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PRESENTATION ON ENTREPRENEURSHIP DEVELOPMENT (EED413)
GROUP ONE
TOPICS:
INCOME, EXPENDITURE, SAVINGS AND INVESTMENT
STUDENT LIST
S/N NAMES MATRIC NUMBER
1. OKORONKWO TRIUMPH CHIMAOBI 2022/145658CS
2. UBOYI FLORENCE 2022/145661CS
3. ALEDESUKAN RAPHEAL TEMITOPE 2022/145666CS
4. ILORI ABRAHAM BABATUNDE 2022/145686CS
5. TAJUDEEN FARUK AYOOLA 2022/145690CS
6. OBAFEMI OMOLOLA MERCY 2022/145699CS
7. AFOLABI KAOSARAT OLAITAN 2022/145723CS
8. ANORUE FEACHUKWU VICTOR 2022/145731CS
9. CHINEDU JOHNSON PATRICK 2022/145736CS
10. PETER ISAAC DAWENG 2022/145740CS
11. JAMES MIRACLE JOHN 2022/145742CS
12. TOBASHE ELIZABETH 2022/145754CS
SUBMITTED TO
MR MOHAMMED K.M
DEPARTMENT OF COMPUTER SCIENCE
SCHOOL OF INFORMATION AND COMMUNICATION TECHNOLOGY
THE FEDERAL POLYTECHNIC, BIDA
MARCH, 2024
Explanation of Income
Income is a fundamental concept in economics and personal finance, representing the money or value received by
individuals, households, or entities as a reward for providing goods or services or for owning productive assets.
Income serves as a key determinant of individuals' standards of living, their ability to consume goods and services,
save for the future, and invest in assets.
Types of Income:
1. Earned Income (Selling Labor): Earned income is derived from actively participating in work or business
activities. It includes wages, salaries, bonuses, commissions, and other forms of compensation received in exchange
for labor or services provided. Earned income is typically associated with employment or self-employment and
reflects the value contributed by individuals through their skills, expertise, and effort.
2. Passive Income (Selling Capital): refers to the income generated from investments, ownership of assets, or other
sources not directly related to active participation in work. Examples of passive income include interest earned on
savings accounts, dividends from stocks, rental income from real estate properties etc. Passive income often
provides a stream of revenue without requiring ongoing labor or effort, making it a key component of wealth
accumulation and financial independence.
In summary, the two fundamental ways of earning income in a market-based economy involve selling labor (human
capital) through active participation in work and selling capital (financial assets) by owning or investing in
productive assets that generate returns and appreciation over time. These two forms of income play essential roles in
individuals' financial well-being, economic growth, and wealth creation in modern economies.
Explanation of Expenditure
Expenditure refers to the act of spending or disbursing money to acquire goods, services, assets, or settle financial
obligations. It represents the outflow of financial resources from individuals, households, businesses, or
governments to meet various needs, wants, and obligations.
Types of Expenditure:
Consumption Expenditure: Consumption expenditure involves spending on goods and services for immediate use
and enjoyment by individuals or households. It encompasses expenditures on necessities such as food, shelter,
clothing, healthcare, education, transportation, as well as discretionary purchases such as entertainment, travel, and
leisure activities.
Investment Expenditure: Investment expenditure involves spending on assets that are expected to generate future
income, returns, or appreciation. It includes expenditures on capital goods, machinery, equipment, infrastructure,
technology, research and development, as well as financial investments such as stocks, bonds, real estate, and
business ventures. Investment expenditure contributes to economic growth, productivity enhancement, and wealth
accumulation over time.
Government Expenditure: Government expenditure refers to spending by governmental entities at the local, state,
or national levels on public goods, services, programs, and infrastructure. It encompasses expenditures on education,
healthcare, defense, transportation, social welfare, public safety, administration, as well as transfer payments such as
pensions, subsidies, and grants. Government expenditure influences economic activity, social welfare, and public
policy objectives.
Business Expenditure: Business expenditure includes spending by firms and corporations on various operating
expenses, production inputs, labor costs, marketing, research, development, and capital investments. It encompasses
expenditures on raw materials, labor, utilities, rent, advertising, machinery, technology, and innovation. Business
expenditure is essential for maintaining operations, expanding capacity, and driving competitiveness in the
marketplace.
Explanation of Savings
Savings is a crucial aspect of personal finance and economic activity, representing the portion of income that
individuals, households, businesses, or governments retain after consumption and expenditure. Savings involve
setting aside a portion of current income for future use, emergencies, investment, or achieving financial goals.
Saving is essential for building wealth, achieving financial security, and facilitating economic growth and
development.
