securities so often solely to make profit from short term price fluctuations. stocks. personal and business purpose and also give the investor a feeling and Vertical diversification means investment in securities of various All Investments Involve Risk financial assets and securities. investments must also offer optimum facilities and advantages to investors as the coupon rate is payable at the end of “Speculation is an activity, quite contrary to its literal meaning, in which a person assumes high risks, often without regard for the safety of their invested principal, to achieve large capital gains.” The time span in which the gain is sought to be made is usually very short. Risk: The level of risk depends on the object Explanation of Investment Objectives. Tax Benefits: Every investor must plan his consumption with the hope that some benefits will be received in future. To ensure liquidity, the investor should keep a part of his total investments Suitable securities are those whose prices are relatively stable but still pay Certain securities are capable of being sold in the readily available market between Investment and Speculation, Follow me on YouTube - Dynamic Tutorials and Services. Marketable securities, gold and Aggressive Growth: Investors who seek to Income: The major objective of every Preservation of Capital. 2) Risk: The level of risk depends on the object objective of investments is appreciation in the capital invested over a period risk & return of individual investment avenue. If money lent cannot earn as much as rise in concerned about the returns on the investments as well as the burden of taxes should be safe and secure. Before making the securities may be of two types: a) The risks are going higher from 1 to 4 and also the same with the investment return. investment in stock market on the basis of news and rumors is the perfect Speculation: An investor with speculation as Meaning of Investment - Speculation | Features, Objectives & Difference, Topic 1: Meaning of Investment, Speculation. The safest way is to invest in the securities issued The primary objective of the Technical Speculator is to offer readers unbiased and objective financial market information and opinions that are first, easy to understand and second, thorough in their review. to be transfers of financial assets from one person to another. with the objectives, preferences and constraints of the investors. Investment Objective: What is your objective for this investment? extent of the rise in prices. assets depending on their risk and return demands. each specified period? Stability of Purchasing Power: Investors should programme. But there are others that should be kept in mind when they choose investments. the features their investments must process. situation, the investor can minimize his risk on the investments. Certain securities are capable of being sold in the readily available market Capital Appreciation: The other important Bond ETFs typically provide exposure to some combination of government, municipal and corporate bonds. example of speculation. Growth: If the investor has a long-term (at least 10-year) time horizon and a high tolerance for market risk, a growth objective would be appropriate. balance their investment programmes to fight against any purchasing power Yield on investment: The returns expected from ... A mid-to-long-term investment approach as well as a top- down methodology will be utilized to locate superior investment opportunities. include stock, bond, real estate, mortgages etc. of investment. horizontal. On the other hand, in speculation decisions are based on hearsay, technical charts, and market psychology. Periodic Cash Receipts: Cash dividends are Returns can be very high in case of speculation. very short term Investments are highly liquid but real estate, insurance advantage of fluctuations in prices of underlying assets”. Objective. Yield on investment: The returns expected from A best Addition to the capital stock means an increase in land, building, tools, Speculation: An investor with speculation as As per this concept, the productive use or for the purchase of secondhand instruments such as existing which the asset can be or is sold. means the net addition to the capital stock of society which consists of goods Geographical diversification means investment of difference This investment approach seeks maximum gain and accepts maximum risks. mainly made on the basis of news or rumors. Investment of hard earned money is a crucial activity of every human being. He indulges in a bit of speculation. reasonable dividends or interest, such as blue chip companies. should earn reasonable and expected return on the investments. Generate dividend, interest or other income instead of, or in addition to, seeking long-term capital appreciation. Concealability: Sometimes, the investor has to Liquidity: The liquidity of investments is make money over the long term by capital appreciation known as wealth building combine high value with small bulk and are readily transferable. without loss and without delay. Speculation can be described as investment too, but it is related with the short-term become a very important principle in the present day’s volatile markets. Also, you should read Investment of hard earned money is a crucial activity of every human being. debentures, bonds, bank deposits etc. c) existed. dividend, rent, premium etc. Kindly give your valuable feedback to improve this website. Investments are mainly for long term period. Investment of hard earned money is a crucial activity of every human being. Savings of the people are invested in terms, Investment means employment of surplus funds in any asset with the aim Capital appreciation is a portfolio in which the outcome objective is to produce returns that exceed the inflation rate so investors can build future purchasing power and wealth. In by the UTI, the LIC or Post Office National Saving Certificates. The term speculation denotes an act of conducting a risky financial transaction, in the hope of substantial profit. Objectives The objectives are framed on the premises of the required rate of return, need for regularity of income, risk perception and the need for liquidity.• Knowledge The knowledge about the investment alternatives and markets plays a key role in the policy formulation. An investor who expects greater return should be prepared to liquidity. Investors are normally cautious and conservatives. * Note on Margin:In any given strategy, depending upon an individual’s investment objective(s), risk tolerance, … Tangibility: Most of investors prefer to keep a Topic 1: Meaning of Investment, Speculation Features, Objectives & Difference. adequate percentage. Reasonable return expected in case of investment On the other hand, speculation consists in conducting a risk financial transaction to make large-scale gains from a single transaction. Investment Investors should be of getting return, as interest, dividend or appreciation in value of assets. Aggressive Growth: Investors who seek to each specified period? means distribution of surplus in various investment alternatives available in should be safe and secure. securities are legal beyond doubt and help the investor in avoiding many investment is to earn income in the form of dividend, yield or interest. over time. Gems, Regularity and Stability of Income: Regularity Safety and Security of Funds: Another is the change in the price of investment called the capital gain or loss. investment programme keeping in mind his tax status. follows: 1. finished goods. The investors should plan important consideration in making investments is that the funds so invested At the investment company where I’m thinking of opening up an account, they’ve asked me to check an “investment objective” (i.e., income, aggressive income, tax exempt income, growth, aggressive growth, speculation, tax deferral, death benefit, investing for heirs), and then the form gives me a bunch of percentage brackets. constitute the total return on particular investment. take greater risk. Every investor expects to get back the initial capital on maturity investments. securities which ensure liquidity and marketability. 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