Question

Based on the information you provided, Brad decides not to buy the condo at this time. How can he save the necessary funds to purchase a condo or house in the future? Be specific in your recommendations.

Answer 1

Instead of investing in condo, Brand can invest in the below recommendations

1. Stocks

The Coronavirus has resulted the stock market into a steep dive. Volatility is high, stock prices have declined very sharply in the last few month. However as seen by many experts this is one of the few rare opportunities where quality stocks are available at fair valuation. Brand can invest in the few stock as mentioned below.

Apple Inc. > Apple is a brand, which is well known all over the world for its quality and innovative products. Given there has been an overall lockdown virtually everywhere in the world, apple stock has corrected sharply.

The stock is trading at ~USD 250 per share; given the strong fundamentals and the brand image, the stock can be seen to have a upside once COVID is eradicated.

Amazon.com, Inc > Amazon has diversified very efficiently in the last few years. Form e-commence, artificial intelligence to data streaming etc. Given the diversity of the stock ,the risk i.e the volatility is fairly mitigated. Also with COVID amazon still continues to deliver with its products and has relatively less impact to because of its diversity Eg: Amazon Prime, demand has only increased; Amazon delivery, which delivers essential products; Cloud computing which has minimum impact due to COVID

2 Mutual Funds

Mutual Funds provide a good opportunity for people to invest who are not well versed to invest in stock.

Mutual Funds invest in a range of stocks hence the volatility has reduced. However since the overall market is down, Mutual Funds have started to give negative returns.

However there are some Mutual Fund which provide more returns as compared to bonds / bank deposit and are relatively less risky

Brand can invest in those Mutual Funds; example include

Liquid Mutual funds and arbitrage funds