Investing in the Future
Question 1
For an individual to have a stress-free future, investing is necessary. Investing provides one with a different income source, funds one’s retirement, or helps one evade future financial jam. Most fundamentally, investing helps an individual grow their wealth hence enabling one to meet his or her financial goals and also increases one’s purchasing power gradually or after some time. One way that I will invest in my future is through Certificates of Deposit, which are provided by banks. I would go for CDs since they usually offer more interest rate compared to savings accounts.
CDs also have particular maturity dates ranging from a few weeks to a few years. I prefer Certificates of Deposit since I cannot withdraw my cash until the agreed time is over. That would be advantageous as it would discourage me from taking back the money for leisure use as there is a penalty for withdrawing the cash earlier than the agreed time. The other benefit is that the bank will pay me interest at constant intervals and after it matures I will be given back my original principal as well as all the accrued interest.
The other way I would invest in my future is through stocks, which is merely purchasing a small company’s share. When companies wish to raise cash, they provide Stocks. As one obtains additional stock, his or her company’s ownership stake goes up. However, I will need to be very cautious and do a lot of research before deciding to jump in. The third way I will invest in the future is through mutual funds, which is collecting a considerable pool of cash from numerous investors, after which the money is invested collectively. Through mutual funds, I will be given shares that will match the amount that I will contribute.
Question 2
Out of the three investment methods, I will confidently invest in Certificates of Deposit. I find CDs as the surest way since it is very safe. CDs are not affected by market changes as matured CDs maintain the anticipated value at purchase. They are also predictable since, during purchase, I will be able to know the CD’s worth when the agreed term comes to an end.
The terms are also very flexible, as with both the long-term and the short-term options, I will be able to select an approach that works excellently depending on my financial situation. The other reason I feel confident with the CDs method is since their returns are more favourable or better as compared to those of savings account. Generally, CDs are safe, which is one of the most significant appealing aspects for any investor. The Federal Deposit Insurance Corporation secures cDs or insures them for up to $250,000. The national government also ensures that the investors never lose their principal, thus making them less risky as compared to other more fluctuating investments.
Question 3
Stocks might be the most challenging way of investment for me due to the risk involved. The shares’ value of any given company could radically go up or go down depending on the company’s financial management and also the economy. However, I can overcome that is by continually checking the stocks’ price fluctuations and the actual stock market. That will keep me informed and also help me make wiser decisions when it comes to buying or selling the shares. Diversification is another way that will help me overcome the challenges whereby I could own various companies of different sizes since each performs differently in every business cycle’s phase.