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Corporate Economy Expressions Markets Leisure   09 February 1998 Be sure of your objectives before investing  Shailendra Saxena   Every investor has his or her own specific or peculiar circumstances in life. These circumstances spawn different investment objectives for individual investors. If one is clear about his investment objectives and evolves and implements his investment strategy accordingly, the objectives may be fulfilled. But many investors don't give a serious thought to their investment objectives and tend to imitate others. This however can be quite dangerous in the long run. Consider some of the common instances given below: People sometimes invest in those schemes where they would normally not invest as they do not consider the scheme sufficiently attractive. This may be because of, say, personal accident coverage available free of cost to investors in the scheme. An investment scheme's extreme popularity among investors may create a situation where even those persons end up investing in it who otherwise would not have invested in it on the basis of the features of the scheme alone. A young marriedman may have heavy investment (in relation to his earnings) in scrips of blue chip companies and the same person may simultaneously have zero or very small investment in life insurance considering the low annualised return on investment on life insurance policies. A retired investor may invest heavily in NBFCs' fixed deposit schemes giving lower preference to the government's or UTI's monthly income schemes because of higher interest rates offered by the former even though he may be depending solely upon such interest income for leading a retired life and NBFCs' schemes may not enjoy highest possible credit ratings. Such examples may be multiplied easily simply because a significant percentage of investors do not give a serious thought to the investment objectives desirable in their case. And amongst those investors who have thought about their investment objectives, many people may be handicapped by inadequate knowledge in the area of personal investment or due to non-availability of soundprofessional advice. Nonetheless, today there is a need for investors to give serious consideration to their investment objectives and act accordingly. In the first case given above for instance, the investor ought to delink his need for personal accident insurance from his other investment needs and would do well to buy a pure personal accident insurance policy separately which may not require a big investment. In the second case the extreme popularity of the scheme should not cloud the judgement of the investor and he should closely examine the features and factual details of the scheme before investing in it. In the third case it may be said that buying life insurance policy should have preceded the investment in shares. In the fourth case given above, the retired investor should not forget the safety consideration for getting higher interest income. Right means lead to right ends while wrong means lead to wrong ends. A clearer understanding of one's investment needs and objectives will thereforelead to evolution and implementation of the right investment strategy and eventually lead to fulfilment of investment needs and objectives. So, it is important to look at personal investment objectives closely before actually investing. Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.