Investing is of immense importance for wealth creation, economic growth, diversification, entrepreneurship, protection against inflation, funding public projects, and retirement planning.
In India, there are a variety of forms of investment, but most people use investment instruments like fixed deposits, stocks, mutual funds, etc. Investor should focus on the its objectives of investment, and they should consider factors like financial goals, age, risk appetite, income, assets, etc., before picking an investment instrument.
An investment objective refers to the role an investment plays in helping you achieve your financial goals. Identifying your objective of investment management can provide direction toward specific securities or asset classes.
Generally, objectives are determined based on risk and return. The amount of risk you are comfortable taking will determine your returns.
For instance, young professionals with a steady income and few financial responsibilities will want to pursue growth through their investments. However, an elderly widow will be interested in investing her life’s savings for safety and income generation. So, what are the objectives of investment? Let us find out.
Investing is a means to expand your wealth. It is a technique to make your money gain returns, secure your future, and beat inflation. Here are the main objectives of investment:
You always want your hard-earned money to remain safe and secure. Investing ensures you do not use your money for immediate and unnecessary expenditures. Moreover, it protects your money from the effects of inflation.
If you are a conservative investor, desiring to receive returns on time without taking risks, safety is the primary purpose of investing for you. Some investment instruments do not let your money erode with time. These include an ordinary savings account, government bonds, bank securities, and fixed deposits.
Capital appreciation is also one of the primary objectives of investment management. You invest money to make it grow into a sizable corpus over time. Generally, this is a long-term objective of investment.
To fulfil this goal, you need to pick investment options that offer significant returns on investment. Therefore, the right investment options for you are equity, commodities, mutual funds, and real estate. Although the risk associated with these investment instruments is high, the returns are also relatively higher.
This objective emphasises on generation of income from investments. Focusing on this objective requires sacrificing safety to an extent. Income generation is an objective of investment for investors seeking passive income and retirees.
Investment instruments offering income in the form of yields, interest, or dividends carry low stability and a high level of risk. However, their returns are higher.
A secondary investment objective is to optimise investments for tax benefits. Tax-saving instruments help investors minimise tax liabilities on investment returns.
Some investment tools that promote tax savings are the National Pension Scheme (NPS) and tax-free savings accounts. Life insurance plans and tax-efficient mutual funds also help in earning significant returns and saving taxes.
There are many objectives of investment, with each having varying levels of importance for different investors. The choice of an investment objective depends on many factors like lifestyle, risk tolerance, age, investment goals, and returns desired.
Before picking an investment instrument from among the various options available, make sure you know what the primary purpose of investing is. It gives you a direction for your investments and ensures that you achieve your financial goals.
At PNB MetLife, you can find several life insurance plans and long-term savings plans to help you achieve your financial goals. Check out the different options to start investing.
Investment refers to acquiring an asset or allocating your money into a financial instrument to create wealth by way of appreciation.
In India, there are many different types of investments.
A good time to start investing is as soon as you start earning. You can begin even earlier if that is possible for you. Money generates more money, and the earlier you start, the better.
Disclaimer:
The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.
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