What is the importance of knowing the fundamental concepts of investment


There are many numbers of people, who pursue an investment. You can attribute it to the social media, the tabloids and the newspaper buzz with the importance of the investment. There are the colleagues, relatives and also friends investing in the many number of investment tools so as to increase the investment portfolio. So it is not a surprise that you too, like many others love t concept to take care of your future. In fact, this is another reason which makes the people invest, the unpredictability with regards to the future as well as aspiration to have a sound future.  However, when you are out in the market to invest, it will be worth to know about the concepts so as to do better in your investment portfolio. If you are aware of the key investment concepts, you will be able to do better with your money invested in the many tools and make your portfolio better. However, if you are pursuing some investment because others are doing it, it will lead to lesser returns as compared to when you would have been well read about the same.

The important financial concept of Investment is related to the inflation, compound interest, risk diversification and even the various schemes. Like when the value of your investment or money erodes the phenomenon is known as inflation. Inflation is related to the increase or decrease of the market scenario. But most of the time, it is really difficult for the investor to understand that when exactly the market is going to go up and when is it going to decline.

Then there another important fact about the Indian investor, which is that they do not want to wait for the return, all they want is instant gratification. In here, you as an investor need to understand that if you want good returns, it is advisable to wait for the appropriate time. Hence, the key at most of the investment tools is long term investing. The confusion may also be attributed to the fact, that when the investment is in a particular scheme, the investor knows about the exact return. However, when the investor is set to pursue investment in the market, then he or she is unaware of the final return and thus gets perplexed.

Then there is the concept of compound interest, which again demands a lot of patience and the right investment tools. In the compound interest when the investor is again and again expected to invest in new tools, it actually becomes tedious. Similarly, risk diversification, howsoever flashy and nice it may sound, it is not easy for the investor.

So the key for sound investment portfolio is not ponder the what’s and how’s, it is better to understand the important concepts and the underlying principles. There are journals, daily news and blogs available at a number of websites which can be taken aid of. Then there are also the financial advisors which will be able to provide you with the best of the advices. Hence, utilize it and have a sound financial portfolio.


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