125k views
4 votes
Based on the module,

what are some factors
that influence how
individuals invest their
money, and what
should individuals
keep in mind when
investing money?
Include three different
asset classes you
learned about that
could be used for
investments, along
with at least one
advantage of each.

1 Answer

5 votes

When deciding whether or not an individual should invest in something, they need to take a couple of things into consideration. For example, how much money will be invested, the risks involved, the financial goal, and the consequences of not reaching that goal. It's smart for the individual to invest in multiple things, so if one isn't making much money there will be other investments that are. One asset class is common stocks. In this class, when a company makes a profit, stockholders receive payment in dividends. They have the ability to generate greater revenue, but dividends are never guaranteed, so investors need to invest carefully. Next, bonds are long-term investment choices. In this class, the investor will purchase a bond, pay periodic interest to the bondholder until the set maturity date, where the investor will then be paid back in full. This type of asset is very common because there is little risk involved. Lastly, government bonds are a type of bond. In this asset, bonds are backed by the government, so they're considered risk-free. However, they have lower interest rates than other bonds.

hope this helped :)

User Dyo
by
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