Investment Management F.A.Q.

Here are some answers to some frequently asked questions regarding investment.

Q. What is investment?

Investment refers to the process of putting money into a business, trade or financial instruments to generate more money for the future. As an investor, you can invest in financial products such as bonds, securities and mutual funds; alternatively, you can also put your money in real estate.

Q. Where does the money for investment come from?

The money usually comes from an individual's reserves or savings. Some people also borrow money from other individuals or financial institutions to make an investment. This happens when the person in question feels that the profits from his investment would cover his interest on borrowing.

Q. What is portfolio?

A. A collection of instruments of financial investment held by an individual or institution is called a portfolio.

Q. Why should a person invest?

A. A person should invest to generate money to survive, secure the future, and generate additional money to meet future expenses

Q. Where should one invest the money?

A. There are several financial avenues open for investment. These include, among others, deposits in banks, bonds, or, investment in debt, equity, commodities, currencies and real estate.

Q. When should one invest?

A. The basic rule is to strike when the iron is hot. Sometimes, recession is the best time for investment. Take the present case of recession. The rates of good shares have fallen by half and so if you have access funds, this can a good time to invest provided you can keep your money locked for some years. Those who invest now stand to gain when the market rises which is sure to rise going by the market indicators and historical evidence. Even otherwise, volatility is the basic trait of stock market. A shrewd investor remains on the look out for the right time to buy and sell to make the best of this uncertain feature of the stock market.

Q. What should be the ideal state of mind while investing?

A. Keep in mind that when you invest, you can make both losses and gains. There is always a risk involved with investment but it is a risk that can be drastically reduced if you make judicious decisions. The basic rule of the game is to maintain a control over your emotions, otherwise you will end up making hurried decisions only to regret them at leisure. Emotions like anger, fear, greed, depression and excitement cloud our judgment and should be avoided as far as possible when taking trading or investment decisions.

Q. How should one invest?

A. Investment decisions determine your losses and gains. Making investment at the spur of emotion may lead to loss. While it is important that you give due importance to the advice given by your experts, you should also keep abreast of what is happening in the market. The best way to invest is to research the market thoroughly, analyze the technical and fundamental data and take informed and balanced decisions without succumbing to greed and fear.