Investment Clubs Options P4DB Essay Example | Topics and Well Written Essays - 750 words

Investment Clubs Options P4DB - endeavor ExampleStill, this does not mean that a person should give up on the idea or desire of getting rich. Investing is the option that allows a person to get affluent, provided one is willing to take skilful and calculated risks.The second reason one must invest is that human body and mind return over time and so does the value of saved money. After having worked very hard in the youth, everyone desires to approve a happy and secure retired life. The problem is that the money saved by a person over time loses its worth owing to inflation (Orman, 2000). Hence, if a person has saved $ 100 one yr and the rate of inflation is 5 percent, the next year that saved $ 100 will be adapted to purchase only $ 95 worth of goods and services. Now, imagine where ones savings will end, if one chooses to be a sitting duck before the vagaries of inflation. Hence, to make ones savings inflation proof, one ought to invest. Investment divests your savings of the ir laziness and makes your money work for you. Investing means making ones hard-earned money appreciate and generate income over time.1. beforehand investing, an single(a) must be aware of ones short-term and long involve and requirements. Caring for short-term needs means making investments that can easily be liquidated. Such investments usually carry low returns. Providing for long-term needs means making investments that are more(prenominal) or less fixed over a specific period and yield blue returns. Ones genuine needs ought to define ones investment decisions. Therefore, if one is cookery a baby next year, one will definitely have to pay the hospital bills and entertain the other attached expenditures. In such a scenario, getting all ones savings entrapped in long-term investments is not wise. On the contrary, if one has young children and wants to provide for their college and university education, long term investments definitely make sense.2. forever and a day loo k forward to diversifying ones investments. Diversification means not risking everything on one endeavor. The entire motivation back investing is the willingness of a person to take risk to get high returns. Hence, the magnitude of risk art object investing is usually inversely proportional to the range of diversification (Markowitz, 1991). The more one diversify ones investments, the more is one insulated against risk. Therefore, it is always wiser to diversify investments among instruments like bonds, stocks, real estate, metals and mutual funds.3. The investment and diversification strategy of an individual needs to be planned while taking into consideration ones age and the time left in ones retirement (Markowitz, 1991). While one is young, one can definitely afford to invest in high risk instruments in the expectation of getting good returns and optimal capital appreciation. However,