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Essay / Research Paper Abstract
A 6 page paper. There are many factors to consider when investing. This paper discusses: why short-term investments are needed; long-term investments; risk factor, including emotional risk, and the relationship between risk and return. Bibliography lists 5 sources.
Page Count:
6 pages (~225 words per page)
File: MM12_PGinv.rtf
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Unformatted sample text from the term paper:
more information on using this paper properly! Before anyone invests money, it is important to consider a number of factors and to answer one primary question - what is
the purpose of the investments? If a person is investing for their retirement, the strategies they use would be different than if he or she were investing to purchase a
house in two or three years. Retirement is a long-term investment goal, saving for the down-payment on a house is a short-term investment goal. For the long-term, a person could
accept more risk in their investments. For the short-term, a person would want investments that were far less risky. Coleman used a wedding cake as an analogy for investing: the
bottom layer is the long-term investments and the next two tiers are different kinds of short-term investments. An investor wants to compound the long-term money, establishing a strong base in
ones financial planning. These are investments like stocks and are not touched often. The short-term investments may consist of two or more types of goals. One may be for something
that is five years in advance, such as a the purchase of a new automobile. Short-term bonds and CDs are good for this level. The top tier of the wedding
cake is synonymous with very short-term savings for things like emergencies. Since this money needs to be readily accessible, one investment vehicle would be a money market fund against which
the holder can write checks (Coleman, 2001). Everyone needs short term investments or savings for the kinds of emergencies or expenses that could occur over a few years.
These are sometimes called liquid assets, meaning they can be turned into cash easily (Coleman, 2001). Long term investing means the investors goal is years away, such
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