Basic Investment Planning and Strategies

The basic investment objective of most people is to earn the maximum possible total after-tax rate of return on the funds available for investment, consistent with the investment limitations and constraints under which they must operate. In other words, most investors want to earn as much on their investments as they can relative to the level of risk they can, or wish to, assume. In general, the higher the expected returns on an asset class (e.g., common stocks, bonds, cash equivalents, real estate, and so forth), the greater the level of investment risk. This is referred to as the risk-return trade-off (i.e., to get greater returns, the investor normally must assume greater risk). Obviously, the level ...

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