Importance of Investment
Importance of Investment
Importance of Investment
1.
Safety of Principal: For this the investor should carefully review the
economic and industry trends before choosing the types of investment and also
diversify assets by industry, geographically, by mgt, by financial type and by
maturities.
2.
any investment pattern. Also the income should be adequate after tax.
4.
should
judge
price level inflation, explore the possibility of gain and loss in the investments
available to them, limitations of personal and family considerations. They should
also try to forecast which securities will possibly appreciate.
5. Legality and Freedom from Care: All investments should be approved by law.
6. Tangibility: Intangible securities have many times lost their value due to price
level inflation, confiscatory laws or social collapse. Some investors prefer to keep a
part of their wealthy invested in tangible properties like building, machinery,
precious metals and land. However, tangible property doesnt yield any income
apart from the direct satisfaction of possession or property.
7. Tax Benefits
8. Concealability
I) Investment Policy:
-
making investments.
II.
Investment Analysis:
III.
Valuation of Securities:
Investment value is the present worth to the owners of future benefits from
investments.
Comparison of value with the current market price of the asset allows a
determination of the relative attractiveness of the as set.
Each asset should be valued on its individual merit. Finally the portfolio
should be constructed.
IV.
Portfolio Construction
This require a knowledge of the different aspects of securities i.e. safety and
growth of principal, liquidity of assets after taking into account the stage
involving investment timing, selection of investment, allocation of savings to
different investments and feedback of portfolio.