What are the Objectives of Investment?
12 Aug 2021

What are the Objectives of Investment?

Your primary investment objectives play a crucial role in your investment decisions.

Key Takeaways

  • Every investor has an objective, a specific goal behind investing.
  • Safety, growth, and income are the primary objectives of an investor.
  • Liquidity and Tax Savings are the secondary objectives of an investor.
  • An investor must understand their goal before making an investment decision.
  • Factors affecting investments include your goals, age, lifestyle, risk appetite, and returns expected.

Your hard-earned money should not be sitting idle. Instead, what if you used your money to make more money? Yes, that is what an investment is! More specifically, investment is when you purchase financial products or any other valuable item to gain favourable returns from the purchase. Today, more and more people are increasingly investing their savings with the hope of earning some benefits in the future. And, with a large number of investment options available to us all (such as stocks, fixed deposits, mutual funds, etc.), investing is becoming more and more widespread.

What are the Objectives of Investment?

As an investor, you must have a specific goal in mind. These are investment objectives that help you determine what type of investments to make and help you prepare for what lies ahead. Investments are categorised into three primary objectives - safety, growth, and income - along with secondary objectives. Therefore, before you begin to invest, it is essential to understand the investment and its goals to pick the right mix and make informed investments that best suit your needs. Let us take a look at the different objectives of investment.

Types of Investment Objectives

Primary Investment Objectives

  • Safety

    Everyone wishes to keep their money safe and secure. If you are a conservative investor who desires to get their initial capital investment at maturity on time and without losses, then indeed, the safety objective is essential to you. Although, you must know that no investment is entirely safe or risk-free. But, if your primary objective is safety, you can make investments that come with low or reduced risks. Naturally, the returns will also be low on these investments and may not keep up with rising inflation. Some examples of safe investment objectives are government bonds, bank securities, or money market instruments.

  • Capital Gain

    A vital investment objective, capital gain or capital appreciation, is when you wish to grow your wealth. While safety is crucial, many people majorly invest money for it to grow. One can achieve capital gains through conservative growth, aggressive growth, and speculation.

    • Conservative growth is when investors build an investment portfolio that will generate wealth over time.
    • Aggressive growth is when investors make a bold investment in stocks to make short and long-term gains.
    • Speculation is when investors try to maximise returns by trading shares and securities through the speculation of share prices.

    Capital gains involve plenty of forecasting and identifying which stock to buy when. Plus, they attract taxes. As a result, such investments should be carried out only with thorough research in a disciplined manner.

  • Income

    As the name suggests, the income investment objective means investing to generate a source of income for yourself. This income comes in the form of dividends, interest, or yields. These investment objectives come with a high level of risks and low stability, but the returns are also higher. Conservative investors tend to include income objectives in their portfolios due to their attractive returns and ability to keep up with inflation. An example of an income investment object is the stock market - it comes with high risks and high returns.

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Secondary Investment Objectives

  • Liquidity

    Another investment objective is the liquidity of the type of investment you make. Liquidity is the ability to instantly trade/sell-off/convert assets into cash with ease in the market and with minimal risk of loss. While some securities are easier to liquidate, others may not be so. Most investors generally prefer investing in securities that are easier to liquidate and use during emergencies. If not entirely, they try to keep a part of their total investments in the form of readily marketable securities. Thus, if liquidity is one of your key objectives, you can consider investing in such securities too.

  • Tax Savings

    Did you know that the income earned from capital gains is taxed differently? Yes, taxes on such income are lower as compared to taxes levied on interest or salary-based income! This makes tax savings a common investment objective among many. Tax-free savings accounts and National Pension Scheme are some investment examples that promote tax savings. Moreover, life insurance policies and tax-saving mutual funds are also popular in saving tax and earning good returns. Actual returns on investment are the returns after taxes. Hence, before choosing to invest, it is best to research and find out all tax considerations and exemptions available to you to minimise your tax burden.


We hope this article has helped you in understanding “what are the objectives of investment”. As is evident, there are various investment objectives, with each one holding varying levels of importance to each investor. The goal is not to choose a single objective but to maintain a good balance between them all. Your objectives of investment depend upon several factors such as your investment goals, lifestyle, age, financial security, risk appetite, and the returns you desire. Any investment, especially those with higher risks, will see some ups and downs. As an investor, you must brace for volatility and market fluctuations and not let your emotions affect your investment decisions.

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*Disclaimer: This article is for information only. We recommend you get in touch with your income tax advisor or CA for expert advice.