Investment Basics
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Generally, "An Investment is a sacrifice of current
money or other resources for future benefits". Investment means use of
funds fruitfully so as to get an yield.
Investment is a
commitment of person’s funds to derive future income in the form of a) Interest
b) Dividends c) Rent d) Premiums or e) Appreciation of the value of his
principal capital
Characteristics of Investments
1) It is an
asset or any instrument
2) Risk is
assumed
4) Period of
waiting
5) Return is
proportional to the risk
6) Expectation
of positive rate of return
7) Capital
Appreciation
8)
Transferability or Disposal at any time and
Principles of Investment
The purpose of
investment is to make one's capital grow. The investor's predominant desire is
to ensure that his capital will not erode and his wealth will increase.
Before
investment, an investor thinks and decides to invest on the basis of the
following principles:
1) Safety of
Investment / Principal
2) Liquidity of
Investment
3) Income Yield
4) Inflation
5) Appreciation
6) Stability of
Income
7) Capital
Growth
8) Purchasing
Power Stability
9) Legality
10) Invest in
Good Companies, Avoid Bad Companies to have freedom from care
11) Tax Status
12) Tangibility
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