Wise investment to reach financial security essay

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Wise investment to reach financial security essay

All investments carry some degree of risk.

Wise investment to reach financial security essay

Stocks, bonds, mutual funds and exchange-traded funds can lose value, even all their value, if market conditions sour. Even conservative, insured investments, such as certificates of deposit CDs issued by a bank or credit union, come with inflation risk.

They may not earn enough over time to keep pace with the increasing cost of living. When you invest, you make choices about what to do with your financial assets.

Pay attention to total monthly debt payments

Risk is any uncertainty with respect to your investments that has the potential to negatively affect your financial welfare. For example, your investment value might rise or fall because of market conditions market risk.

Corporate decisions, such as whether to expand into a new area of business or merge with another company, can affect the value of your investments business risk. If you own an international investment, events within that country can affect your investment political risk and currency risk, to name two.

Ten Things to Consider Before You Make Investing Decisions

There are other types of risk. How easy or hard it is to cash out of an investment when you need to is called liquidity risk. Another risk factor is tied to how many or how few investments you hold.

Generally speaking, the more financial eggs you have in one basket, say all your money in a single stock, the greater risk you take concentration risk. In short, risk is the possibility that a negative financial outcome that matters to you might occur. There are several key concepts you should understand when it comes to investment risk.

The level of risk associated with a particular investment or asset class typically correlates with the level of return the investment might achieve. The rationale behind this relationship is that investors willing to take on risky investments and potentially lose money should be rewarded for their risk.

In the context of investing, reward is the possibility of higher returns. Historically, stocks have enjoyed the most robust average annual returns over the long term just over 10 percent per yearfollowed by corporate bonds around 6 percent annuallyTreasury bonds 5.

The tradeoff is that with this higher return comes greater risk: Exceptions Abound Although stocks have historically provided a higher return than bonds and cash investments albeit, at a higher level of riskit is not always the case that stocks outperform bonds or that bonds are lower risk than stocks.

Both stocks and bonds involve risk, and their returns and risk levels can vary depending on the prevailing market and economic conditions and the manner in which they are used.

What is Financial Planning? (with pictures)

So, even though target-date funds are generally designed to become more conservative as the target date approaches, investment risk exists throughout the lifespan of the fund. While historic averages over long periods can guide decision-making about risk, it can be difficult to predict and impossible to know whether, given your specific circumstances and with your particular goals and needs, the historical averages will play in your favor.

The timing of both the purchase and sale of an investment are key determinants of your investment return along with fees. If you buy a stock or stock mutual fund when the market is hot and prices are high, you will have greater losses if the price drops for any reason compared with an investor who bought at a lower price.

That means your average annualized returns will be less than theirs, and it will take you longer to recover.

Wise investment to reach financial security essay

Investors should also understand that holding a portfolio of stocks even for an extended period of time can result in negative returns. It has only been recently that the closing price has approached this record level, and for well over a decade the NASDAQ Composite was well off its historic high.

Investors holding individual stocks for an extended period of time also face the risk that the company they are invested in could enter a state of permanent decline or go bankrupt. However, the historical data should not mislead investors into thinking that there is no risk in investing in stocks over a long period of time.Investment in financial instruments often requires investment counselling, or in-house market sophistication.

When considering investment in financial instruments, it is always prudent to consult with a league. The presence of financial institutions and financial services encourage savings, direct them to productive uses and helps the investment market go grow.

The financial institutions in existence in India are mutual funds, development banks, commercial banks, life insurance companies, investment companies, investment bankers and mortgage .

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Essay # 2. Age Wise and Sex Wise Distribution of Investors. The age wise distribution of investors is given in Table The Table reveals that a little less than two fourths of the investors are in years, a little more than one fourth of the investors to be up to 35 years of age and the balance one third of investors are above 50 years of age.

Financial Literacy and Retirement Planning in the United States Annamaria Lusardi and Olivia S. Mitchell many U.S. workers relied mainly on Social Security and employer-sponsored defined benefit (DB) pension plans.

Today, by contrast, Baby Boomers are increasingly turning to crucial to the making of informed investment decisions The key to investing wisely is to find good investments in line with what you’re trying to accomplish with your portfolio.

Whether you’re trying to purchase a home, send your children to college or save money for retirement, learning the best ways to invest money can help you reach your goals a little faster.

Financial crimes is a critical issue and it has likely devastating economic, security and social impact. It encourages drug dealers, terrorists, illegal arm dealer, corrupt public officials and others to operate and expand their criminal schwenkreis.coming to Petter Gottschalk, ()," financial crime can be categoried in corruption, fraud.

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