Investment Management Industry
What is an Investment?
So, people, Investment is the employment of funds with the aim of achieving additional income or growth in value. The vital feature of an investment is that it involves waiting for a reward. It involves the commitment of funds that have been put away from present expenditure in the hope that some benefits will accumulate in the future.
Make it clear that proper investment management is needed for the appreciation of the value of the principal capital.
Importance of Investment
Investments are both important and useful in the context of present-day conditions. Some factors that have made investments increasingly important are:
Longer Life Expectancy:
Investment decisions have become significant as people retire between the age of 55 and 60. With the improvement in medical technology, people have a longer life expectancy. With longer life expectancy people need more money to live comfortably. Money should be invested in such a way that they get a fixed income every month even after retirement.
The increasing rate of taxation:
Taxation is one of the crucial factors in any country which introduces an element of compulsion in a person’s savings. There are various forms of savings outlet in our country in the form of investment which will help in bringing down the tax level by offering a reduction in personal income. Some examples of tax-saving investments are–unit trust certificates, unit-linked insurance plans, national savings certificates, bonds, post office deposits etc.
Another aspect that is necessary for a sound investment plan is the level of the interest rate. Interest rates vary between one investment and another. A high-interest rate may not be the only factor favoring the outlet of investment.
With the increase in employment opportunities, investment decisions have assumed importance. With Independence came new development and, and with development came new organizations like the IBPS, UPSC, PSU, Financial Institutions, expansion in the public sector etc. This gave rise to employment opportunities for both men and women. This, in turn, gave rise to better income and larger investments and opportunities for an investment advisor.
The Investment Process – Stages in Investment:
The entire investment process is divided into four stages. The following are the four stages:
Stage-1: The Investment Policy:
The first stage determines and involves a person’s financial affairs and objectives before making investment decisions. It may also be called the preparation of investment policy stage. The investor has to see that he should be able to create an emergency fund, an element of liquidity, and quick convertibility of securities into cash.
Stage-2: Investment Analysis:
When an individual has arranged a logical order of types of investments that he requires on his portfolio, the next step is to analyze the securities available for investment. The investor should make a comparative analysis of the type of industry, kind of security, fixed vs. variable securities.
Stage-3: Valuation of Investment:
The third stage is the most important one–consideration of the valuation of investments. The investor has to bear in mind the value of these investments. Each asset must be valued on its individual merit. Finally, the portfolio should be constructed.
Stage-4: Portfolio Construction:
Portfolio construction requires knowledge of the different aspects of securities. The various aspects of securities are safety, and growth of the principal, liquidity of assets, selection of investments etc. While evaluating securities, the investor should realize that investment is made under conditions of uncertainty. There is no magic formula that will always work. If need be, the investor can always consider switching over to alternate proposals.
Investment in Startups
Investing in startups is a trend which has been in the picture of long. But has gained popularity in recent years. An investment advisor can guide you to make an investment in a particular startup so that the investor benefits from the investment he is making.
This way the investor is able to diversify his portfolio and is able to reap the benefits in the longer run.
Importance of Investment Management
Investment management is important for the below reasons
- The risk of loss can be mitigated due to portfolio diversification.
- You will be able to get a good rate of returns.
- The will be a possibility of having liquid cash in times of emergency.
- Your future will be secured as per your investment.
An investment firm can help you through your investment process to secure a wealthy future.
Ourbusinessladder is a 360 – degree Market Research and business advisory Company which helps startups and existing business for their exponential business growth. Contact Us for better Investment Management.