Question

Alicia has graduated from college and has established a career. She has been working with the same company for five years. She has saved up $5,000 and needs to decide how she will save and invest this money. Using the principles and strategies of saving and investing, create an outline of a diversified saving and investing plan.

Answer 1

She needs to invest in several different companies/corporations. This will give her a firm foundation in case one fails! She should invest when stocks are low, because this is when everyone will sell! Then when people see that they are being sold, they get bought again, making the stock go up! She also needs to put some of that money in a savings account with a high interest rate! This will help her make more money.

Answer 2

There are several types of investments, all will depend on the risk appetite that the investor has. Some people are willing to take more risks in return for a higher yield. Others prefer a lower yield with lower risks. An appropriate investment plan is to diversify the investments chosen so that the risk of money investment is minimized. This way, Alicia will be able to invest part of the money in public funds, which pay a low rate but are safer, and part in varied income, which is the stock. She must choose stocks according to market parameters observed by experts and must buy stocks from more than one company. Thus, if there is a problem with one of the companies, it does not lose all the money, only the invested part.