Financial Investment - Meaning, its Need and Different Types of Investments

It is human nature to plan for rainy days. An individual must plan and keep aside some amount of money for any unavoidable circumstance which might arise in days to come.

Future is uncertain and one must invest wisely to avoid financial crisis in any point of time.

Let us first understand what is investment ?

Investment is nothing but goods or commodities purchased today to be used in future or at the times of crisis. An individual must plan his future well to ensure happiness for himself as well as his immediate family members. Consuming everything today and saving nothing for the future is foolish. Not everyday is a bed of roses, you never know what your future has in store for you.

What is Financial Investment ?

Financial investment refers to putting aside a fixed amount of money and expecting some kind of gain out of it within a stipulated time frame.

What is Important in Financial Investment ?

Planning plays a pivotal role in Financial Investment. Don’t just invest just for the sake of investing. Understand why you really need to invest money? Investing just because your friend has said you to do so is foolish. Careful analysis and focused approach are mandatory before investing.

Explore all the investment plans available in the market. Go through the pros and cons of each plan in detail. Analyze the risk factors carefully before finalizing the plan. Invest in something which will give you the maximum return.

Appoint a good financial planning manager who takes care of all your investment needs. He must understand your requirement, family income, stability etc to decide the best plan for you.

One needs to be a little careful and sensible while investing. An individual must read the documents carefully before investing.

Types of Financial Investment

An individual can invest in any of the following:

• Mutual Funds
• Fixed Deposits
• Bonds
• Stock
• Equities
• Real Estate (Residential/Commercial Property)
• Gold /Silver
• Precious stones

Need for Financial Investment

Financial Investment ensures all your dreams turn real and you enjoy life to the fullest without actually worrying about the future.

Financial investment ensures you save for rainy days. Careful investment makes your future secure.

Financial investment controls an individual’s spending pattern. It decides how and what amount one should spend so that he has sufficient money for future.

Tips for Financial investment

Don’t just blindly trust your financial advisor. Read the terms and conditions and go through all the related documents carefully before signing. Check out risk factors, tenure, clauses etc before selecting the plan.

Avoid cash transactions. It is always advisable to issue an account payee cheque in favour of the company rather than giving cash to your advisor. You never know when he disappears with all your hard earned money.

Carefully staple all the related documents and put it in a folder. Keep it at a proper and safe place. Loosing even a single paper might land you in trouble later on.

Make sure your investment plan is the best in the market and guarantees sufficient return in future.

If you plan to invest in property, ensure it is at a prime location and would have takers in the near future. Investing in non approved properties is worthless.

Authorship/Referencing - About the Author(s)

The article is Written and Reviewed by Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.