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Investment and Money Essay Sample

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Investment and Money Essay Sample

Is an account where a saving note is issued by a bank to a depositor who places funds in savings for a set period. Is a relatively low-risk debt instrument. The potential return is that you reieve a set amount of annual interest on the loan and when the CD contract reaches maturity you get your money. Fidelity, Wells Fargo, and a real life example is if a person purchases a 3-year certificate of deposit from Local Savings and Loan. It requires a minimum amount of money to invest, and it is a safe way to save money but it is hard to get the money out. IRA

Individual Retirement Account (IRA)—a portion of a person’s income is set aside to be withdrawn after retirement, growing interest in the meantime through investment in other securities. Employers might contribute to the account as a benefit to employees. Varies in amount of risk because it depends on the specific plan. Fidelity, T. Rowe Price, or Vanguard are examples.

You can invest as much as you want and is easy to start, but you cannot take money out of the accunt until after a certain age, usually when the person has retired from work, and usually with taxes paid at that time. If you decide to withdraw from the account you will have to pay a fee. MMA

Is a savings account that will not make much money, but more traditional savings It offers a higher rate of return to exchange for deposits that are larger than normal. For example if you find you have a certain sum of money that you do not immediately need, then you may choose to invest those funds temporarily, until you need them to make some other, longer term investment, or a purchase. It’s easy to start but the money is hard to take out because a fee will be charged if you take it out early, and it requires a minimum amount of money in the account. Stocks

A share of ownership corporation that represents a claim on a portion of that company’s earnings, and they make the most money over a long period of time. With stocks return is not guaranteed, and you can potentially lose all your money, or even more then you invested if the business fails. You can invest in an infinite amount of stocks such as Apple, Google, Nike, etc. Usually you can’t just buy one stock—must invest a minimum dollar amount. For a large company like McDonald’s, the high start-up cost deters personal investors ($50,000 in 2012). Bonds

Is a debt investment, meaning the purchase of the bond is loaning money to the company or gov for a set period; they have fixed interest rate, meaning the investor knows how much interest will be earned on the loan since the rate will not change. The average returns from bond investments have also been historically lower, if more, stable than average stock market returns. To earn the highest return you have to take higher risk, and to take low risk you will have a low return. 30-Year Treasury Bond—U.S. Department of the Treasury

Mutual Funds
A pool of funds collected from many investors in order to purchase stocks, bonds, and other investments in greater amount. They require a minimum amount of money to invest, and can earn significantly more money but can also potentially lose more.

Futures
A contract, or legal agreement, where an investor agrees to purchase a certain amount of a physical good or financial asset on a specific date for a set price. High (Aggressive)—Have a potentially large return relative to other investments but also are considered the riskiest.

Traditional Bank Account
Is an account that allows you to deposit and withdraw at will. They don’t make much money, and the bank may charge a fee for these accounts. Can be used with debit cards and checks.

These websites can help you find information about specific investments available.

 Investopedia—Investing

 Market Watch—Getting Started

 The Wall Street Journal—Market Data Center

 Yahoo Finance
Investment Plan
After completing the reading and activities in the lesson, develop your own investment plan. Base this investment plan on your results from the spinner activity on the activity tab. Choose three investment options from the chart for your money. Describe your investment plan in a detailed paragraph. Be sure to include responses to the following questions: Explain how you obtained the money for investment.

Why did you choose these three options?
How do your choices reflect your tolerance for risk?
How do you plan to divide your money between the three investment options you chose? Be sure to include the following terms in your explanation:
diversification
risk
rate of return
interest rate

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