01/06/2022
What is “Investment”? Part 2
As mentioned on part 1, investment is an asset or item acquired with the goal of generating income or appreciation. Generating an income is not easy as it sounds like, we need to have a proper plan to execute our investment strategies and a clear goal to what our end target should be. In other word, we need to have a clear OBJECTIVE for our investment and a proper plan and strategy to achieve our objective.
Objective is something that we should decide before executing any investment plan so that we have a clear direction as where should we go, what should we do and why do we choose a certain asset to invest in. Objective should have 2 main components in them which are TIME and PROFIT.
Time is very essential and important in any objective, we should decide how long should we invest in something to achieve our targeted profit. It can be days, months or even years depending to what your end goal is. As an example, if we invest and we hope to use the income generated for our children college funds, we should decide an investment with desirable period, for example if we have a baby, an investment with long period of time such as 15 years is suitable to meet your objective.
When we talk about profit, it is better to be realistic according to current market environment and which instrument that we invested in. Setting our targeted profit in the percentage would be easier for example in a year, we set to have the profit rate of 10% rather than rough number like RM300 of profit. Achieving this profit rate will require investment strategy, which we will discuss in near future time.
As summary, investment is like planting a tree, we would need land or just a vase to start planting. We plant the best species according to our objective as example we plant vegetable because we are
