personal finance 1

Question 1

Pros of Savings Account

Answer 1

transfer money from your salary to a savings account every month.

Easy to withdraw money, no risks, bank guarantee
It is guaranteed that the money is safe, even if the bank goes bankrupt.

Question 1

Pros of stock investments

Answer 1

buy shares (ownership in companies)
The stock value can increase

Question 2

Pros of mutual Fund Investment

Answer 2

Buying shares in one or more mutual funds. Shares in a large number of companies in various industries/countries.

Good chance of a profit and you can choose level of risk and return

Question 3

Pros of bonds

Answer 3

promissory note. Lending your money to companies or the government and recieving interest as a thanks.

Guaranteed return

Question 4

Cons of savings Account

Answer 4

low return on savings. 1-2% interest per year. Often, inflation is higher.

Question 5

Cons of stock investments

Answer 5

Risk that stock value may fall.
Forced to sell at loss.
Stock value may fluctuates depending on how many expect the share price to rise.

Question 6

Cons of mutual Fund Investment

Answer 6

Risk that mutual funds decrease in value, forced to sell at loss.

Lower return potential compared to stock investments.

Question 7

Cons of bonds

Answer 7

Profit can be eroded by inflation