Answer to Question #290098 in Finance for Kelsey Jand

Question

Money Makes Money

The quote by Adam Smith identifies you can make money if you have money. If you were given $100,000 dollars today how would you use this money to make additional money in the future?

Please create a list of 3 options you could take to make money from the $100,000; identify the pros and cons of each option and identify your first choice.

Instructions

1. Create your list of three options.
2. Identify the pros and cons of each option.
3. Weigh each option and identify your first choice.

Answer 1

Invest in Gold 

Invest in Real Estate

Invest in Stock market

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 Advantages of investing in Gold

1) a simple way to save money for the future.

2) Price stability is an added advantage

3) Easy to buy and sell

Disadvantages of Investing in Gold

1) Gold can be stolen and lead to losses

2) It may take years for Gold to increase in Value

Advantages of investing in Real Estate

1) Real Estate responds is proportionally to inflation, Value appreciates over Time.

2) It is easy to understand how it works

3) Real Estate maintains low liquidity .

Disadvantages of investing in Real Estate

1) Likelihood of Extra costs 

2) Illiquidity

3) Hidden property issues

Advantages of investing in Stock market.

1) High chances of good returns even for a short period 

2) Very high Liquidity

3) Gaining control of the share in the market.

Disadvantages of investing in Stock market.

1) Highly volatile

2) The involvement in Brokers can reduce the profit margin

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Among the three options , that is Stock market , Gold investment and Real Estate, Investing in Real Estate is the best since there is guarantee that its value will increase over time as population of a region continues to grow. Furthermore, the high liquidity and risk available in the two other options makes Real Estate an ideal business.