So, where does one begin?
Before you get into looking at the investment
options available, it
is important to assess and lay down your ‘investment objective’.
This sounds
rudimentary but avoiding this can lead to investing without focus and eventual financial loss!
Do you desire appreciation of your capital?
Or, are you looking for regular income?
How willing are you to take risks?
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:
- 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.
- 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.
- 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.
- 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.
