Make Sound Investment Decisions by Understanding Factors that influence investment decisions.

Investing in a right product can be a complex decision if you're unaware of the basics factors that can influence your investment decisions. In this article we will look out for factors that matters the most to any investor and how each one of them is significantly important.

RISK is the No.1 Factor that every investor should look out for before putting a single rupee in any investment. Risk here, simply means the possibility of depreciation in the amount invested. Investors have various options to choose from in terms f risk sensitivity varying from ZERO Risk to Extremely High Risk investment avenues. Investors should evaluate their capacity to take risk and filter their investments accordingly.

RETURNS are second factor which influences investment decisions. It is simply the percentage of Gain investor is expecting on the invested amount. Investors be more practical while setting up the goals of returns they expect. The returns are often found to be in a Linear relationship with the RISK. The Higher The Risk The Higher The Returns investors expect from it. Investors should also keep in mind that Risky Investments inherit the possibility of losing complete value of investment. Thus it is sensible to invest in avenues which provide best returns fitting in investors risk taking capacity and not to look out for Higher Rewards risking potential Loss.

TIME FRAME is the third factor to consider while investing in any avenue. Some investment options are restricted with a specific time frame and investors cannot PROFITABLY liquidate their money before the time frame ends while some investment options have no such restrictions. Investors should carefully analyse their own gals and figure out whether they are looking for a Short term investment or a Long term. It is important to invest in securities accordingly and plan for a strategy that meets investors own goals and financial condition.

LIQUIDITY is a key aspect of any investment. It mean how easily any investment can be converted into Liquid Cash. Liquidity is important as the prime objective of investor in not to keep money blocked in a security but it is to Profitably convert it into Cash or Cash equivalents whenever it is needed. Investors opt for avenues with highest liquidity. However, investments with fixed time frame are least Liquid but the safest.

TAX BENEFITS are crucial component for investors looking to reduce their tax liability. Under section 80C of Income Tax Act 1961 various investment options provide a Tax shield for investors. However, there are limitations in terms of Tax Benefits one can enjoy on such investments.

These were Five most important factors that influence investors decisions. Further we will analyse various investment avenues on the matrix of these five factors which will help You as an Investor to chose securities which fits in perfect with your Investment needs and can fulfill your goals. Stay tuned for more.