Who Are Investors

Investor

Who are Investors?

“The investor’s chief problem and even his worst enemy is likely to be himself.” – Benjamin Graham

An investor is a person/entity who commits money in physical or financial assets with the objective of receiving a financial return. An investor can be an individual/firm/company or any other entity. The investment assets include stocks, bonds, real estate, commodities, and collectibles.

“Investment in Knowledge pays the best interest”- Benjamin Franklin

An investor’s age becomes an important criterion in determining an investment. For example a young investor tends to buy assets with price appreciation potential as there are years before he would require funds for his retirement, while an older, retired investor will require regular income and thus wants assets that offer regular cash payments. The world of investing can be cold and hard. The chances of long-term success are good only if an investor invest  thorough research and keep their head on straight.

What is Risk and Return?

Risk and return are the two main points which are kept in mind while investing. An investor and a speculator are two different terminologies. While a speculator makes quick and large gains from price increases, an investor waits for his asset to mature over time. Investing is key to building wealth, but investing in and of itself is not enough. You have to invest wisely.

“Investors are of two types only, those who make money and those who lose” — Anonymous

Investors are not the same. The differences among individual investors vary by several measures including personal and financial goals, current life situation and risk tolerance. Investors usually seek investments that not only generate good returns but also fulfill personal needs and provide financial security for the future time horizon. The type of investor an individual/entity is (investment style), tends to influence the investment decisions made. From the point of view of investment management, these characteristics are often defined more rigorously as objectives and constraints. Objectives is the type of return being sought, while constraints include factors such as time horizon, how liquid the investor is, any personal tax situation and how risk is handled.

What are source of earning?

You earn money by performing an activity, the activity can be one in which you are involved personally and one in which you are not involved personally.

Personal Involvement /Participation  includes:

• Employment
• Own Business
• Professional Practice

No Personal Involvement/Participation–Passive Money Earning includes:

• Money invested in Business Ventures earning profit or interest
• Money with Banks earning interest
• Money in Shares earning dividend or increase in value of shares
• Money in Private Equity
• Money from Property (Commercial/Residential) Rentals
• Money from Bonds earning interest

“Never depend on single income. Make investment to create a second

source” – Warren Buffet

Income and Investing

Income and Investing go hand in hand. The investment size, pattern, period and risk taking capacity depend upon the income status of investor. How much you can save & invest depends on how much you earn. Hence income levels and expenditure pattern of the individuals greatly decide their size of investment. The more you earn the more you can save and invest. Money can grow and multiply only if the individual invests his/her savings intelligently. An individual becomes an investor when he actually puts his saved money into an income earning vehicle (investment). The quantum of saving and investing depends on his earning capacity, family requirements, spending pattern, Future Requirements and Knowledge about the investing options.