How To Maximise Wealth: The First Five Process In Investment

You should have come across the term ‘investment’ in a wide variety of contexts. For example, ‘ITC plans to invest in the modernization of its plant’, or ‘I must now invest in a house’, or ‘invest your savings in mutual funds’ or ‘ investment in shares and debentures promises very good returns’ are some of the situations when businesses/individuals visualize a pay-off by putting their money in productive avenues.

Such examples as above underline the following characteristics of an ‘investment’ decision. One, it involves the commitment of funds (in a plant, house, or shares and debentures) for future periods ( generally exceeding one year) in expectation of rate of return which is adequate to induce you to part with your funds. Two, the broad investment choices could be either physical assets (like plant or a house) or financial assets (like shares and debentures).


It may be appropriate at this juncture to define the term ‘investment’ in a general sense. You may look at the term investment as ‘postponed consumption’. For example, an employee who contributes a part of his salary to provident fund is postponing his present consumption for future consumption which would be made possible by a draft on his provident fund accumulating after his retirement. Similarly when you buy shares or securities out of money saved from your current income, your current consumption is curtailed and the return on shares/securities realized in future time periods would, inter alia, be available for future consumption.

An Investor in Securities Business defined in Four Simple Points

1. The time horizon of an Investor is long
2. An investor expects a ‘good’ return and a consistent performance over time.
3. An investor generally sticks to his investment, as long as the fundamental values are good.
4. An Investor is generally risk averse.

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by: business Total views: 11 Word Count: 339 Date: Mon, 10 Mar 2008 Time: 5:36 AM 0 comments