence both are of equal importance. 

Defining Investment

When a person buys or acquires certain financial assets to generate income for himself or acquire goodwill or do both, it is called investment. Investment always happens with a specific intention - to achieve returns or benefits. It is future-oriented hence it might entail certain risks that people take willingly. Especially when someone invests in stocks or share markets, they know they will reap benefits if the share prices of that company soar high but they also stand to lose if it suddenly declares bankruptcy. 

Investment is a game of profit and loss with a lot of risks and speculations involved. However, it is one of the major means of saving up for the future. 

Types of Investments

There are two major types of investments: 

1. Growth Investment - Because it is related to market changes, it entails many ups and downs and is more suitable for long-term investors who are aware and ready to take risks - 

• Shares: Investors get periodic dividends as part of the company’s profit that is regularly paid to shareholders. The value of shares do vary and dividends are also dependent upon the profits a company makes. If you master the art of investing in shares, this can become a major source of garnering assets! 

• Property: This is a growth investment because pieces of properties show spikes over a period of time. It is risky but if one speculates right, they are in for high returns! 

2. Defensive Investment - It generates regular incomes and is meant for those who wish to remain stable and not risk too much over a long period of time. 

• Cash - It includes bank deposits, savings accounts etc. Although the returns are regular, they have low potential and there is barely any capital growth. It is something a common man depends on. 

• Fixed Interests - When governments or companies borrow money from investors and pay them a rate of return, it is called bonds that have the lowest risk. They can be sold off pretty quick.