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.