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Determining Your Investment Objectives
from InvestmentCare.com
One of the most important steps in getting started in the investment process is to determine your personal investment objectives. As an investor, it is important to understand the different types of investment objectives in order to select the most appropriate objective that fits your individual needs. Although there are several different categories for determining investment objective, the following is a list of the four (4) most frequently used investment objectives as they relate to investing:
Safety & Preservation of Capital
One of the investment objectives with the least level of risk is Safety and Preservation of Capital. Investors who classify themselves under this type investment objective are primarily focusing on preserving their existing asset base through an emphasis on cash and cash equivalents.
Examples of investment products under this objective would include:
• Cash
• Savings Accounts
• Savings Bonds
• Money Market Funds (MMFs)
• Certificates of Deposit (CDs)
• Treasury Securities
Income
The second type of investment objective, which has a slightly higher risk level than Safety and Preservation of Capital, is the Income objective. Investors who choose this particular investment objective primarily focus on the continued receipt and steady stream of income.
Examples of investment products under this objective would include:
• Variable Annuities
• Government Bonds
• Municipal Bonds
• Real Estate
Growth
The third type of investment objective, which is less conservative and more risk-oriented than the preceding two objectives, is the Growth objective. Investors who classify themselves under this objective primarily focus on generating capital appreciation.
Examples of investment products under this objective would include:
• Blue Chips Growth Stocks
• Aggressive Growth Mutual Funds
• Convertible Bonds
Speculation
The fourth type of investment objective, which is considered the least conservative and riskiest of all objectives, is Speculation. Investors who focus on speculative investments primarily concentrate on extremely aggressive investment products that assume high market risks for potentially high returns.
Examples of investment products under this objective would include:
• Options
• Commodities
• Penny Stocks
• Some Internet Related Stocks
• Junk Bonds
• Junk Mutual Funds
• Index Futures
• Private Placements
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