A Key Note on the Basics of Investment

A Key Note on the Basics of Investment

We human beings are not the same as any other living beings we are always concerned about our future, and we try to find ways to earn money and save it for a better future. We invest our assets in different financial institutions for making some extra money. These days a new form of investment option have arisen in form of cryptocurrency but proper Bitcoin code review to be done before investing in such option

Objectives of Investment

  • Safety
  • Growth of Capital
  • Income

Safety

The investment is a common activity done by most of the people who are worried about their future. The important reason behind investing their money in different in financial institutions is that the investment is completely safe and secure. Sometimes some private financial institutions have safety issues, but the security our money can be ensured by purchasing of government-issued stable securities or through the purchase of bonds of credible companies etc.

Growth of Capital

Growth in capital can be achieved by investing in stocks preferably ‘common stocks’ which normally yield low earning but have continuous growth. It is advisable for persons who are interested in long term investment. But they are rarely able to provide safety and earnings of government bonds.

Income

Income is an important factor which promotes investment activities. Most people like to invest in safe and secure institutions which also give high returns. There are different investment options available in a country’s economy, so before investing money in any financial institutions you should conduct deep analysis to know these schemes are profitable or not and whether it can generate a fixed income.

Important Investment Areas

  • Bank investment

It is the most popular investment activity. People always like to save their extra money in banks because of it very safe and convenient. The main drawback of this type of investment method is that the annual returns are very low.

  • Stocks

The stock investment has become more popular in recent years. Stocks are offered by different companies and available in different size such as Large –cap, Mid-cap, Small-cap. The stock investment provides high returns, but the size of the stock is inversely related to profit, which means that the small-cap investment stocks yield more profit returns than mid-cap. But investing in small-cap stock is riskier than mid-cap investment. The main drawback of the stock type investment is it always depended on frequent fluctuations of the market.

  • Bonds

Bonds are the safest investment method. In bond type investment we can invest a fixed amount of money; they will provide interest to the amount invested in bond twice a year. So bonds are considered as a steady income source and also are a risk-free type of investment.

  • Mutual Funds

It is one of the popular choices of investment option because the mutual fund schemes start with the very affordable amount and they provide high liquidity rate also. Different types of mutual funds are available in the market, the investor can easily choose the best mutual fund schemes according to his needs. The mutual funds are prone to the market fluctuations, but the main advantage of mutual fund schemes is that the investor can withdraw their money back as he desires.