Virtual Retirement Account Summary Essay Sample

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  • Pages: 5
  • Word count: 1,110
  • Rewriting Possibility: 99% (excellent)
  • Category: accounting Summary

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Introduction:

      This paper seeks to discuss a Virtual Retirement Account Summary by attempting to answer five sets of questions as indicated below in relation to some fundamental theories on how to make and profits from investments in stocks.

 Questions and Answers:

  • What is the current worth of your account? How much did you lose or gain?

     Since it is assumed that I have put up about  $800 by end of semester, the value of my account must gauged on whether the value increased or decreased on the basis of the current price of the stocks. Any loss or gain should be the difference between the acquisition cost of $800 and total current value of my account.  As computed , the value of my account is estimated at more or less $866. I therefore have a gain or loss of $ 66. See Appendix A.

  • What 3-5 investment vehicles did you invest in? Give a description of your rationale for investing in each. What research did you do? What did you know about each company?

      As per case facts, I have invested in the following investment vehicles: (1)

I have invested into Jewelry companies because its close to the holiday season and the jewelry companies sell a lot. I also invested in (2) Starbucks and (3) Barns and Nobles because these are more of the stable accounts where it appreciates over years. Having given the description of the rationale for investing in each, I did  conduct a research about the companies stock prices, profitability and leverage of the companies to measure the risks involved in the investments as may be found in the stock in the New York Stock Exchange (NYSE) and in the Smartmoney.com website. I at least know their stock prices and their behavior.

  • How did you think about your account? As a long-term investment (for use 30 years from now) or short-term (for use in the near future). How did this affect how you chose your investments?

      I thought of my  account as something  of which I may gain or lose some money but my belief was of course stronger on gaining something the moment I decided to invest my money in stocks.

As a long term or short-term investment, it really affected how I make my decisions.  If  I treat

the investment as long-term  I got satisfied with modest increase in the stock prices but if I treat the same at short term I was looking for  a remarkable increase in prices to afford me greater profits.

  • How did you feel about the account? And what did you learn about how you deal with your own money?

       I felt good about my account as I saw the opportunity for my money to earn but the probability of losing some was also there, which I considered as risk in investment.  I found the reality of the trade off between return and risk, that is the greater the return, the greater the risk (Investopedia, 2006). Such is the nature of the investment and that is true in many areas in life not only in finance.  One cannot gain everything all the time, hence one must lose something to gain something.  I have learned how to understand the business environment of which I was investing and this involved my practical knowledge on the economy and how they will affect the value of my stocks. I also found the relationship of what is happening in government to be relevant also in my decisions.

  • What did your learn from working with the account? What did you do well? What could you have done better? What would you have done differently if you had another opportunity to work with it?

      I learned many things from working with my account. I learned to study the behavior of the prices of stocks and how I got influenced from information as I discovered about the company I was investing, that good news may increase the value of my stock but bad news will bring down the value of my investments.  I did well in observing practical developments in the prices of stock which influenced my decision making.  I could have done better if  I have a deeper knowledge in statistics  for better prediction. I would have joined the “mock” investment in stocks or the All Star Bowl Fantasy Portfolio game at the Smartmoney website to improve my judgment about stocks.

Conclusion:

      Investing money other than letting the money to remain in the bank offers the opportunities for more wealth as the choice is presumed to generate more profits.  This is based on the premise that businessmen will not go to business if they will not earn from it.  They do some value added things on their products and services before they sell with the expectations that they will earn profits and in return their wealth will increase.  Companies use funds from investors including from those of retirees and even from present employees or students who want to save.

These  funds are therefore are , in a sense, put in the hands of financial managers which have the responsibility of further making it bigger in business including those in financial markets (Brigham and Houston, 2000).  However the business environment has risks including of losing money when the market may turn out to be unfavorable but the belief that profit will be generated carries a greater weight.  For me, the best way to win in the game is to have more knowledge on the workings of the game and the system.

Appendix A– See Excel file with filename: AppendA.xls

References:

Brigham and Houston (2000) Fundamentals of Financial Management, Thomson South Western, USA

Investopedia (2006) Risk Return Tradeoff, {www document} URL, http://www.investopedia.com/terms/r/riskreturntradeoff.asp, Accessed November 14, 2006

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