Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Downstream

What it is:

Downstream refers to the benefits (or costs) that will ultimately result from decisions made today.

How it works (Example):

In finance, a series of investments might be made with the anticipation that at a point in time in the future these efforts will yield a series of returns.  These returns occur after the initial investments.  As a result, they are referred to as downstream benefits.  Similarly, investments can have downstream "costs" as well.   The expectation is that the downstream benefits will outweigh the downstream costs.

At the same time, because the future is hard to predict, downstream effects are often unanticipated, setting off unintended costs and consequences.

Why it Matters:

 It is important to consider the "downstream" effects of an investment decision since it will impact ones future economic performance.