Investment Strategies and Factors Influencing Investments
Learn about different types of investments, such as economic, general, and financial investments, and the factors influencing investment decisions like inflation, taxation, and interest rates. Discover the importance of achieving a good rate of return, reducing risks, ensuring liquidity, and safeguarding principal in your investment portfolio.
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BY A.N.CHRISTY ASSISTANT PROFESSOR OF COMMERCE BON SECOURS COLLEGE FOR WOMEN, THANJAVUR
Investment is the employment of funds with the aim of achieving additional income or growth in value. It involves the commitment of resources which has been saved, with the hope that some benefits will accrue in the future. Waiting for the reward is the essential quality of an investment.
Economic investment: This means the net additions to the economy s capital stock. General investment: This deals with the investment of common man, for example, purchase of house, car or deposit. Financial investment: This deals with exchange of financial claims and allocation of monetary resources to assets that are expected to yield positive return over a given period of time.
Longer life expectancy: Increase in working population, proper planning of life span and longevity have ensured the need for balanced investment. Taxation: This is one of the crucial factors which introduces an element of compulsion in a person s saving. Interest rates: The level of interest rates is important for a sound investment plan. Stability of interest is as important as getting high rate of interest.
Inflation : Rising prices leads to falling standard of living, thus an investor tries to invest in assets that that gives him high rate of return in order to cover the decrease due to inflation. Income: More incomes have increased a demand for investment in order to bring in more income above their regular income.
To achieve a good rate of return in the future. Reducing the risk to get a good return. Liquidity in times of emergencies. Safety of funds by selecting the right avenues of investments. A hedge against inflation.
Safety of principal: The investor should consider diversification of assets and must be reasonably accomplished. Liquidity: The investor should buy easily saleable securities so that it is converted into liquid investments . Income Stability: Regularity of income at a constant rate is necessary in any investment pattern
Appreciation and Purchasing Power Stability: The investors should balance their portfolio and should forecast which securities will appreciate. Legality and Freedom from Care: The investor should carefully examine the laws relating to investments and invest in safe investment avenues. Tangibility : Some investors prefer to keep a part of their wealth in tangible assets such as land, building, etc., for their satisfaction.
Investment Policy: It is a preparation stage for investment and considers the various features of investment. Investment Analysis: The investor analyses the securities available for investment, based on the future returns and risk. Valuation of Securities: This considers the present worth to the owners of future benefits from investments.
Portfolio Construction: This requires the knowledge of the different aspects of securities. The investor should constantly evaluate the performance of his investments and switch over if needed to alternate proposals.
