There are lot more factors that goes into making investment decisions and it depends on your personal profile, family history, number of dependants, loans, etc. It is a huge investment, not just in monetary terms, but also in terms of the time involved in the transactions. Factors concerning before construction of the project, 2. Summary â Investment levels are influenced by: Interest rates (the cost of borrowing) Economic growth (changes in demand) Confidence/expectations; Technological developments (productivity of capital) Availability of finance from banks. (5), 2. In case of emergencies, there should be an amount of capital allocated to an investment that can be easily converted to cash. It is not possible to enlist all the points that are to be kept in mind while making an investment. In a recession, investment falls, and recover with economic growth. As a general rule, the higher the risk of an investment… On the other hand, government subsidies/tax breaks can encourage investment. Return on Investment (ROI) Risk; Investment Period; Liquidity; Taxation; Inflation Rate; Volatility; Investment Planning Factors; Budget; Explanations of Factors that â¦ Now plotting the two tables on a graph as shown below. Long-term changes in technology can influence the attractiveness of investment. Although the financial case for making an investment is a vital part of the decision-making process, non-financial factors can also be important. Therefore despite record low-interest rates, firms were unable to borrow for investment – despite firms wishing to do that. In a recession, investment will fall sharply, but not completely – firms may continue with projects already started, and after a time, they may have to invest in less ambitious projects. Many shares on the stock market are considered fairly liquid because they can be easily sold to other traders in the market. The decision to buy or make may be made by analysing the minimum cost for each alternative. This has led to greater investment – though it can also affect the quality of investment as there is less incentive to make sure the investment has a strong rate of return. However, it will make them think twice about future investment projects. List of Factors to Consider When Making Investment Decisions. ... while still â¦ But the wrong investment decision can cause grief and havoc. Martin Pelletier: Being organised and knowing what to look for is also a â¦ Low volatility means that the investment, market or economy is stable. Loan ; The loan is another factor which you should look for while making an â¦ If this is a requirement, make sure that you do not need the money before the prescribed redemption period. The accelerator theory states that investment is highly dependent on the economic cycle. You may be accumulating this extra money to spend on something big within the year without going into debt â for things like a new furniture or gadget. Here is a list. ... there are some factors to be considered as well. What are the things that you should think about before deciding on an investment? Tax is a compulsory fee that citizens must pay to the government. When planning investments, you should consider the safest possible investment opportunities. Factors concerning after construction of the structure. People choose investments according to their personal needs, goals and interests. I think you can guess what has happened to the value of this property during the recent housing crash. You have to consider your investment property in context. Now, what do the above factors mean, and how do they influence your investment? In the long-term, inflation rates can have an influence on investment. Liquidity means the degree to which an investment can be quickly sold in the market and cash can be obtained as and when required. High and variable inflation tends to create more uncertainty and confusion, with uncertainties over the future cost of investment. What Factors Increase the Riskiness of a Capital Budgeting Project?. Hello! Looking at vertcointoo, it was about 2 doâ¦ The investor must consider income tax implications in order to secure a high net. Investment is expenditure on capital goods – for example, new machines, offices, new technology.Â Investment is a component of Aggregate Demand (AD) and also influences the capital stock and productive capacity of the economy (long-run aggregate supply). Interest rates can be outweighed by economic conditions.
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