What is An Investment Objective

In this post, we are going to explain to you what is an investment objective in a very easy way, so let’s start.

In simplest words, the process of earning money by using the money that we already have in our hands is called investment.

Though investment should still be considered as important as saving money, many of us understand the value of investing.

Cash, fixed deposits, bonds, stocks, cryptocurrencies, etc., are the most popular asset classes for investment.

As a matter of fact, neither okay the is it classes above have the same rate of compounding/ability to produce returns, nor do they involve the same amount of risk.

To know the objective of investment, we should first have a brief introduction about the most popular as it classes of investment.

A Brief Introduction To Most Of The Popular Investment Options:

  • Gold
  • Stocks (Equity)
  • Bonds

Let’s discuss this in detail now.

Gold:

The classic way of investment, Gold has been everybody’s first choice of investment, and to date, it is considered one of the most trusted and safest ways of investment.

But compared to earlier times, the way of investment in Gold has changed a bit. Currently, people do not just invest in physical Gold; they also invest their money in digital Gold, which offers more flexibility and other facilities.

Stocks (Equity):

Equity stocks are the best asset class of investment. Not only do they offer many higher returns than most traditional asset classes like bonds or Gold, but they have been the key player behind the creation of the wealth of today’s billionaires.

Dividends paid by the company to the shareholders are also a great producer of profits.

Bonds:

Bonds are agreements usually made with the government or banks where the investor sanctions loans to the borrower in return, for which the investor gets a contracted fixed amount of returns over time. Though the rate of returns is not usually as high as stocks, it is a fixed source of income.

Now, let’s get back to the topic – the objective of investment:

A man without a goal is like a ship without a rudder.”

Just like we all like to set goals for our educational, work, and personal life. We often need to pay more attention to defining a particular goal for our investment.

Setting a goal for our investment can help us to determine the-

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  • How much amount to invest?
  • Where to invest your money / How to do the allocation of your wealth-
  • How much risk to take?
  • How long to keep invested?
  • When to exit/sell off your investment?

The first question – How much to invest – is a vital question to ask yourself before making any investment.

There is neither a fixed amount for that nor a fixed percentage.

The investment amount depends on your current earnings and how many liabilities you currently have. And it directly has a connection with your risk-taking abilities.

The next question to ask yourself is where to allocate your earned money.

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You want to grow your money and will don’t want to invest your money for negative returns. So wisely choose the asset class you want to invest your money in.

For example, if your goal is to have a safe and secure life even after retirement, the best asset to invest in will be pension funds.

You may have hundreds of reasons to invest, and it’s you who knows why you need to invest and how much you have to invest. It may be because –

  • You want to create a handsome amount of wealth.
  • Your child’s education.
  • Your desire to buy something expensive.
  • You want to build a new startup.
  • You want to tour the world.

Remember, the more returns you expect, the more risk you will take.

Conclusion

In the end, the investment objective differs for every individual. Your personal financial advisor may be the best person to help you in this case. But, because you have read the article, we have well-understood the needs of investments. We hope that you will remember these things in the future, which will guide you to become a better investor.

I am a well-skilled experience Stock Marketer and Investor. I have good knowledge of the stock market and investment. I have completed Bachelors in Finance And Investment from the University of Virginia (US).
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