Question

your friends, jim and joey (16) are twin brothers and just received a $1000 inheritance from a wealthy aunt. jim wants the two of them to put their money together and buy a 4-wheeler. joey says he wants to put his money in a savings account. jim comes to you to ask you to help persuade joey to buy the 4-wheeler. what is your best financial advice?

Answer 1

The best argument to persuade Joey to buy the 4-wheeler is to inform him that keeping the money in a savings account would cause that money to loose value overtime (due to interest rates). Therefore, to ensure the best use of the $1000, it is ideal to use that money rather than save it.