Final answer:
A buyer can request their deposit to be invested in interest earning investment funds, subject to agreement between the involved parties. Such arrangements require clear terms regarding investment risks, returns, and tax implications, and are not standard practice. Additionally, while a diversified portfolio is beneficial for risk management, it does not guarantee economic success.
Step-by-step explanation:
Yes, a buyer can request that their deposit be invested in interest earning investment funds, but this is subject to the agreement of the seller or the entity holding the deposit. In real estate, for instance, an earnest money deposit might be held in an interest-bearing account, with the accrued interest potentially benefitting either the buyer or the seller depending upon the terms negotiated in the contract.
However, there are considerations and regulations to be aware of. The parties must agree on terms relating to the investment risks, returns, and the appropriate allocation of interest earned. This can get complex, as it may involve tax implications, escrow arrangements, and legal stipulations. Therefore, it is not a standard practice and requires additional negotiation and preparation.
It's also important to note that having a diversified savings and investing portfolio helps in managing risk and can contribute to economic success, but it does not guarantee it. Diversification reduces risk by spreading investments across various financial instruments, industries, and other categories.