Economics had been an all-time favorite subject since school days for all those who have a big heart for Investment and profit. So resources are the base for general economics. Scarcity, needs and wants are all that comprise it. But scarcity is something which people generally go through every day.
Role of scarcity in the investment world:
But does this scarcity works in this Investment world? The answer is yes. Scarcity is resources available at current; i.e. time and money. Mindful investment leads to useful results. The first step in investing has to be about understanding how much free capital we have for investing, the length of time we would like to invest for (which is known as our investment horizon), and our risk appetite.
Opportunity cost and Investment Decisions:
An opportunity cost is a cost of spending your time, money, and energy on one thing, instead of another thing. As you can see, opportunity costs play a big role in personal finances. Every choice that you make in life has an opportunity cost attached to it, even if it is not easily seen.
An opportunity cost doesn’t only include monetary costs, but it includes all real costs of making one choice over another, including the psychic profit of lost time, energy, and pleasure.
In the investment world, “opportunity cost” is the cost of choosing one investment over another one that would have been more profitable. Opportunity costs are invisible on the balance sheet that one prepares, but they are a very real consideration when making investment decisions.
The concept of Choice:
The concept of choice comes everywhere whether it is in business decisions or personal. The choice is the situation when we select one option sacrificing another. This sacrifice is opportunity cost i.e., sacrificing something to gain another.
There is a fascinating array of investment opportunities in Singapore. From nearly risk-free options such as salary-savings accounts, government bonds (such as the Singapore Savings Bond), and topping up our CPF accounts, too much riskier options such as stocks and corporate bonds.
Thus selecting one of the best alternatives to gain handsome dividends adds on to wiser decision makings. And thus the paradox of choice is at full play. Have you ever been to a restaurant with so many pages in their menu that you feel stuck and end up asking the waiter about the most popular dish?
So, always make a wise decision in stock market related to investment and stay updated on our website for investment and monetary decisions.