An investment goal can be considered the answer to the basic questions of what is the purpose of your money?
How long do you have until you need that money? How much risk are you willing to take to achieve above-average returns?
Do you want your money to grow or do you want to preserve its current value?
Taking it to daily terms, an objective can be to invest in the short term to buy a car, prepare for old age, increase your assets or save in the medium and long term for the purchase of a property.
These factors respond to the type of investment, term, liquidity, security, etc.
Let us check out some of the main goals of an investor:
Wealth accumulation/capital optimization:
The accumulation of assets or their optimization is the most common objective among investors.
Because basically everyone who invests money wants to improve their financial situation, that is, increase their capital.
You can start small to make your savings profitable, or if you already have a relatively large amount.
For example, through an inheritance, the capital market is a good option.
In any case, good performance is paramount when optimizing assets.
Besides the accumulation of capital, an investor may also have a planned purchase in mind, probably something more expensive.
So, the main goal should be to secure existing assets and moderate but steady capital growth.
In addition, the investment horizon must be taken into account, which is most usually short.
Since they generally do not plan purchases 10 years in advance.
But, for example, only 1 or 2 years before. Therefore, liquidity of investments should be a priority.
Another common investment goal is financial savings for retirement.
This investment objective has little to do with short-term liquidity. Here I need time to capitalize on the savings.
In any case, it is better to give up immediate liquidity than to risk it and find yourself penniless later in old age.
If you want to anticipate your retirement, you should start investing as soon as possible.
What is an investor’s primary goal?
A primary goal of an investor is living on income. The investment objective is to ensure a lifestyle equal to or higher with income.
Applies to people who want to live on the interest and income from their assets or who regularly deduct a certain amount from capital gains to live.
In the latter case, the rapid availability of individual investments is important.
The best way to invest your assets is in liquid investments and at the same time safe.
However, you cannot expect high returns there.
If, on the other hand, you don’t want to touch capital for a while, it makes sense to spread it across different asset classes with different risks and expectations of returns.
Which best describes how an investor makes money?
An investor is any person who decides to allocate part of their savings to a financial asset.
Or not in order to increase its value or at least not lose economic value due to inflation or currency depreciation.
Investing in shares is an alternative that, depending on the company, maybe about acquiring shares admitted to trading on a stock market.
On the contrary, shares of an unlisted company.
In both cases, the investor will eventually earn money in two ways: (a) the dividends distributed by the company and (b) the capital gain from the sale of its shares.
When an investor decides to buy a company in whole or in part, he aspires to both sources of profit.
Although the capital gain from the sale of his shares is limited by the fact of the lack of liquidity of the shares of a company not admitted to trading in a stock market.
For this reason, it is common for an investor to have professional advisers who accompany him.
He helps in the analysis, evaluation, and formalization of a participation take.
whether it is a total or partial purchase of a company.
Professional advisers will always propose that the acquisition of the shares of a company be formalized together with a partnership agreement that includes clauses that grant liquidity to the investment.
Which best describes a market index?
A stock market index is a calculated average of the prices of selected stocks that represent a specific market or sector.
You can think of an index as a ‘basket’ of stocks that provides a broad sample of national industry, sector, or economy.
The collective performance of these stocks provides a good indication of the trends in the global market that they represent.
In addition to allowing investors to track changes in the value of an equity market, the index also provides a useful benchmark.
That helps to measure the success of investment vehicles such as equity funds and portfolios.
Are the buying and selling of stocks centralized?
The stock market is the set of all those institutions, companies, and individuals that carry out transactions of financial products in different Stock Exchanges around the world.
In this market, products or assets of similar nature are exchanged, as occurs in the Stock Exchanges with stocks or bonds.
Although, there are also Exchanges specialized in other types of products or assets.
The demand and supply of products and assets act as the force that determines the prices at which they are bought and sold.
The stock market is considered a centralized and regulated market. This market allows companies to finance their projects and activities through the sale of different products, assets, or securities.
And investors obtain a return on their savings.
In the stock markets, there is a secondary market in which securities, assets, or products previously issued by companies or governments can be exchanged.
The evolution of the stock market is measured through different indices that reflect the movements in the prices of different products, assets, or securities.