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Investment is the employment of funds in assets with the expectation of earning additional income. Investment is the sacrifice of certain present value for an uncertain future reward. It entails arriving at a number of decisions such as type, mix, quantity, timing and quality of investment and disinvestments.
Furthermore, such decision-making has not only to be permanent but rational too. Broadly speaking, an investment decisions should ensure trade-off between present and future, and risk and return. Since investments in financial assets are revocable, investment ends are transient and investment atmosphere is liquid.
The consistent bases of reasoned expectations become indistinct as one visualizes uncertainty of the distant future. Investors will, as a result, once in a while, reappraise and re-evaluate their different investments commitments in view of new information and distorted expectations.
It is broadly believed that mutual fund is a retail financial product designed to attract small individual investors and others who are intimidated by the stock market but, however, similar to garner the benefits of stock market investing. At the retail level, investors are distinctive and are a highly diverse group.
The globalisation and liberalization measures declared by the government led to a paradigm shift in the mind set of investors and the capital market atmosphere became more unfriendly to retail investors. They had no other alternative but to turn to mutual funds to reap the benefits of stock market investing.
Investment can be classified as direct investment or indirect investment. Direct investment is possible through investing in physical assets or financial assets that may be traded or non-traded in a securities market. Investors may prefer to invest non-traded financial assets by investing their claims on bank deposits, and post office saving deposits. Non-traded financial assets are relatively less risky: possess more liquidity options, and connected with short-term investment perspective.
However, investors may prefer to invest their claims in traded instrument like equity shares, debentures and mutual funds. In addition, investors with a long-term investment perspective may invest their money into capital market instruments, such as equity shares and debentures. These kinds of investment are riskier, but offer two types of returns in the form of annual dividend income and terminal capital appreciation.
Navigating Investment Dynamics: Decisions, Risks, and Market Trends. (2019, Dec 17). Retrieved from https://studymoose.com/investment-decisions-essay
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