Investment of money in a place where the expected return is assured with protection for the safety of capital invested is vital for any investment decisions. This requires careful analysis of the investment alternatives with limited exposure to risk.
The analysis is on the proposed investment product or project. There are two ways to analysis the investment alternatives, income expectation and creatin of wealth. The income expected from the proposed investment is required for the investor who requires regular income from the investment. However certain category of investor does not necessarily need the regular income but such investor aims to create wealth over period of time. Further, there are investors who look for the both the objective of creation of wealth as well as regular income. Hence, the investment decisions are made based on the objectives of investment. Further the investor is also looking liquidity of investment. The liquidity of the investment is also important as encashment of the capital on right time is required for some investors. If the investment is not readily available for encashment, then investor may pose problem of liquidity of the Investment.
Accordingly, investment needs to give regular income, create wealth over period of time and also liquid enough to meet the urgency of cash requirement. So, meeting these three objectives of investment requires proper planning and voice investment decisions. There are different ways to meet these objectives. The total investible funds can be categorised in to three portion which can be invested in different products or projects which meet independently income criteria, wealth creation and liquidity. By investing on these products independently based on the income, wealth creation and liquidity criteria, the investor can meet the all the objectives of Investment.
In summary, the investor need keep four aspects in mind in taking investment decisions, the protection of investment, Liquidity of Investment, Income from Investment and Creation of Wealth over period of time. These four aspects are utmost important in taking investment decisions.