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In this task, I will look at the alternative methods of investing 50,000.

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Introduction

In this task, I will look at the alternative methods of investing �50,000. I have found that investing �50,000 into the stock exchange has been very risky as the shares vary which may result in risky investment and cause the value of shares to decrease. Therefore, I feel that investing this money into the stock exchange is not a suitable investment. Other investments are considered on the following pages. I will summarise each possible investment and its aspect. These investments also hold risks but not to the degree of those of the stock exchange. These investments include banking, investing in a property, a business or industry and automobiles etc. In a nutshell, investment trusts are companies that invest in the shares and securities of other companies. They pool investors' money and employ a professional fund manager to invest in the shares of a wider range of companies than most people could practically invest in themselves. This way even people with small amounts of money can gain exposure, at low cost, to a diversified and professionally run portfolio of shares, spreading the risk of stock market investment. There are over 300 investment trusts responsible for the management of billions of pounds' worth of assets on behalf of investors. Banking The most common of investing money is in banks or building societies. Many people invest in here as the risk of losing or a decline in their investment is very unlikely. An almost certainty is that the money deposited will increase depending on the time it stays in the account. At the end of all the banking methods, I will produce a table showing profit made from each account. The formula used to work out the profit made on each account is: The top line multiplies the investment amount by the interest rate. Then you divide it by 52 (weeks in a year). Finally, multiply it by 10 (the monitoring period). ...read more.

Middle

* The interest rate can either go up or down, but it is guaranteed that it will not go below 2%. * There are no fixed terms, so the savings will continue to earn tax-free on the investment. Summary of Banking Investments Type of Account Amount Invested Interest Rate Profit Made Current �50,000.00 4.59% �441.35 Basic �50,000.00 - - Bond �50,000.00 5.00% �480.77 Regular Savings �50,000.00 - - ISAs �50,000.00 5.25% �504.81 Foreign Currency �50,000.00 2.00% �192.31 Student �50,000.00 4.33% �416.35 I can see that the most profitable account is investing in an ISA. The account has benefits as it produces the most amount of money over a short period of time. Another major benefit is you do not have to pay tax on any interest or dividends you get from the investments within your ISA. Investing in a Business Starting a new business is an exciting prospect but can be a daunting task. The advantage of buying an existing business is that its infrastructure, clients and reputation already exist. It is less of a risk, and businesses with a good track record stand a better chance of getting financial support. Plus, it can be very satisfying to take an existing business and inject your own personality into it. On the flip side, there may be hidden problems that are difficult to correct, like poor customer service or long-standing problems with staff. Also the previous owners are likely to have built up a very loyal customer base, which can be a double-edged sword - while you have a ready-made audience; you need to think about how you're going to convince them that you are a worthy successor. Sole Trader Most small businesses are sole traders. You do not need to do anything except start trading. Examples of sole traders are: plumbers, hairdressers, newsagents and fishmongers. The advantages of sole traders are: 1. They are easy to set up. ...read more.

Conclusion

on an annual basis. Therefore, the buyer would pay �2,750 per annum. The profit that I will have gained would be �5,001. This is quite a rise. The risk could occur if there were no buyers. This illustrates the risk of investing in a car. I would not personally decide to do this, if I had the option. Conclusion After investing each alternative method of investing �50,000, other than the stock exchange, I have come to a conclusion that banking is the safest option. However, I believe that the least secure bank account is an Internet account. This is because it could be hacked into and accessed as the data is intangible. I also found that ISAs were an excellent investment for small savings (�3,000) but as I had �50,000 it would not be useful. After considering a business I found that each type of business ownership had its own shortcoming. For example, limited companies were better off than other business structures i.e. - sole trader, partnership. This showed me that limited companies were a possible option as I had a lot of capital to setup and maintain the company. Investing in a property would be a good option for people who were married or retired as the house I found was well located and had a fair price. The house price would surely inflate once it has been paid off and could be sold off for a bigger price. There would also be some problems with the property. For example the depreciation of the property would cost money if the property was damaged or suffered from wear and tear. Investing in a vehicle is not very appropriate for my investment, as buying a car for a small amount of money and selling it on is not a realistic decision. Other alternatives that I could investigate could be: clothes, furniture, jewellery and more. In my opinion these sorts of industries are less risky than the other alternatives that I have investigated, and if researched in depth could be a fool proof option. ?? ?? ?? ?? Gurveer Saggu Investing �50,000 1 ...read more.

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