What are Investment Objectives?


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INVESTMENT OBJECTIVES : Investing is a wide spread practice and many have made
their fortunes in the process. The starting point in this process is to determine the
characteristics of the various investments and then matching them with the individual’s
need and preferences. All personal investing is designed in order to achieve
certain objectives. These objectives may be tangible such as buying a car, house etc.
and intangible objectives such as social status, security etc. Similarly, these objectives
may be classified as financial or personal objectives. Financial objectives are safety,
profitability and liquidity. Personal or individual objectives may be related to personal
characterist ics of individuals such as fami ly commitments, status,
dependents, educational requirements, income, consumption and provision for
retirement etc.
The objectives can be classified on the basis of the investor’s approach as follows:
(a) Short term high priority objectives : Investors have a high priority towards
achieving certain objectives in a short time. For example, a young couple will give
high priority to buy a house. Thus, investors will go for high priority objectives and
invest their money accordingly.
(b) Long term high priority objectives : Some investors look forward and invest
on the basis of objectives of long term needs. They want to achieve financial
independence in long period. For example, investing for post retirement period or
education of a child etc. Investors, usually prefer a diversified approach while
selecting different, types of investments.
(c) Low priority objectives : These objectives have low priority in investing. These
objectives are not painful. After investing in high priority assets, investors can invest
in these low priority assets. For example, provision for tour, domestic appliances
etc.
(d) Money making objectives : Investors put their surplus money in this kind of
investment. Their objective is to maximise wealth. Usually, the investors invest in
shares of companies which provides capital appreciation apart from regular
income from dividend.

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