Question

What are the main things that company have to take into consideration before making investing decisions? elaborate.

Answer 1

In general, to invest is to allocate money in the expectation of some benefit in the future”. Investing is multiplying your money to double triple and even more at a rate that is faster than putting it in a savings account. It is a way of saving your money for something further ahead in the future. Although investing carries risks for your money, it will potentially give you a much higher return.

Main things that company have to take into consideration before making investing decisions:

1. Knowing the risks involved in the investment plan: Investment Plans are financial products that provide the opportunity to create wealth for future. But at the same time it is involve risk taking and scope of losses. So it’s always recommended to know the risk involved while making an investment decision. This help you to make a better judgment and a better business decision.

2. Try not to focus on risk: Since we already know that the risk is involved in every field of life. As if now nothing is certain therefore it’s important to overcome the hesitant nature and try to take calculative risk in life specially while making business decision. As we already know the importance of investment decision we must also know that greater the risks greater are the chances to for good returns. Hence we must strongly suggest you try not to focus on risks.

3. Analyzing key business decisions by Capital budgeting: Let us first get familiar with the term Capital budgeting. Capital budgeting is the process of deciding whether to undertake an investment project or not. It is a mechanism in which a business determines and evaluates potential large expenses or investments. These expenditures and investments include projects such as building a new plant or investing in a long-term venture. Capital budgeting hence play important role in business decision making.

4. Investment objective: Before making any investment it’s so very important to that you calmly analyse your financial situation and draw a financial road map of your own. Now being clear with you financial situation it is essential to determine your investment objective. If your goals are simply to keep your saving safe then you must go for investment options like fixed deposits.  Investments in mostly bonds are also suitable here.

5. The time to make investment: The most essential and crucial factor of the smart investment is the time.This is one of the most important things you should consider before investing. There is indeed right time to make a right investment. I can’t really provide with some pro formula to decide that the time to make investment is right or not because there don’t exist one. All you need here is the power of an observant eye to discover the right time to make the best return on investment for yourself. For this particular consideration you may even choose to consult a financial adviser. Also employing someone with good judgment and knowledge of investment marketing with help you know better about the right time and place for investing.

6. Where to make investment: investment decision making: where to invest money for good returns can be decided earlier itself on the basis of your investment objective. Going for the options such as fixed deposits and bonds may keep you investment safe but not result in higher appreciation. Where as investing your money in stocks marketing may involves higher returns but additional aggressive risks also. People usually makes mistakes of investing in a venture they have little knowledge about it.

7. The duration of investment: The time before you need the money or the duration of investment decision making is directly proportional to the length of investment goals; short-investment or long-term. This completely depend upon you. The long term investment lead to higher profits but unfortunately to higher risks and potential losses which you may or may not be able to recover. But this is certainly uncertain to tell you now which one to go for. For say if you don’t have enough time to stay invested then it’s always preferable to go for short term risk free investment like bonds. However, if you are ready for long term investment please be ready to take some risk so that they could return you some potential return on investments.