U1, AOS 1: KK5 - Alternative investment opportunities Flashcards
A person who purchases property will experience a return on their investment in two ways;
- Rental income
- Appreciation in the value of the property
Alternate business opportunities include;
Property
Putting cash in savings
Buying shares
Putting cash in the bank could be a missed opportunity as…
Cash is tied up in savings and could be used elsewhere to generate a greater return. Although this is much less risky.
There are two approaches to investing in shares…
Short-term - experience growth in the value of the share and sell when the price is high.
Long-term - wait for the business to turn a profit then the investor receives a % of it - this is known as a dividend.
Investing in business is risky because…
- Could lose the money you have invested
- Loss of time invested
- Loss of job security and benefits
A term deposit is…
A type of savings account. Users of term deposits tie their funds up for a prearranged length of time and receive a set amount of interest once the term deposit matures. These are often for 12, 24, or 36 months.
If you remove your money early, there is often a penalty charged by the bank.
If you leave your money in the bank, the return you will receive is called…
Interest
If you invest in shares the return you will receive is called…
A dividend
