Is It A Good Option To...
If you’re speaking to someone who calls themselves an “investor”, you are bound to hear the phrase: “Mutual Funds”. Everyone keeps talking about it, but do people really know whether...
If you’re speaking to someone who calls themselves an “investor”, you are bound to hear the phrase: “Mutual Funds”. Everyone keeps talking about it, but do people really know whether...
When you think of investments, the first thing that comes to your mind would be stocks, bonds, deposits, etc. You also think that we invest to ‘become rich in a...
Mutual Funds (MF) are trust funds managed by an Asset Management Company (AMC) with the money pooled from investors. The money is invested in assets like bonds, equities, stocks and...
Investment options for our savings are available in abundant, choosing the right one based on the investor’s objectives is crucial to minimize risks. You can choose to discuss with your...
When a person decides to invest in the financial markets, there is a plethora of options available. One can choose to invest in stocks, debt, derivatives, commercial paper, debentures and...
When you have just stepped on the income generation mode (say early 20s), you would have plans to set up milestones to ear mark each achievement. Purchase of a car,...
In our big wide world today, income can be generated quite easily. While most people work hard for years to ensure that they have enough savings when they retire, there...
Day Trading is a form of Share dealing where shares are bought and sold in a single day. The intention of a Day Trader is to make use of the...
Day Trading and Day Traders Traders who participate in day trading are called day traders. Day trading is speculation in securities, specifically buying and selling financial instruments within the same...
We might have heard about a lot of strategies of fund managers but it is difficult for a lay man to get a perfect picture of what it is. So...
Investment options for our savings are available in abundant, choosing the right one based on the investor’s objectives is crucial to minimize risks. You can choose to discuss with your financial advisor to choose and work on an investment strategy. While one can have more than one objective, it is wise to plan an investment strategy based on the below criteria’s.
Setting investment goals
Safety
Ensuring the preservation of capital is the first goal for an investor. Securities such as corporate bonds and government securities provide security and good returns. Treasury bills, banker’s acceptance slips and Certificates of Deposit are also safe investment options.
Growth
Capital growth is achieved through the sale of securities at a higher price than the purchase price. Sold at a lesser price is called Capital Loss. Investors seeking capital gain look for long term growth and invest in stocks, real estate, private equities etc. Investors who want to preserve capital would still like to get returns. Choosing a portfolio that yields good returns still have great risk.
Understanding risks involved
Most type of investments involves some amount of risk and sometimes even loss of capital. Usually, higher the risk potential – higher is the income or loss. Based on the investors risk tolerance, the type of investment can be chosen. Risk can be losing investment goals or losing the savings. Risk tolerance, age, emotional and financial position are also risk factor.
Income level
Investor’s income level and expected returns influences investment decisions. Income level also determines the level of risk tolerance. Investment is based on the amount available after tax; therefore tax saving investment options can offer good rebates. To increase the income level, investors choose markets like government bonds, money market instruments that yield high returns.
Time perspective
The time, at which the investments are required, whether the investment should be short or long term, age factor and the time to recover from a loss are pertinent factors while making an investment decision.
Liquidity
Investor has to choose a portfolio based on the liquidity requirement of the investment. For immediate liquidity, money markets and investment in stocks can be made. However, easier the rate of liquidity, lesser is the return. For investors who aim for greater returns and can opt for illiquid investments like real estate, hedge fund investment and private equity.
Building and managing a suitable investment portfolio can be done by yourself or you can approach your financial advisor. All factors like liquid worth, net worth, risks, income and expenses are taken into account. Diligence is required for estimating the constraints and risks. More articulation in planning facilitates a better portfolio and helps achieve investment goals.
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