Page 11 - Introduction To Investment Management

Table 1: The differences between Investment and Speculation
Investment Speculation

Exposure of Risk Reasonable – High Risk/Unexpected
base on analysis

Return Moderate High Return

Period Medium and Long- Short Term
Term
Instruments T-Bill/Bond/Stock Derivative Market/ Speculative

Bond/ Stock

1.4 THE IMPORTANCE OF INVESTMENT
Investment is very important for all to fulfil our long-term and short-term
objectives, especially to gain a financial freedom. Since we hardly can predict what will

happen in the future, thus having a proper financial strategy and preparation becomes
crucial. There are many motives why people invest, among the motives would be:-

i. Wealth creation

By investing money in appropriate financial instruments, investors can increase
their value in the future. Return in term of dividends and capital gain would

increase investors’ wealth.

ii. Fulfilling financial goals

Buying home, children’s education and our retirement plan are some goals that
are important to all of us. To accomplish these goals, we need to place aside part

of our income in suitable investment instruments depending on when the
financial goal will come up for fulfilment.

iii. Financially secured and freedom

Our financial security mostly depends on how much we invest and how efficient
we manage our investment. Generally, investments can help us build a corpus so

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