ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Safety of principal is a small step up on the risk spectrum from preservation of capital, resulting in large allocations into safe debt securities that have longer time horizons. As you already know, more price volatility exists for long term debt securities.

Detailed explanation-2: -The most basic investment objective is the safety and security of the principal. When this is the paramount concern, the investor is less concerned with return on investment than with the return of investment.

Detailed explanation-3: -Saving means not spending a portion of your income, in other words putting some money aside. Your money is therefore safe and available, but its value decreases each year by the level of inflation. To guard against this, you can invest these savings in financial products that fit your needs.

Detailed explanation-4: -When you are saving money, the most important consideration is safety principal. When saving accumulate beyond what may be needed for short-term goals and emergencies, than you have money available for investing. Experts recommend setting aside one to two years net pay in an emergency fund.