Type of Investment Description—explain what it is and how it works. Level of Risk and Potential Return—explain.
Real-life example of this investment (name or company) Minimum investment amount or time? Easy to start or stop investment? Discuss. CD (Certificate of Deposit) A savings given by the bank to a depositor, who puts funds in the savings account Low risk Has better interest than most traditional savings. The growing intrest of a CD Very simple to begin or stop. No minimum investment amount.
IRA A portion of a person’s pay is put aside to be used after retirement, growing interest as time goes by. Low risk There is a limit to how much can be deposited into the bank. Roth IRA There is a Limit to how much can be deposited Fee if money is taken out early MMA (money market account) A savings that offers a better rate of return in exchange for bigger deposits Low risk Not make much money but more than a traditional savings account The United States of America’s debt Fee if money is taken out early Stocks Shared ownership of a company High risk You could potentially make a lot of money but if company fails you could lose a lot of money Universal stock, because it is safe and safe. You must invest a minimum amount of money. Bonds The buyer of the bond is lending money to a company. Moderate Doesn’t cost very much. United States Department of the Treasury’s 30 year bond It requires a minimum amount to buy and a certain period of time to own the bond.
Mutual Funds A large amount of money collected by many investors in order to purchase large amounts of stocks or other types of investments. Moderate risk Requires a large amount of money. More money involved means more of a risk. The vanguard group Requires a certain amount of money to invest. Futures A legal agreement where a buyer agrees to buy goods for a set price. High risk Has a big potentially return but very risky.
Betting on the future price of a product. Very specific because a legal agreement is made to buy an amount of goods on a specific date and time. Traditional Bank Account Funds deposited in a bank that the depositor can withdraw at will Low Will not make much money Bank account at Bank of America Usually a fee, and small minimum such as 20 dollars.
My three investment options I would choose would be a traditional savings account, bonds, and IRA. I would be using the money I obtain from my jobs: a horse jumper and waitress. Having a diversification of jobs has its benefits. I chose these three types of investment because they seem to be the easiest.
My choices are due to my fear of risks. I would do %50 in the traditional savings account due to the least amount of risk. I would then choose %25 to go into IRA because that has a higher interest rate and is safe. The rest would go into bonds, which has high rate of return.