Types of Savings:
Personal Savings: Personal savings refer to the funds individuals or households set aside from their income after
meeting expenses. It encompasses saving through various channels such as bank accounts, retirement accounts,
investment accounts etc. Personal savings serve as a financial cushion for emergencies, unexpected expenses, and
future needs such as education, homeownership, retirement, or healthcare.
Business Savings: Businesses also engage in saving by retaining a portion of their earnings or profits for
reinvestment, expansion, or contingencies. Business savings may be held in retained earnings, corporate reserves, or
invested in capital projects etc. Accumulating business savings is vital for maintaining liquidity, funding growth
initiatives, and withstanding economic downturns or unexpected challenges.
Government Savings: Governments engage in saving through fiscal policies such as budget surpluses, sovereign
wealth funds, or stabilization funds. Government savings involve setting aside excess revenues or windfall gains for
future use, debt reduction, infrastructure investment, or addressing fiscal imbalances. Government savings
contribute to fiscal stability, debt management, and long-term economic resilience.
Explanation of Investment
Investment is the allocation of financial resources into assets or ventures with the expectation of generating returns
or benefits in the future. It involves sacrificing current consumption or liquidity in exchange for potential future
gains, such as capital appreciation, income, or other financial rewards. Investment plays a crucial role in personal
finance, business operations, and economic development, driving wealth accumulation, innovation, and productivity
growth.
Types of Investment:
Economic Investment: Economic investment refers to spending on capital goods, physical infrastructure, and
productive assets that contribute to expanding the economy's capacity, enhancing productivity, and generating future
income or returns. Examples of economic investment include expenditures on machinery, equipment, factories,
infrastructure projects, research and development, and human capital development.
Commitment Investment: Commitment investment involves long-term commitments of financial resources or
capital to projects, ventures, or obligations with the expectation of achieving strategic objectives, financial returns,
or contractual obligations over time. Commitment investments often entail significant upfront costs, risks, and
obligations, such as long-term contracts, partnerships, joint ventures, or capital-intensive projects.
Financial Investment: Financial investment refers to the acquisition of financial assets such as stocks, bonds,
mutual funds, exchange-traded funds (ETFs), real estate investment trusts (REITs), or other securities with the aim
of generating returns, capital appreciation, or income. Financial investments offer opportunities to diversify
portfolios, manage risk, and participate in the financial markets.
Importance of Investment:
Wealth Accumulation: Investment provides avenues for individuals, households, businesses, and governments to
grow wealth over time by earning returns higher than the rate of inflation. By investing in assets that appreciate in
value or generate income, investors can increase their net worth, achieve financial goals, and build long-term
prosperity.
Economic Growth: Investment plays a central role in fostering economic growth, productivity enhancement, and
innovation. By channeling financial resources into capital formation, infrastructure development, technology
adoption, and human capital investment, investment stimulates economic activity, job creation, and wealth creation,
driving sustainable economic development.
Income Generation: Certain investments, such as stocks, bonds, real estate, or business ventures, offer regular
income streams in the form of dividends, interest, rental income, or business profits. These income sources provide
financial stability, supplement earnings, and support ongoing expenses for individuals, retirees, businesses, and
governments.
Capital Formation: Investment contributes to capital formation by mobilizing financial resources for productive
use in businesses, industries, and infrastructure projects. Capital formation involves the accumulation of physical,
financial, and human capital, which fuels innovation, entrepreneurship, and technological advancement, leading to
increased productivity and competitiveness in the economy.
Elements of Good Investment
Return: Return is the financial gain or profit earned from an investment over a specific period. It represents the
increase in value or income generated by the investment, typically expressed as a percentage of the initial
investment. A good investment should offer attractive returns relative to the level of risk undertaken, providing
investors with the opportunity to grow their wealth and achieve financial goals.
Risk and Return: Risk refers to the uncertainty or variability of returns associated with an investment. Generally,
higher-risk investments tend to offer the potential for higher returns, while lower-risk investments typically yield
lower returns. A key element of a good investment is achieving a balance between risk and return that aligns with
the investor's risk tolerance, financial objectives, and time horizon.
Time: Time horizon refers to the duration over which an investor intends to hold an investment before selling or
liquidating it. A good investment should be aligned with the investor's time horizon, whether it be short-term,
medium-term, or long-term. Different investments may offer varying returns and levels of risk depending on the
time horizon, with long-term investments typically providing opportunities for higher returns and the ability to
weather short-term market fluctuations.
Marketability: Marketability, also known as liquidity, refers to the ease with which an investment can be bought or
sold in the market without significantly impacting its price. A good investment should be highly marketable,
allowing investors to enter or exit positions quickly and efficiently. Investments with high marketability offer
liquidity, flexibility, and the ability to adjust investment strategies in response to changing market conditions or
investor preferences.
Other elements include convenience, inflation and safety of principal.
