Investment Objective

An investment objective is used by asset managers to determine the optimal portfolio

mix for a client. Investments are chosen using the guidelines of the investment
objective. An investor questionnaire often defines financial goals and objectives and
determines the asset allocation within the portfolio based on an individual's time
horizon, risk tolerance, and financial situation.
The information that an individual provides to determine their investment objective
may include annual income and net worth, average annual expenses, timeline to
withdraw the money, and the maximum decrease in the value of the portfolio with
which the investor is comfortable.

What are the four types of investment objective?

1. Safety of Capital
Capital preservation is one of the primary objectives of investment for people.
Some investments help keep hard-earned money safe from being eroded with
time. By parking your funds in these instruments or schemes, you can ensure
that you do not outlive your savings. Fixed deposits, government bonds, and
even an ordinary savings account can help keep your money safe. Although
the return on investment may be lower here, the objective of capital preservation
is easily met; look for investments that have a minimal risk level. Safe
investments include government issued securities, money market instruments
and securities guaranteed by banks.
2. Income
If your primary objective is income, you will have to sacrifice a degree of safety
in order to increase your returns. Capital appreciation is generally a long-term
goal that helps people secure their financial future. To make the money you earn
grow into wealth, you need to consider investment objectives and options that
offer a significant return on the initial amount invested. Some of the best
investments to achieve growth include real estate, mutual funds, commodities,
and equity. The risk associated with these options may be high, but the return is
also generally significant. Even the most conservative investors like to have some
level of income in their portfolios just to keep up with the rate of inflation
3. Growth
If you are growth oriented, you would normally be less concerned with safety,
and do not totally depend on income from investment funds. These types of
 investments in growth instruments are more likely to fluctuate in value and might
have a greater risk of loss. Saving up for retirement is also a necessity. It is
essential to have a retirement fund you can fall back on in your golden years,
because you may not be able to continue working forever. By investing the
money you earn during your working years in the right investment options, you
can allow your funds to grow enough to sustain you after you’ve retired.
4. Tax Savings
Income generated by common shareholders is considered capital gains and is
taxed differently. Taxes on capital gains are significantly lower than taxes on
interest income or ordinary income like salary. If your primary objective is tax-
saving, registered plans such as national pension schemes and tax free savings
accounts are the best bet. However, there are also effective ways to earn good
returns along with saving taxes like investing in tax saving mutual funds or life
insurance policy.

References:
https://www.investopedia.com/terms/i/investmentobjective
https://wizely.in/wizeup/investment-objectives-definition/
https://www.maxlifeinsurance.com/blog/investments/what-is-investment