Major Investment Objectives
People have different investment goals. Let's take a look at the main factors that help you set your investment goals.
• Capital appreciation
You may have investment objectives focused on capital appreciation, such as: B. The value of your investment increases over time. You may also have income-focused investment goals, such as: B. The cash you earn from your investments each year. Investors often have multiple objectives, and it is important to determine which are primary and which are secondary. The main goal is to build the foundation for other investment strategies.
• Current income
Your current income is an important factor in determining how much you need to invest each month. Most investors have a certain amount of money each month that they want to invest, this is called a fixed amount. However, you may also want to invest a variable amount each month, known as a floating amount. If you have a variable amount of money, you can invest the full amount each month, or invest a small amount and put the rest in a savings account.
• Capital protection
The investment objective of many investors is focused on capital preservation. This usually depends on the investor's risk appetite. Investors with a high risk tolerance should probably focus primarily on growth investments, which are stocks that are expected to appreciate in value. On the other hand, investors with low risk tolerance may want to invest primarily in conservative investments, bonds that are expected to retain their value.
With most investments, your goal is to increase the value of your investment over time. However, it is also important to get as much of the initial investment as possible. Therefore, it is a good idea to allocate a portion of your portfolio to capital preservation. This portion should be distributed in such a way that it is unlikely to provide a significant amount of current income, but likely to receive the bulk of your initial investment.
Speculation is investing in assets that are expected to appreciate in value. This is usually done to generate ongoing income. But that also means the returns on those investments won't last long. The purpose of speculation is to obtain a high return on investment. However, speculation carries a high risk of loss. It is important to remember that when you invest, you are putting your money at risk. You may lose your original investment.
You may wish to speculate on the future value of an investment. This is often called a "market game" because you try to predict the performance of a group of assets, such as B. stocks, bonds, or commodities in your portfolio. It is a profitable strategy when you are constantly predicting the future performance of your investment. Investing in speculative or risky assets such as emerging markets, real estate, commodities and art is generally considered riskier than investing in more traditional financial instruments.
Investment objectives should also be regularly reviewed and updated as the environment changes and new opportunities emerge.