Investment Objectives: The 5 Types That Every Investor Needs To Know

Every investor has different objectives when it comes to their investments. Some people want to grow their wealth over time, while others want to generate income from their investments. Still, others are looking for a combination of both growth and income. No matter what your investment objectives are, it’s important to have a clear understanding of your goals before you start investing.

investment objectives

Basic Investment Objectives:

Once you know what you’re hoping to achieve with your investments, you can start to develop a strategy that will help you reach your goals. For example, if you’re primarily interested in growing your wealth, you might focus on investing in stocks or mutual funds with a history of strong performance. On the other hand, if you’re more interested in generating income, you might consider investing in bonds or dividend-paying stocks. No matter what your objectives are, there are a variety of investment options available to help you reach your goals. There are the 5 Investment objectives:

  1. Safety
  2. Capital Gain
  3. Income
  4. Liquidity
  5. Tax Savings

What Is Safety? 

In investment terms, safety refers to the likelihood that an investment will not lose value over time. An investment can protect against losses during periods of market volatility. This Is also one of the primary objectives of investment.

There are two main types of risk that investors face: market risk and credit risk. Market risk is the chance an investment’s value decreases because of a shift in the stock market. There is a credit risk whenever you invest in something that could lose value if the borrower’s creditworthiness changes.

How To Achieve Safety?

There are several ways that investors can achieve safety in their portfolios,

  • One way is to diversify their investments across different asset classes.
  • Another way to achieve safety is to invest in high-quality investments, which are less likely to lose value than lower-quality investments. 
  • If you want to invest in bonds then invest in government bonds rather than corporate bonds to avoid higher risks
  • Finally, investors can use hedging strategies to protect their portfolios from losses. Also, make sure to take decisions relating to personal finance carefully.

investment objectives

What Is Capital Gain? 

In simple terms, capital gain is the profit that you make from the sale of an asset. This could be a property, a piece of art, a valuable coin, or anything else that has increased in value since you purchased it. For example, let’s say that you bought a painting for $1,000 cash. After holding onto it for a few years, you decided to sell it. If you were able to sell the painting for $1,500, then your capital gain would be $500. 

There are two types of capital gain: short-term and long-term. Short-term capital gain: the profit made from selling an asset that you’ve owned for one year or less. Long-term capital gain: the profit made from selling an asset that you’ve owned for more than one year.

  • One way to make a profit is to buy an asset when it’s cheap and then sell it when it’s worth more.
  • Investing in assets that have the potential to increase in value over time is another way to achieve capital gains.
  • Sometimes, the best strategy is simply to hold onto your assets and wait for them to appreciate. 
  • Working with a financial advisor can help you reach your goals—including achieving capital gains and potentially higher returns.

What Is Income? 

Income can be defined as “the money that is received by someone regularly, typically in return for supplying a service or carrying out work. For example, if you are employed full-time, your income is the current income salary or wages that you receive from your employer. This money is typically paid to you on a weekly or monthly basis.

In terms of investments, income refers to the money that an investor receives from their investment regularly. This money is generally paid out in the form of dividends.

How To Increase Income? 

There are two main ways to achieve income from your investments: bonds and dividend stocks.

  • Bonds are debt securities that are issued by corporations and governments to raise capital.
  • Dividend stocks, on the other hand, are stocks that are issued by companies that generate profits. These profits are then distributed among shareholders in the form of dividends. it is important to know not all companies give dividends to make sure to research.

Why Is Liquidity Important? 

There are a couple of reasons why liquidity is so important. First, if you need to access your cash quickly, you don’t want to be stuck with investments that will take weeks or even months to sell. Second, highly liquid investments are typically less volatile, which means they’re less risky. That’s not to say that all liquid investments are low risk—but they tend to be more stable than their illiquid counterparts.

How to Achieve Liquidity 

There are a few different ways you can achieve liquidity in your investments.

  • One way is to invest in assets that can be easily converted to cash, such as stocks, bonds, and mutual funds.
  • Another way is to keep some cash on hand at all times so that you have it available if you need it.
  • Finally, you can use investment tools like futures contracts and options to create liquid investments.

What Is Tax Savings? 

Tax savings refer to any strategy used to minimize your tax bill. This can be done in several ways, such as claiming deductions or taking advantage of tax credits. Reducing your taxable income is another way to achieve tax savings. This can be done by investing in a retirement account or contributing to a health savings account. 

How To Archive Tax Savings

There are several ways to achieve tax savings, including claiming deductions and taking advantage of tax credits.

  • You can also reduce your taxable income by investing in a retirement account or contributing to a health savings account.
  • Another way to achieve tax savings is by increasing your deductions, which can be done by itemizing your deductions instead of taking the standard deduction.

There are other many other ways to achieve these ways to achieve this object. Make sure to consult a financial professional who can better advise you by analyzing your financial situation.


To have a successful investment portfolio, you should aim to accomplish these 5 objectives. Which investment objective is for you depends upon your preferences. Some people may prioritize safety while others may prioritize growth.

The important thing is to align your investment choices with your overall objectives. Once you know what your objectives are, research different types of investments and choose the ones that best meet your needs. 

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