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What Are The Various Objectives of Investment

The document discusses the various objectives of investment. The main objectives are safety, growth, and income. Safety refers to preserving capital through low-risk options like savings accounts. Growth means investing for capital appreciation through higher-risk options like stocks and mutual funds. Income means generating a secondary income stream through interest-bearing assets like bonds. Other objectives include tax exemption and liquidity.

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Salil Borana
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918 views1 page

What Are The Various Objectives of Investment

The document discusses the various objectives of investment. The main objectives are safety, growth, and income. Safety refers to preserving capital through low-risk options like savings accounts. Growth means investing for capital appreciation through higher-risk options like stocks and mutual funds. Income means generating a secondary income stream through interest-bearing assets like bonds. Other objectives include tax exemption and liquidity.

Uploaded by

Salil Borana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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What are the various objectives of investment?

Your investment objectives may differ in accordance with your life stage and risk profile.
Here’s a list of them.

An investment is made because it serves some objective for an investor. Depending on


the life stage and risk appetite of the investor, there are three main objectives of
investment: safety, growth and income. Every investor invests with a specific objective
in mind, and each investment has its own unique set of benefits and risks. Let us
understand these objectives in detail.

Safety
While no investment option is completely safe, there are products that are preferred by
investors who are risk averse. Some individuals invest with an objective of keeping their
money safe, irrespective of the rate of return they receive on their capital. Such near-
safe products include fixed deposits, savings accounts, government bonds, etc.

Growth
While safety is an important objective for many investors, a majority of them invest to
receive capital gains, which means that they want the invested amount to grow. There
are several options in the market that offer this benefit. These include stocks, mutual
funds, gold, property, commodities, etc. It is important to note that capital gains attract
taxes, the percentage of which varies according to the number of years of investment.

Income
Some individuals invest with the objective of generating a second source of income.
Consequently, they invest in products that offer returns regularly like bank fixed
deposits, corporate and government bonds, etc.

Other objectives
While the aforementioned objectives are the most common ones among investors
today, some other objectives include:

- Tax exemption
Some people invest their money in various financial products solely for reducing
their tax liability. Some products offer tax exemptions while many offer tax
benefits on long-term profits.

- Liquidity
Many investment options are not liquid. This means they cannot be sold and
converted into cash instantly. However, some people prefer investing in options
that can be used during emergencies. Such liquid instruments include stock,
money market instruments and exchange-traded funds, to name a few.

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