Answer to Question #290481 in Finance for Kelsey Jand

Question

Context Links: https://saylordotorg.github.io/text_personal-finance/s06-basic-ideas-of-finance.html + https://saylordotorg.github.io/text_personal-finance/s05-personal-financial-planning.html

Instructions: Implementing the personal finance terms within the provided links above, respond to the following prompt.

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

Answer 1

Property Investment

Defensive Investment

Shares

Advantages of Property investment

1) There is a steady Cash Flow.

2) It has great returns.

3) Long-Term Security.

4) Ability To Leverage Funds.

5) Protection Against Inflation

Disadvantages

1) It has low liquidity.

2) High cost of investment.

3) High maintenance cost

4) Problematic tenants.

Advantages of Investment Property

It has long-term gains with lower risk than other stocks.

Disadvantages of property Investment

1) Often yields less of a return than a more aggressive strategy

2) there is always risk that an investment will under-perform

Advantages of Shares

1) Part-ownership of a company.

2) Real-time dealing throughout the trading day with limit orders available when markets are closed.

3) One receives dividends either as income or re-invest to buy more shares.

4) Ability to vote on important company decisions

Disadvantages of shares

1)There is uncertainty of dividends

2)It is a high risk investment

3)There is fluctuation in market prices

4)There is limited control of what happens to the investment.

My first choice would be defensive investment since it provides high returns which are long term and with security.