Question

A. Give 3 categories of Long-term Investments (please mention examples for each category) B. What is the difference between Tangible Assets and Intangible Assets? Give examples please.

Answer 1

A. Categories of Long Term Investments :-

1.) Stocks: Stocks are equities and when you own a stock, you own a piece of the company. Over the long term, you can expect to earn an annual rate of return of roughly 7-8% from stocks. This is great for building long term wealth.

For example ;- Amazon, Procter & Gamble

2.) Bonds :- Long-term bonds are interest-bearing securities with terms greater than 10 years. The most frequent terms are 20 yearsand 30 years.The primary attraction of bonds is usually the interest rate. Since they’re long-term in nature, they usually pay higher yields than shorter-term interest-bearing securities.

For example, while the yield on the US 5-year Treasury Note is currently 2.61%, the return on the US 30-year Treasury Bond is 3.03%. The higher yield is to compensate investors for the greater risks involved in longer-term securities.

3.) Mutual Funds :- Mutual funds generally fall into the category of actively managed funds. That means the purpose of the fund isn’t to simply match the underlying market index, but to outperform it.

For example, rather than investing in all the stocks in the S&P 500, a fund manager may choose the 20, 30 or 50 stocks he or she believes to have the best future prospects.

B. Diffrence between Tangible Assets and Intangible Assets :-

Tangible fixed assets generally refer to assets that have a physical value. Examples of this are your business premises, equipment, inventory and machinery. Tangible fixed assets have a market value that needs to be accounted for when you file your annual accounts. Some of these assets, for example computer equipment, will incur depreciation, which needs to be factored into your accounts while Intangible assets is opposite to tangible assets as they dont have physical evidence and cannot be seen by eyes.These all have an intangible value as they usually have little value to anyone outside of the business For example, Copyright, Patents etc