Difference between Trade Investment and Non-Trade Investment class 12
Confused, What is the difference between Trade Investment and Non-Trade Investment in class 12 CBSE, ISC, and State Board.
Trade Investments vs Non-Trade Investments (Differences and Comparisons)
Let’s unravel this together!
Trade Investments:
These investments are directly related to the core business activities and operations of a company. They are typically undertaken to support or enhance the company’s business operations and generate revenue. Here are some examples:
- Stock Investments: Buying stocks of other companies to earn dividends or capital gains.
- Real Estate: Acquiring commercial properties to support business operations, like warehouses or office buildings.
- Inventory: Purchasing goods for resale or for use in the production of other goods.
Non-Trade Investments:
These investments are not directly related to the core business activities. Instead, they represent financial activities that a company undertakes to manage its excess cash or to diversify its portfolio. Here are some examples:
- Savings Accounts: Keeping money in high-yield savings accounts for liquidity and interest income.
- Bonds: Investing in government or corporate bonds to earn interest over time.
- Mutual Funds: Putting money into mutual funds managed by financial experts to gain returns.
Trade investments are usually tied to immediate business needs, while non-trade investments are more about preserving capital or generating a steady return on surplus funds.
