Question

There are many different investment alternatives. Some of these options include:

1 Stocks

2 Mutual Funds

3 Guaranteed Investment Certificates

4 Canada Savings Bonds.

Briefly describe each of these investment options. Outline the risks involved and the potential return for each investment.

Based on what you know, which of the options might appeal more to a student who is trying to accumulate funds for post-secondary schooling? Which option would an adult with a family and stable career be more likely to choose? Be sure to justify your decision and discuss how the idea of risk vs. return was a factor in making your decision.

Answer 1

1. STOCKS

Investing in stocks include high risk and high return. Here we need to open a demat account and make investment in any company as per our wish. So we will get benefitted when the company performing well. So investing in stocks is a good choice for making a good return.

2. MUTUAL FUNDS

Mutual funds are also similiar but here we invest our money through a mutual fund agent. The agent will collect all the money and they will invest these money in different portfoloios. So here the risk factor is little bit low and the return is comparitively low than share investing.

3. Guaranteed Investment Certificates

Guaranteed Investment Certificates is a Canadian investment that offers a guaranteed rate of return over a fixed period of time, most commonly issued by trust companies or banks. These type of investments are very safe and secure.

4. Canada Savings bond

Canada Savings Bonds were investment instruments that were offered by the Government of Canada in between the years 1945 and 2017, sold between early October and December 1 of every year. Now they are stopped this scheme. So it will not be beneficial.

Actually choosing a scheme from this will depends on the risk taking mentality and the return they needed. But in my opinion for students who completed their studies can learn and invest in Guaranteed investment Certificates. Because there is no risk is associated and investing in stocks without proper knowledge will ne a bad idea.

For Households who are earning money can invest their money in stocks. They can study fundamental analysis and make proper investment. If they have capital then the return will be good.

Here the main thing is that how each individual take risk and what return they need. Obviously if there is good return then there will be a risk associated.

ThankYou....