Join the Reddit Group
Investment objectives are statements that outline what an investor hopes to achieve with their investments. Some common investment objectives include: [1, 2]
Income generation
Investors may seek regular income from their investments, such as from dividend-paying stocks, bonds, or rental properties. This objective is important for investors who rely on their investments to supplement their earnings or cover living expenses. [2]
Capital appreciation
Investors may aim to grow their capital and allow their money to compound at a rate that's higher than inflation. This objective is suited for investors with a long-term horizon. [3]
Capital preservation
Investors may want to avoid as much risk as possible, and preservation of capital is the least risky objective. This objective could result in an insured investment, like a certificate of deposit (CD). [4]
Tax efficiency
Investors can maximize their after-tax returns by selecting tax-efficient investments and implementing strategic tax management techniques. [5]
Diversification
Investors can reduce overall risk by avoiding concentrating any single investment or asset class in their portfolio. [6]
Liquidity
Investors should have enough liquid assets to cover at least six months of living expenses. This provides cash flow to meet unexpected expenses and other emergency needs. [7]
Other factors that affect investments include an investor's age, lifestyle, risk appetite, and expected returns. [8]
Generative AI is experimental.
[1] https://www.poems.com.sg/glossary/investment/investment-objective/
[2] https://mutualfund.adityabirlacapital.com/blog/what-is-investment
[3] https://finpeg.com/mutual-funds
[4] https://app.achievable.me/study/finra-series-7/learn/suitability-investment-objectives
[5] https://www.selectivewealthmanagement.com/post/tax-efficient
[7] https://www.carboncollective.co/sustainable-investing/investment-plan
[8] https://www.dbs.com/digibank/in/articles/invest/what-are-the-objectives-of-investment