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Certificate in Stock Market and Equity Research

Hanumant Dhokle

1.10 Investment Alternatives

What are the Investment Alternatives available for an Investor?

There are several investment options:

Real assets

are assets that are intrinsically valuable because of their utility. They include real estate, gold, equipment, patents, etc. They are directly opposite to financial assets. Real assets can be tangible or intangible.

Tangible Assets:

Investment to procure assets like a car, television, washing machine and any other household articles which are physical and have a long life are considered as tangible investments as they result in the creation of tangible assets. Procuring these assets may be viewed as either an expense or an investment based on the reasons for buying the same. For example, buying a car for personal use is considered as expenditure. If a car is purchased with a view to generate income by operating a taxi service, the purchase would be considered as an investment as it can potentially result in the generation of periodic income.

Intangible Assets:

The procurement of knowledge such as this course for which you have paid with the intention of becoming a smart investor may be considered as an investment in an intangible asset. The asset that is being acquired by you - knowledge related to investments - is an intangible asset.

An individual may make a decision to procure an asset with either a short or long-term horizon in mind. This decision is based on the individual’s need at that point in time. Some examples of investment in assets that are tangible include:

Real Estate:

It could be an apartment, either residential or commercial. It could be the purchase of vacant land for the construction of residential or commercial buildings or individual houses or bungalows.

Bullion: One can invest in precious metals like gold, silver etc.

Precious Stones:

Investments in precious stones like diamonds and gems etc are also bound to fetch good returns.

Business:

Fixed assets such as land and building, plant and machinery or intangible assets such as patents, royalty etc.

Others:

Antiques, paintings etc.

Individual investors are normally attracted to tangible assets and procure them to meet their financial needs that may cater to the short-term or long-term needs. The following section provides example of financial instruments classified on a time horizon. Financial instruments are cash, evidence of an ownership interest in an entity or a contractual right to receive or deliver cash or another financial instrument.

Financial Instruments

Are cash, evidence of an ownership interest in an entity or a contractual right to receive or deliver cash or another financial instrument.

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