The fundamentals of Investment

The answer to these questions will help you determine an underlying theme behind all your future investments. There are many websites and/or investment advisor who can help you determine your investment objective.

Some common investment objectives are:

1. Minimum risk: All investments have an element of risk associated with them. And, risk is directly proportional to returns; higher the risk – higher the return. There are many investors who are unwilling to take risks on their invested capital and are willing to compromise on the returns. For such investors, the investment objective is – Minimum risk.
2. Capital appreciation. On the other end of the spectrum are investors who are willing to take risks and desire a growth in their desired capital. These investors realize that a downward trend of the market can lead to a potential financial loss but take the risk to stand a chance to achieve good returns. For such investors, the investment objective is – Capital appreciation.
3. Regular income. With the ever increasing cost of living, many investors desire their capital to provide a secondary source of income. They invest in options that offer periodic returns. For such investors, the investment objective is – Regular income.
4. Reduce / eliminate tax liability. There are some investors who invest solely with the purpose of saving tax. They look for options that offer tax exemptions and/or rebates. For such investors, the investment objective is – Save tax.

These are some commonly defined investment objectives. Every investor has a specific objective which needs to be identified.

Once the investment objective is defined, then you start looking at investment options that match your financial goals. Some such options are:

SAVINGS ACCOUNTS | BANK FIXED DEPOSITS | POST OFFICE SMALL SAVINGS SCHEMES | PUBLIC PROVIDENT FUND | DEBENTURES | BONDS | COMPANY DEPOSITS |MUTUAL FUNDS | LIFE INSURANCE POLICIES | EQUITY | REAL ESTATE | GOLD AND MANY MORE.

Investment is a journey and not a destination. Prepare well before you set foot on this journey and improve your chances of earning good returns.