Let’s understand the basic concept of investment for beginners.
Investment– A commitment of funds made in the expectation of some positive rate of return.
Characteristics of investment:-
1. Return (capital appreciation)
2. Risk * more risk get more return * less risk get less return * depend on investment * risk is less in debenture rather than equity share.
3. Safety ( Security about return)
4. liquidity (money market funds, shares, etc)
The main objective of investment:-
1. Maximization of return
2. Minimization of Risk
3. Hedge against inflation.
Need for investment:-
1. longer life expectancy
2. Save tax
3. Regular Income
4. Earn interest.
There is a necessity for everybody to know the importance of investment. Investing is crucial to smart money management as a result it ensures each present and future monetary security. Not solely does one find yourself with extra money within the bank, however, you also find yourself with another income stream. Investing is the sole way to accomplish each growing wealth and passive income.
On a daily basis something changes, the stock markets could are stabled yesterday, however owing to a small change everything goes up and down, sort of roller coaster. This is often why to become (or continue being) a good investor people got to recognize there’s no checklist, people should always continue to grow. If the world changes, then smart people should improve their investment skills. The key message of this statement is there are cases within which because of some unforeseen changes in certain elementary factors, even nice companies and firms may face immense losses.