With the advancement of financial literacy, investment has become a widely discussed topic and is even seen as something young people should undertake. Various types of investments and the availability of online platforms also make it easier for anyone who wants to invest.
Investment itself is a financing activity in the form of certain assets to make their value more significant than the initial outlay. The increase in the value of these assets will be a profit or return on investment.
The types of investments that currently attract people are generally in the form of mutual funds, stocks, gold, and property. There are several reasons why people choose to invest. The most common reason is to obtain a passive income, otherwise known as earning without working. Let the money work, more or less.
Also read: Short Term Investment: Definition, Risk, and The Examples
However, that is not the only reason why one invests. So, what are the objectives that can be achieved through investment? Check out the following explanation!
1. To earn a passive income
Investment objectives
As explained above, earning a passive income is one of the reasons why people invest. Through investment, one can earn a passive income regularly, for example, monthly, similar to the earnings from the main job. However, the amount certainly varies depending on the instrument and the investment amount. An example of an investment that offers a monthly return is bonds in the form of coupons.
2. To protect money from inflation
When saving conventionally, the amount obtained can be relatively large, but the value of money decreases. This happens because of the inevitable inflation every year. Investments can minimize the effect of inflation on the assets and wealth owned, including money. Examples of investments that can safeguard against inflation are gold and property because their value tends to always go up and follow the inflation in every country.
3. To set up a special fund
Many people invest because they need to set up special funds long before they need them, starting from wedding funds, childbirth, children’s education to retirement funds. If these funds are prepared only with savings, as in the second point, the value will stagnate or even decrease. Investment is one of the solutions for managing finances so that they do not just run out when needed in the future. Unlike conventional savings, some investment instruments are more difficult to cash out, so one will ponder before cashing them out.
4. To gain assets
The next objective that can be achieved through investment is to gain assets. These assets can be sold or liquidated at any time when necessary. For example, gold, houses, or land. The value of these assets tends to increase annually, and automatically, the profits obtained will increase from time to time.
Also read: Types of Assets and The Examples
5. To accumulate venture capital
Another investment objective is to accumulate venture capital. Some people wish to open a business but are hindered by insufficient capital. Before starting a business, some people choose to accumulate capital by investing. Investment returns can be used as capital support for the businesses that are to be established.
6. To set up an emergency fund
Investment objectives
When one invests, they are essentially saving, only with a relatively higher yield than conventional savings. So, by investing, one can set up an emergency fund. Emergency funds are very helpful for meeting unexpected needs, such as if a relative falls ill, if a natural disaster destroys their home, if a vehicle is damaged, and so on. Without an emergency fund, your only option could be debt. By investing, one can prepare a fund to face various worst-case scenarios.
7. To create a frugal lifestyle
When deciding to invest, one should automatically set aside a portion of their income for investment. For example, to buy gold, bonds, or mutual funds. For this reason, investing can also indirectly build a frugal lifestyle for someone.
Also read: Long Term Investment: Definition, Risks, and The Examples
8. To secure the existing business
To achieve this objective, investors must invest in business partners, such as their businesses’ raw material suppliers. This way, investors do not need to worry about raw material shortages. In addition, the prices of products on the market will also be more competitive due to the secure availability of raw materials at lower prices and competitive quality.
So, those are some investment objectives that you need to know. To achieve the aforementioned objectives, investors certainly need to be disciplined and apply the following tips:
- a. Choose an investment according to your risk profile
- b. Be consistent
- c. Evaluate
Remember, starting an investment does not need to be with a large value immediately. Adjust it to your financial capability, and do not forget the key is consistency to achieve your final goal.
