Question

Demonstrate how would you associate investing in a single asset with an initial capital of $1,000 with justifications taking into considerations major challenges and uncertainties in domestic and global market.

Answer 1

1.Shares-Shares are considered a growth investment as they can help grow the value of our original investment over the medium to long term. the benefit is that we can get a huge return in share and the major challenges and uncertainties is that we may lose our bigger part of investment if company goes in to losses due to any reason.

2.Fixed Deposit/Bonds-The best known type of fixed interest investments in the form of bonds, which are essentially when governments or companies borrow money from investors and pay them a rate of interest in return.Bonds are considered as a defensive investment, because they generally offer lower potential returns and lower levels of risk than shares.But major challenges and uncertainties are that bonds have lower rate of interest sometimes less than inflation rate.

3. Gold- investment in gold either in - paper and physical form. we can buy it physically in the form of jewellery, coins, and gold bars and for paper gold you can use gold exchange traded funds (ETFs) and sovereign gold bonds (SGBs). Major challenges and uncertainties are that growth in the value of gold depends upon various economic factors like demand, supply, value of supplementary and complementary products, economic crisis etc.

Thanks & all the best..........