1. Portfolio money (it can be lump sum or non lump sum)
2.Non-portfolio money ( it will always be lump sum money)
3. SIP Investment money
Friends, all investment we make is out of cash money/amount.
The investment made in stocks without understanding, clarity and awareness as to out of what kind of money these investment is made; creates a vaccum in an aware and intelligent investor's mind and investment and financial planning.
Here, we have put down main 3 types of money out of which investment is made.
One is portfolio money, this is the money which is invested strictly according to plan. For e.g you have made a portfolio comprising of some stocks as per adhering to and following proper portfolio investing strategy as to allocation within and between asset classes as per your return/time expectation for that particular amount. This money can be lumpsum, but it is ultimately portfolio money, it is aimed at certain achievement of pre-planned target or one type of important part of your investment planning which is in turn an important part of your financial planning.
So, thus the portfolio money is not invested haphazardly or based on fumes and fancies of your mind and for short term return. Portfolio money is for special purpose and is invested with a portfolio strategy and adhering to portfolio investing rules and other important principles of investing. So, this is lumpsum portfolio money. It was invested at one part or kept some and invested at some later stage in that particular portfolio only. Or such portfolio money can also be SIP money. Yes, if you prepared a portfolio investing strategy, and it includes investing certain amount at regular intervals, then such regular investment amount, say, monthly, is also portfolio money. But, as emphasized more than once, such money has a particular portfolio strategy, which is not general for all investors class; this portfolio strategy differs from each investor to investor. Money meant for such particular portfolio is not invested for any general purpose, is not accounted in aggregate with other investment holding such as lumpsum penny stocks investment, commodities/gold investment done purely for future use purpose or overall diversification of aggregate non-debt investment of an individual.
Second is non-portfolio money. Such type of amount is always lumpsum. For e.g you received a good penny stock recommendation or an IPO recommendation and you pull out say, Rs.50,000 for purchasing the recommendation share; then this will amount into non-portfolio lumpsum money investment. That particular transaction/investment may have its objective (of course, as all investment must have its objective) but it does not constitute a part of your some particular portfolio investment strategy, it is not your portfolio investment amount. It is also beyond your 'investment planning strategy' which is an integral part of your financial planning.Suppose, you received urgent advice from your equity advisor, that infra sector or some stock is going to run up fast and hefty returns could be generated in that. So, you put some money out of your savings account or out of non-emergency fund (by selling some other non-portfolio holdings etc.). The non-portfolio money or lumpsum money is usaully put in use for delivery trading (stocks of which delivery is taken for less than 3 months to maximum 1 year), buying penny stocks for 'buy and forget' time horizon, buying gold for lumpsum amount on auspicious days such as pushya nakshatra as a religious importance, for short term listing gains in IPO stocks. We are not covering trading instruments and activities. In investment we will only go so far as defining and inculcating the investment of delivery
The third one type of investment money is SIP money. This is nothing but amount being invested at a regular interval of time for some specified or unspecified period of future.Such money is always kept out of calculation of monthly expenses, and calculation of emergency funds. Such money usually constitute a huge portion overtime, as most of the investment is done through this route out of regular income of a person usually every month, given the need and structure of financial planning actions and requirements. Usually/mostly an SIP money is a part of portfolio money or is termed as portfolio investment money, as most SIP investments are part of well defined and thought over investment planning of overall financial planning of a person. While, some persons may also put the SIP route for non-portfolio investment use. For e.g you are putting certain some in gold at regular interval, for future use purpose, then it will be t ermed as an SIP Non-portfolio money.
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