Investment is to distribute money or time in the present with a hope of deriving some benefit in the future. Investment has many meaning and can be looked upon through different angles and sides.
The two major and important characteristics of an investment are present offering and future benefit.
For instance, investment in bonds, real states, valuable objects, insurance policies, etc. All these activities involve current sacrifice of consumption for a profit or gain in future.
When we make our investment for a long period of time by confining our needs for the sake of benefits in the future, risks and the expected benefits and return on the invested or the allocated amount is uncertain.
Therefore, the risk and the expected return from the investment are the two concerning factors of the entire investment process.
Need to invest
We invest to improve and to upgrade our future stability. No one is aware of what fate is stored for them. Investment ensures betterment and protection of one’s life during the peculiar days.
What we invest comes from assets that we own, saved money, etc. By investing the savings today we build and enhance our future needs and dreams.
It may happen that today what we have might not be present with us tomorrow. We have seen many cases that many people leave abandon their parents when they grow up or after marriage, thus to face such situations people invest their savings so that they don’t need to be dependent on others in future.
Investment bears the fruit especially after the ‘Retirement’, when one retires from his/her job the invested amount serves acts like a pillar for their old age, it motivates and uplifts us to live and enjoy life to the fullest without any worries.
Investment should not be made an option but it is a necessity, a need and one should manage their wealth effectively to derive most from it in the future or in the hour of need.
How to invest
Whatever decisions we take in our present directly affects our future.So before taking any decisions we need to do a proper planning, we should give a proper direction to our ideas so that it works well and no glitches arise during the execution.
We invest because we have goals in our life, and it may be buying a home or saving for child’s education, for medical uncertainties.
For a successful execution, planning provide a good start and meaning to our financial decisions.
It helps us to understand how each and every decision affects and influences other areas of family requirement. It gives a feeling of security and satisfaction that our dreams, goals and life are at a good track.
Investment is needed to be carried out effectively and efficiently.
It is like a ladder on which we need to take slow and steady steps after thinking and observing all the conditions carefully. Before making any investment we should bear in mind the risk and the return relationship associated with it.
We should be determining about the investment objectives and policy security analysis is needed to be carried out. Construction and diversification of the portfolios and evaluation of performance is needed to be reviewed.
Factors influencing investment
Returns, capital appreciation, safety and security of the invested funds play an important role in the selection of investment.
Investment can be done in the various areas but only after analysing those particular areas that what profit or loss can be faced in future.
It can be made in the form of equity, preference shares, real states, money market investments, non-marketable assets , valuable goods, insurance policy, etc.
Types of investment
Investment can be of many varieties.
Types of investment include alternative and traditional investments. One can choose according to his will the type under which he/she wishes to invest.
Alternative investment is an investment in tangible assets, real estates, commodities, private equities. Traditional investment is the one associated with the bonds, cash and policies.
These all depends of the investment environment. The decisions to buy/sell properties are taken by individuals, or group of people needs to carry out the processes.
There is a money and capital market where the investor invests according to their needs. The investment can be for a short period of time that is called a short term investment or for a longer period of time called long term investment.
Thus analyzing the entire investments issues one should take a decision to invest in the desired area whichever he/ she finds to be most profiting one.