04.

02: TAKING RISKS

Part One—Review the Investment Types

You must choose

three different
investments, one from
each different risk levels
(Aggressive, moderate, and conservative).
1. Real estate (moderate)
2. stocks (aggressive)
3. Roth ire (conservative)

Part Two—Select and Explain Your Investment Plan

Imagine you win $10,000 in a state competition and decide to invest your prize.
First,
determine your risk tolerance. Then, choose two investment options from the
lesson for
your money. Describe your investment plan in a detailed paragraph. Be sure to
include
responses to the following questions:
 Why did you choose these two options?

The reason I chose these two options was because retirement is a common type
of
investment and it's an easy one you can use to invest in. other projects that
might bring
forth passive income, and stocks because even though it has a high risk you can
invest
however much you want in different stocks and its longer term the stock market
varies.

 How may taxes, fees, and inflation affect your investments?

The more risk in the investment the higher the rate of return is for example if I
invested
all the $10,000 in stocks and each were worth 50 at the time, I bought them I
would
have a total of 200 stocks and if the stock price increases in 4 years let's say
$100 I
would have gotten double the amount, I began with that being, $20,000
In a Roth Ira if I begin with the amount given to me of $10,000 and I start
adding
annually $200 contribution since the age of 17 and if I retire at 65 and the
expected
rate of return is 7% and the marginal tax rate is 7% I would have added more to
what I
had originally by making annual contribution according to calculations by the
age of 65 I

would have added 9,600 in contribution and since it's with a Roth ire I would
get back a
total of 332,889.

 How do your choices reflect your tolerance for risk?

I like risk because yes it can be risky, and you could lose what you put into it
but in a
long run I don't think money should just be kept still I much prefer to invest it
and see
how many ways I could double the amount that I originally started with but If I
had to
play it safe I would stick with a Roth Ira

 How do you plan to divide your money between the two investment options
you
chose?
Be sure to include the following terms in your explanation:
Diversification: Roth Ira

risk (conservative)
rate of return (7%)
interest rate (7%)

the explanations I gave it in the previous questions ^