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Investment Based On Current Economy

Suppose you have $50,000 that you must invest. Generally, how will you invest it? What are your reasons for this investment?

Please comment on the risk, liquidity, safety, diversity, and potential return on investment on some of the investments mentioned here.

Please consider the current state of the economy -- a weak housing market, rising food and energy prices, stock market lows for many industries, weak credit markets, a weak mortgage and real estate market, and a looming recession. Do explain the reason for your chosen investment(s).

Solution Preview

Before answering, we must establish some parameters:

* a first time investor will probably more risk averse (not interested in high risk)
* age plays a factor ( a younger person might have more tendencies toward risk, then say an older investor)
* risk plays a significant factor in any investment decision
* to be considered an investment implies that we will have systematic and consistent investment strategy, as opposed to entering an "investment" with the idea of a quick and large return (which is gambling);

Now onto the investment portion:

There are several options and approaches to consider:

* one is to pick investments which we think will grow and add to our wealth --- that is, increase the amount we have invested over time based upon an expected rate of return (low risk = low ...

Solution Summary

This is an explanation of investment and risk strategies based upon levels relating to age, earning power, station in life, and risk factors. It presents options to consider based upon the above factors.